1998 Supreme(AP) 644

Andhra Pradesh High Court
Judges : N.Y.HANUMANTHAPPA, NEELAM SANJIVA REDDY
I.V.R.Constructions Ltd - Appellant
Versus
Sukdevraj Sharma and Bros - Respondent
Decided On : 09-11-98

The High Court cannot interfere with the acceptance or rejection of a tender by the department under Article 226 of the Constitution of India unless it is shown that such an entrustment of contract is violative of Article 14 of the Constitution of India or it results in depriving of fundamental right or at least a statutory right.

Headnote:

TENDER - ACCEPTANCE - JUDICIAL REVIEW - SCOPE - CONTRACTUAL OBLIGATIONS - ENFORCEMENT - WRIT JURISDICTION - BIAS - ALLEGATION - JUDICIAL REVIEW - SCOPE - ADMINISTRATIVE ACTION - JUDICIAL RESTRAINT - CONTRACTUAL POWERS - GOVERNMENT - FAIRNESS - REASONABLENESS - NON-ARBITRARINESS - ABSENCE OF MALA FIDES - JUDICIAL INTERFERENCE - SCOPE - CONTRACTUAL MATTERS - REVIEW - SCOPE.

Fact of the Case:

The petitioner, a class contractor, submitted a tender for the construction of a Gateway Technical Building for Videsh Sanchar Nigani Ltd. at Madhapur, Hyderabad. Seven contractors submitted tenders, including the petitioner and the 4th respondent. The 2nd respondent, the Executive Engineer, Telecom, Civil Division-I, opened all the sealed tenders in the presence of the contractors and read out the rate of each item of the schedule for the information of the tenderers present. The same was noted by them. The 2nd respondent also read out the total amount of each tender and the rates/quantum quoted by the various tenderers. The petitioner's tender was the lowest. However, the 2nd respondent accepted the tender of the 4th respondent, who quoted a higher price than the petitioner. The petitioner challenged the acceptance of the 4th respondent's tender by way of a writ petition, alleging that the 2nd respondent misled him and informed him that the 4th respondent quoted Rs. 19.00 per kg for item No. 20, but in fact he quoted Rs. 21.00 per kg. The petitioner also alleged that the entire exercise of finalising the tender was a preplanned, fraught with suspicion, doubt and appears to be very carefully stage-managed at the behest of the 4th respondent. The 2nd respondent denied the allegations made by the petitioner and submitted that the tender of the 4th respondent was accepted after exercising due diligence and care and after taking the legal advice from the Law Ministry to protect the interest of the department, but not otherwise as alleged by the petitioner. The 4th respondent also denied the allegations made by the petitioner and submitted that the quoting of two rates for item No. 20 was occasioned inadvertently in the 4th respondent's office in that the staff of the 4th respondent while highlighting the rate of Rs. 19.00 by encircling it, by mistake failed to strike off the rate of Rs. 20.00. The learned single Judge allowed the writ petition and directed the official respondents to re-tender the work to the successful bidder.

Finding of the Court:

The Court held that the acceptance or rejection of a tender is governed by the conditions of the tender. As per the terms of the tender a discretion is given to the department either to accept or reject the tender without assigning any reasons. It is settled principle that there cannot be any interference by the High Court under Article 226 of the Constitution of India in contractual obligations unless it is shown such an entrustment of contract is violative of Article 14 of the Constitution of India or it results in depriving of fundamental right or at least a statutory right. The Court further held that the petitioner has not shown how, by accepting the tender of R-4, his right has been affected and such acceptance is violative of Article 14 of the Constitution of India. However, if there is any impropriety, fraud or mischief alleged to have been played by the authorities in accepting the tender of the fourth respondent and rejecting his tender the petitioner has to agitate the same before appropriate forum by leading evidence and Article 226 is not the proper remedy.

Issues: 1. Whether the High Court can interfere with the acceptance or rejection of a tender by the department under Article 226 of the Constitution of India? 2. Whether the petitioner has locus standi to challenge the acceptance of the 4th respondent's tender? 3. Whether the acceptance of the 4th respondent's tender was biased or mala fide?

Ratio Decidendi: 1. The High Court cannot interfere with the acceptance or rejection of a tender by the department under Article 226 of the Constitution of India unless it is shown that such an entrustment of contract is violative of Article 14 of the Constitution of India or it results in depriving of fundamental right or at least a statutory right. 2. A rival tenderer has locus standi to challenge the acceptance of a tender by the department if it is shown that such acceptance or rejection is arbitrary or discriminatory, which is causing loss to the State. 3. The acceptance of the 4th respondent's tender was not biased or mala fide.

Final Decision: The Court allowed the writ appeals filed by the respondents and dismissed the writ appeal filed by the petitioner. The Court held that the order passed by the learned single Judge so far as it relates to the cancelling the allotment of work to the 4th respondent by accepting his tender and directing the authorities to call for fresh tenders is incorrect and the same is quashed.