2005 Supreme(SC) 673

2005(4) Supreme 578
Supreme Court of India
(From Delhi High Court)
R.C. Lahoti, CJI & G.P. Mathur, J.
M/s. Master Marine Services Pvt. Ltd. —Appellant
versus
Metcalfe & Hodgkinson Pvt. Ltd. & Anr. —Respondents
Civil Appeal No. 1853 of 2005
Decided on 19-4-2005
Counsel for the Parties :
For the Appellant : Mukul Rohtagi and Chetan Sharma, Sr. Advocates, Manish Vashisht and Vikas Mehta, Advocates.
For the Respondents : Ramesh P. Bhat, Sr. Advocate, Inderjit Singh Alag, J.S. Lamba, R.S. Suri, R.K. Joshi and Sushil Kumar Jain, Advo­cates.

Important point
While exercising discretionary powers under Article 226 of the Consti­tution in cases of review of administrative decisions, especially those relating to acceptance of tender and award of contract, the Court should ­always keep the larger public interest in mind in order to decide whether its intervention is called for or not.

Headnote:Administrative Law—Award of Contract—Judicial restraint in adminis­trative action—Contract of work of professional services—Second respondent, CONCOR floated a limited tender for hiring professional services for survey of containers and cargo at Inland Container Depot for a period of 24 months —CONCOR pre-qualified two bidders, appel­lant and respondent—Bid of ­appellant was Rs. 3.00 per container while that of first respondent it was Rs. 3.75 per container—Word was awarded to appellant as its bid was 25 percent lower than that submit­ted by first ­respondent—Writ petition filed challenging eligibility of appellant to participate in the tender process mainly on ground that appellant did not have a license to act as a surveyor/loss asses­sor under the Insurance Act, 1938—Para 11 of the Instructions con­ferred a power upon the CONCOR to relax tender conditions at any stage—Whether High Court was justified in setting aside order of CONCOR awarding the contract to appellant—(Yes).

       Held : The principles which have to be applied in judicial review of administrative decisions, especially those relating to acceptance of tender and award of contract, have been considered in great detail by a three Judge Bench in Tata Cellular v. Union of India AIR 1996 SC 11. It was observed that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances­ of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. (Para 9)

       The only ground on which the High Court has quashed the decision of CONCOR awarding the contract to the appellant is that there was no license to act as surveyor/loss assessor under the Insurance Act, 1938 in favour of the appellant which is a company. This question was considered by the TEC in its meeting held on 17.1.2004. The TEC also took notice of the fact that there were only two bidders (the appel­lant and the first respondent) in the tender and it would be desirable to prevent the tender from lapsing into a single bidder tender. After receipt of the reply from the appellant, the TEC again evaluated the tenders for pre-qualification bid and after noting that M/s Master Marine Services Pvt. Ltd. is known to be an established surveyor doing work for a number of shipping lines at various CONCOR terminals and further that Capt. Percy Meher Master, who had the license, had been appointed the Chairman of the company, made a recommendation that both, the appellant and the first respondent may be qualified for their technical capabilities. It has to be borne in mind that para 11 of the Instructions clearly conferred a power upon the CONCOR to relax the tender conditions at any stage, if considered necessary, for the purpose of finalizing the contract in overall interest of the CONCOR and the trade. Therefore, having regard to the fact that the Chairman of the company had a license under the Insurance Act, the condition regarding the holding of such a license by the appellant itself, in the facts and circumstances of the case, could be relaxed. So far as commercial considerations are concerned, it is the specific case of the CONCOR, which has not been disputed by the first respondent, that ninety eight per cent of the work under the contract is of data entry of a container, for which the appellant had quoted Rs. 3.00 against Rs. 3.75 as quoted by the first respondent and for this kind of work no license under IRDA is required. In such circumstances, no such public interest was involved which may warrant interference by the High Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution while undertaking judicial review of an admin­istrative action relating to award of a contract. We are, therefore, clearly of the opinion that the High Court erred in setting aside the order of the CONCOR awarding the contract to the appellant. (Para 13)