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1998 Supreme(Cal) 226
High Court Of Calcutta
P. S. MISHRA, BARIN GHOSH
ADHIR GHOSH - Appellant
Versus
STATE OF WEST BENGAL - Respondent
M. A. T. 912 Of 1998
Decided On : 05/15/1998
ASOKE BANERJI, SAMAR DUTT, Sarajit Sen
A public authority is obliged to purchase at the most beneficial terms since such purchases are made out of the public fund and for the benefit of the public.
Headnote:
TENDER - REJECTION - REASON - REQUIREMENT - PUBLIC POLICY - ARBITRARINESS - INVESTIGATION - POLICE - CRIMINAL PROCEDURE CODE, 1973 - SECTION 154 - PUBLIC DUTY - NEGLECT - VIGILANCE DEPARTMENT - ACTION - DIRECTION - COURT.
Fact of the Case:
The petitioner participated in a tender for the supply of dietary articles to a district hospital. The petitioner's tender was rejected, and the tenders of three private respondents were accepted at a higher rate. The petitioner filed a writ petition challenging the rejection of his tender as arbitrary and illegal.
Finding of the Court:
The court held that the rejection of the petitioner's tender without any reason was arbitrary and illegal. The court also held that the acceptance of the tenders of the private respondents at a higher rate was a violation of public policy and the financial interest of the State.
Issues: 1. Whether the rejection of the petitioner's tender without any reason was arbitrary and illegal. 2. Whether the acceptance of the tenders of the private respondents at a higher rate was a violation of public policy and the financial interest of the State.
Ratio Decidendi: 1. A public authority is obliged to purchase at the most beneficial terms since such purchases are made out of the public fund and for the benefit of the public. 2. A clause contained in a tender that tenders may be rejected without assigning any reason is neither illegal nor opposed to public policy. 3. However, when such fairness is challenged by way of judicial review and it is shown prima facie that there is reasonable doubt in regard to such fairness, it becomes the duty of the public authority to place before the Court the reasons for such preference.
Final Decision: The court allowed the appeal, set aside the order impugned, and disposed of the writ petition with the following directions: 1. It is declared that the acceptance of the tenders of the private respondents is illegal. 2. The respondents shall forthwith take steps to invite fresh tender for the supply of dietary materials to the District Hospital. 3. The Inspector General of Police shall forthwith take steps to investigate why without any reason the higher rate offered by the private respondents was accepted and if on such investigation it transpires that any public officer for his own personal benefit had shun his public duty, shall immediately lodged a complaint under the Criminal Procedure Code, 1973 and forward his report to the appropriate Vigilance Department for taking appropriate steps against the erring officer.
( 1 ) THE Chief Medical Officer of Health, Malda, published a tender notice bearing No. 2424 dated 23rd September, 1987, inviting tender for supply of dietary articles to the District Hospital, Malda and to other hospitals in the same District for the period 1-11-97 or any subsequent date till 31-10-98.
( 2 ) THE said tender contained a clause to the effect that the District Diet Committee reserves the right to reject tender without assigning any reason and the decision of the District Diet Committee will be final.
( 3 ) THE petitioner/appellant participated in the said tender in respect of supply of all dietary articles except milk to the District Hospital, Malda only.
( 4 ) ON 28-10-97 the tenders were openedwhen rates quoted by different tenderers were not declared. However, on 29-10-97 Chief Medical Officer of Health, Malda, hung up a list of selected tenderers for supply of dietary articles in different hospitals in the District of Malda including District Hospital, Malda, furnishing therein the accepted rates.
( 5 ) THAT list disclosed that the tender of the petitioner/appellant has been rejected and the tender of the private respondents No. 7, 8 and 9 have been accepted at a higher rate than those given by the petitioner/appellant for supplies to be effected to the District Hospital, Malda. It further revealed that the tenders given by others at the same rate that of the petitioner/appellant had been accepted for the supplies to be effected to six other hospitals. It further disclosed that even lower rates have been accepted for supplies to be effected to many other hospitals in the District.
( 6 ) HENCE by filing Writ Petition No. 23629 (W) of 1997 the petitioner/appellant contended that rejection of lower rate offered by him and acceptance of higher rate offered by the private respondents No. 7, 8 and 9 is arbitrary, opposed to public policy and contrary to the financial interest of the State and thus, illegal. A learned single Judge of this Court by order dated 4-3-1998, impugned herein, rejected the writ petition holding as follows :-"i find there is nothing illegality and/or arbitrariness on the part of the State Government in rejecting the offer of the writ petitioner, being guided by the terms and conditions mentioned in the tender forms. The learned senior standing counsel is right in saying that the writ petitioner cannot be allowed to question after having accepted the terms and conditions mentioned in the tender notice after having been unsuccessful. I find there is no challenge whatsoever as against those terms and conditions, which enjoined the State Government's right to reject any offer without assigning any reason and further right not to accept any offer quoting below the scheduled rate. So I hold that this action of the State Government rejecting the offer of the writ petitioner is perfectly justified and lawful. "
( 7 ) A State or an instrumentality of State when making purchases, not for profit motive, is obliged to purchase at the most beneficial terms since such purchases are made out of the public fund and for the benefit of the public. The most beneficial terms will also include most beneficial rate, but that is not, in all cases, the one and the only consideration. If a public authority is of the opinion that a supplier, who has quoted a lower rate, cannot supply standard materials, may reject the tender submitted by such supplier and more so when such supplies are dietary products for patients of public hospitals. There may be various other technical reasons for not accepting an offer of a lower rate.
( 8 ) WHEN a public tender is floated, it is expected that a large number of members of the public will participate in such tender. While one or two tenders of such large number of participants will be accepted, the rest will be rejected. The rejection will be higher than acceptance. The authority concerned would be required to apply its mind for the purpose of acceptance as
