The Government cannot ignore tenders and allocate items without rejecting or terminating the tender process.

Headnote:
TENDER - INVITATION - ACCEPTANCE - HIGH COURT JURISDICTION - WRIT PETITION - WRIT OF CERTIORARI - QUASHING OF RESOLUTION - Bombay Reorganisation Act, 1960 (Act No. 11 of 1960), Section 41 - Bombay High Court Appellate Side Rules, 1960, Chapter XXXI - Constitution of India, Article 226.
Fact of the Case:

The Director of Health Services issued a tender notice inviting tenders for used X-ray plates and "wasteful hypo solution" to be sold to Small Scale Units. Six parties submitted tenders, but the Government passed a resolution distributing the items among three parties, including the petitioners and respondents 3 and 4, and specifying the areas in which each party would operate. The petitioners challenged the resolution, arguing that their tender offered the highest price and should have been accepted.
Finding of the Court:

The Court held that the Government's action in ignoring the tenders and passing the impugned resolution was bad in law. The Court quashed the resolution by writ of certiorari, allowing the respondents to dispose of the items in accordance with the law and usual procedures.
Issues: 1. Whether the High Court Bench at Nagpur had jurisdiction to hear the petition. 2. Whether the Government could ignore the tenders and pass the impugned resolution. 3. Whether the petitioners were entitled to relief.
Ratio Decidendi: 1. The Court held that it had jurisdiction to hear the petition under Article 226 of the Constitution, as the cause of action arose within its territorial jurisdiction. The provisions of Section 41 of the Bombay Reorganisation Act, 1960, and Chapter XXXI of the Bombay High Court Appellate Side Rules, 1960, could not abridge the Court's jurisdiction. 2. The Court held that the Government's action in ignoring the tenders and passing the impugned resolution was contrary to law. The Government should have either rejected the tenders or terminated the tender process before allocating the items. 3. The Court held that the petitioners were entitled to relief, as the Government's action had violated their rights.
Final Decision: The Court quashed the impugned resolution by writ of certiorari, allowing the respondents to dispose of the items in accordance with the law and usual procedures.

JUDGMENT - N.K. PAREKH, J.:---The facts that give rise to this petition are that the Director of Health Services issued a notice dated 21st July, 1983 inviting tenders in respect of used X-ray plates and "wasteful hypo solution" to be sold to Small Scale Units (these being items from which silver is extracted). Six parties submitted tenders in respect thereof. However, the Government thereafter passed a resolution dated 3rd August, 1984 purporting to distribute these two items amongst three parties, namely, the petitioners (herein) and respondents Nos. 3 and 4 and also indicating the areas in which each of these parties would operate. The said resolution also stipulated that the used X-ray film would be sold at Rs. 40.50 per kilogram whilst "wasteful hypo solution", would be sold at Rs. 11.00 per litre. Being aggrieved by the said Resolution, the petitioners have filed this petition for quashing the said resolution and consequential reliefs. The petitioners have contended (a) that the tenders have not been rejected and/or have otherwise not been dealt with and the Government could not purport to pass the resolution (now impugned) distributing the items in the manner they have done, (b) that, looking to the tenders filed by the petitioners and respondent Nos. 3 and 4, the rates quoted by the petitioners in respect both the items were the highest, and the petitioners tender ought to have been accepted and the items ought to have been given to the petitioners exclusively, and (c) that there was no methodology by which the Government allotted these items in the proportions specified in the said resolution or allocated the areas specified in the said resolution, or as to how the respondents Nos. 3 and 4 who 'had quotes' a lesser price, were allotted a part of the items, and as to how they were called upon to pay the price at which the petitioners ha offered to buy the items.

2. The petition is of course resisted by respondent Nos. 1 and 2 who have contended that these items were to be sold to small-scale industries with a view to help such industries. That it is in the light of this policy that the items were allotted amongst the, petitioners and respondent Nos. 3 and 4. That although the price quoted by respondent Nos. 3 and 4 in their tenders were lower than the price quoted by the petitioners, none the less respondent Nos. 1 and 2 had demanded the same price from respondent Nos. 3 and 4 as quoted by the petitioners and hence there was no loss to the Government. That in the circumstances the question of quashing the said resolution did not arise. Respondent No. 3 has contended that although under the impugned Government resolution respondent No. 3 was allotted a quota less than what they would be entitled to, the question of quashing the said resolution did not arise. Respondent No. 4 has contended that the High Court Bench sitting at Nagpur has no jurisdiction to receive, try and hear this petition. On merits, respondent No. 4 has contended that since the intention of the Government in selling these items was to assist small-scale industries, the Government resolution (now impugned) fulfils the very purpose, and the petitioners would be entitled to no relief.

3. Now as regards the question whether this Court has jurisdiction to receive, try and hear this petition is concerned, it has been submitted by Counsel for respondent No. 4 that admittedly the tender notice was issued in Bombay and the resolution (now impugned) was also passed at Bombay. That the whole cause of action had arisen in Bombay. That it was the cause of action that attracted jurisdiction and this being so, the High Court Bench at Nagpur had no jurisdiction to receive, try and hear this petition. In support of this contention, Counsel for respondent No. 4 placed reliance on the decision in the case of (M/s. Siku Industries and others v. Smt. C. D'Souza, Inspector, Officer of the Regional Provident Fund Commissioner, State of Maharashtra, Bombay and another)1, 1

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