IMPORTANT POINT
The Government while entering into contracts is expected not to act like a private individual but should act in conformity with certain healthy standards and norms and such actions should not be arbitrary, irrational or irrelevant.

Headnote:(i) Constitution of India-Article 136-Government Tender-Value of contract-State of Meghalaya owning a weigh bridge had decided to lease out to contractors-Notice inviting Tender from interested persons for operating the said weigh bridge-Income from this weigh bridge is received from fees charged for weighment of trucks-Weighment charges are fixed by the Government-Payment of bid amount is purely a matter between the contractor and the State-High Court was in error in holding that fair value of contract is Rs. 40,29,600/- and any bid over and above that would be predatory-Does the principle of predatory pricing apply to the contract involved in this appeal-(No)-It was open to the State to have re-fixed value of contract on basis of fresh material available before it-Administrative Law.
       Held : The Government while entering into contracts is expected not to act like a private individual but should act in conformity with certain healthy standards and norms. Such actions should not be arbitrary, irrational or irrelevant. The awarding of contracts by inviting tenders is considered to be one of the fair methods. If there are any reservations or restrictions then they should not be arbitrary and must be justifiable on the basis of some policy or valid principles which by themselves should be reasonable and not discriminatory. (Para 19)
       The respondent-State owns a weigh bridge at Morkjniange. The income from this weigh bridge is received from the fees charged for weighment of trucks which pass through route in which this weigh bridge is situated. We are told that these trucks mostly carry coal from Jaintia Hills to Guwahati. As per the notification the person operating the weigh bridge can only charge a sum of Rs. 30/- for a loaded truck and Rs. 10/- for an unloaded truck. Therefore, the fee to be collected from the transporters for weighment of their vehicles is fixed and it does not vary with the amount of bid offered by the contractor. This is not a contract of supply where a contractor by manipulating the price may cause loss to public at large. This is not a contract which would have any effect on the price of coal, since weighment charges are fixed by the Government and the contractor has no right to increase the same. Payment of bid amount is purely a matter between the contractor and the State. As a matter of fact obtaining higher revenue by accepting the eligible highest bid would only be in public interest because State stands to gain more revenue. The offering of the bid after knowing the commercial value of the contract is a matter left to the business acumen or prudence of the tenderer. No third party s interest is involved in such contract. Therefore, in our opinion, application of principle of predatory pricing is wholly alien to this type of contract. Mere offer of a fancy or high bid by itself does not make the bid a predatory bid in this type of contract. If the State decides to give its largesse to public it has an obligation to see that it fetches the best possible value for the same, provided otherwise it does not in any manner affects the rights of other citizens. No bidder has any right in law to demand the State to give away its largesse for an amount which he considers to be reasonable even when there are bidders willing to pay more for it. Principal of monopoly also does not come into play in these types of contracts. (Para 21)
       Therefore, in our opinion, the High Court was in error in coming to the conclusion that because it felt the fair value of the contract is Rs. 40,29,600/- any bid over and above that would be predatory. (Para 22)
       (ii) Constitution of India-Article 136-Government Tender for operating weigh bridge-State of Meghalaya owns a weigh bridge which it had decided to lease out to contractors on yearly basis-It issued a Notice Inviting Tender-State accepted bid of respondent 5 which was for a sum of Rs. 1.21 crores-Contract settled in her favour-Writ petition filed by one of the bidders who participated in the said tender-Acceptance of bid challenged as contrary to prescribed guidelines-Allegations that the bid amount accepted was speculatory and predatory in nature-High Court set aside acceptance of bid of 5th respondent holding that approximate value of the contract would have been only Rs. 40,29,600/- -Tender Approval Committee made a fresh assessment of approximate value of the tender-Fresh tender was called for-Difference of opinion between the Tender Committee and the Minister in finalising the tender-Authorities decided to accept tender of 4th respondent which was for a sum of Rs. 40,29,600/- per annum-Appellant who had bid for Rs. 62,70,797/- challenged acceptance of offer of 4th respondent-Whether value of contract fixed at Rs. 40,29,600/- by the High Court was a final value-(No)-Whether it was open to the State to have re-fixed that value of contract on basis of fresh material-(Yes).
       Held : It is seen from the above directions issued by the Court that the High Court left open the question of re-assessing the value of the tender to the State Authorities. However, it directed them to take into consideration the report submitted by the Enforcement Inspectors of Motor Vehicles Department. It did not prohibit the said authorities from taking into consideration any other material which was also available. Therefore, in our opinion, it was open to the authorities to rely upon such other material as was available to it while re-assessing the value of the tender but, of course, it also had to consider the report submitted by the Enforcement Inspectors. By its order the High Court had also not specifically held that the reasonable assessment of the tender value made by it at Rs. 40,29,600/- was a conclusive value and the authorities were bound by the same, because if it was so then there was no need to give the direction to the State authorities to make a re-assessment on the material available to it. We think it is clear from the above judgment that the reasonable assessment of the tender value made by the High Court at Rs. 40,29,600/- was only a tentative expression of opinion. That apart fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. From the above findings of ours, it is clear that the Tender Acceptance Committee had the necessary authority to re-assess the value of the tender which it did by fixing the value of Rs. 2 crores. This value was fixed after taking into consideration the report submitted by the Enforcement Inspectors as also the report and data supplied by the PWD and if the said authorities thought it fit and safe to rely upon the data supplied by the PWD authorities we can find no fault with the same. In this context in our opinion, the Minister who disagreed with the recommendation of the Tender Acceptance Committee was in error in coming to the conclusion that the figure of Rs. 40,29,600/- fixed by the learned Single Judge in his order was a final value and the State Authorities had no right to differ from the same. (Para 17)
       It is seen from the records that pursuant to the acceptance of the bid of the 4th respondent on 19.9.2002 the 4th respondent has been operating the weigh bridge, and the tenure of the contract is to come to an end in the normal course on 18.9.2004. Since the acceptance of the 4th respondent s bid is held to be illegal by us the same has to be set aside but we will not issue directions to the respondent State Government to accept the bid of the appellant because in our opinion it is in the interest of justice that a fresh tender should be called for and based on the bids received pursuant thereto, and in accordance with the guidelines, a fresh contract will have to be entered into by the State Government in regard to this weigh bridge. (Para 25)

JUDGMENT

Santosh Hegde, J.-Heard learned counsel for the parties.

Leave granted.

2. In this appeal the appellant questions the correctness and legality of the judgment of the High Court of Gauhati dated 28.1.2003 made in Writ Appeal No. 710/2002 confirming the judgment dated 7.11.2002 made by the learned Single Judge of the same High Court at Shillong Bench in W.P. (C) No. 355 (SH)/2002. The facts necessary for the disposal of this appeal are as follows:

3. The State of Meghalaya owns a weigh bridge at Morkjniange which it had decided to lease out to contractors who were willing to take it on lease on yearly basis. For the said purpose it issued a Notice Inviting Tender (NIT) from interested persons for operating the said weigh bridge. Pursuant to the said notification number of tenderers offered their bids. On 11.2.2002, the respondent-State accepted the bid of one Smt. Nila Niangti, respondent No. 5 herein, which was for a sum of Rs. 1.21 crores and the contract was settled in her favour. One of the bidders who participated in the said tender challenged the said acceptance of the bid before the High Court in W.P. No. 34(SH) of 2002, inter alia, on the ground that the said acceptance was contrary to the prescribed guidelines and the bid amount accepted was speculatory and predatory in nature. The learned Single Judge who heard the said writ petition accepted the contention of the writ petitioner that the bid offered by the 5th respondent herein was speculatory and predatory in nature. According to the learned Judge the approximate value of the contract would have been only Rs. 40,29,600/- which figure the learned Judge arrived at by taking into consideration a report submitted by the enforcement staff of the Department of Transport. On the said basis while setting aside the acceptance of the bid of 5th respondent herein the court directed the respondent to call for fresh tenders and re-examine and re-assess the value of tender keeping in view the observations made in the said judgment. A further direction was given that a fresh tender should be called for and the exercise of acceptance of that tender should be made within a period of 45 days from the date of the said judgment.

4. In compliance of the directions issued by the High Court in the above said judgment, the Tender Approval Committee made a fresh assessment of the approximate value of the tender. While doing so it took into consideration the above-mentioned report of the enforcement staff of the Department of Transport as also Traffic Census Data provided by the Public Works Department and came to the conclusion that the annual collection from the weigh bridge fees would be to the tune of Rs. 2.11 crores and the said Committee evaluated the value of the tender at Rs. 2 crores. This assessment was made by the said Tender Committee after considering the above two reports. In the meantime, it is to be noted that a fresh tender was called for and in the said tender 27 bids were received. The highest bid was for Rs. 3,03,33,333 and the next highest bid was for Rs. 2,53,60,333/-. These two bids were rejected by the Tender Committee because the said bid forms were not affixed with the necessary court fees stamp. The 3rd highest bid was of Mr. C. Yonbon for Rs. 1,75,00,567/-. The 4th and 5th bids were for Rs. 1,63,00,987/- and 1,35,00,867 which were withdrawn by the concerned tenderers. The 6th highest bid was for Rs. 97,77,777 but the said tenderer has not pursued the matter any further for whatever reason. The 7th bidder who is the appellant now before us offered a bid for Rs. 62,70,797/- the 8th, 9th and 10th bidders are respondents 5, 6 and 4 respectively in this appeal who offered identical bids of Rs. 40,29,600/- each which was actually the figure identified by the learned Single Judge in his order dated 15.3.2002. It is not necessary for us to go into the particulars of the other bids for the purposes of disposal of this appeal, hence, we will not refer to those particula

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2004 Supreme(SC) 647

IMPORTANT POINTThe Government while entering into contracts is expected not to act like a private individual but should act in conformity with certain healthy standards and norms and such actions should not be arbitrary, irrational or irrelevant.

IMPORTANT POINT
The Government while entering into contracts is expected not to act like a private individual but should act in conformity with certain healthy standards and norms and such actions should not be arbitrary, irrational or irrelevant.