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1995 Supreme(Gau) 87
GAUHATI HIGH COURT
D. N. BARUAH, J.
K.L.Trading Co.Pvt.Ltd -Appellant
Versus
State of Meghalaya and others -Respondent
Rs. Nos. 329 of 1995, and 292 of 1995
Decided On : 02-05-1995
P. K. Goswami, S. Sarma, S. J. Sarma and R. Bordoloi, Mr. N. M. Lahiri, Adv. General, Meghalaya, Mr. A. Sarma Ms. B. Dutta, G. A., for Respondents 1 and 2; M/s. P. G. Baruah, A. N. Pareekh, S. Medhi, P. Upadhyay, R. Baruah, for Respondent No. 3
The government's action in awarding a contract is subject to judicial review, but the court will not interfere unless the decision is vitiated by any vice of arbitrariness, unreasonableness, or unfairness.
Headnote:
LOTTERY - DISTRIBUTION AGENT - APPOINTMENT - LEGITIMATE EXPECTATION - JUDICIAL REVIEW - SCOPE - ARBITRARINESS, UNREASONABLENESS AND UNFAIRNESS - GOVERNMENT CONTRACT - AWARD - PUBLIC LAW LIMITATION - FAIRNESS - REASONABLENESS - POLICY - CHANGE - JUDICIAL INTERFERENCE - DOCTRINE OF LEGITIMATE EXPECTATION - APPLICABILITY - JUDICIAL REVIEW - SCOPE - ADMINISTRATIVE ACTION - VICE OF ARBITRARINESS, UNREASONABLENESS AND UNFAIRNESS - JUDICIAL INTERFERENCE - GROUNDS.
Fact of the Case:
Petitioners challenged the notice issued by the Principal Secretary to the Government of Meghalaya, Excise, Registration, Taxation and Stamps Department, Shillong, and the agreement entered into between the respondent No.3 and the Government of Meghalaya for the appointment of a distributing agent for the Meghalaya State Lottery. Petitioners claimed that they had submitted tenders fulfilling all the terms and conditions mentioned in the NIT and had offered higher guaranteed profit than the 3rd respondent, but were overlooked in favor of the 3rd respondent.
Finding of the Court:
The court held that the appointment of the 3rd respondent as the distributing agent was not arbitrary, unreasonable, or unfair. The court found that the 3rd respondent had offered the highest guaranteed profit and had the requisite experience and financial soundness. The court also held that the petitioners had not furnished the necessary information regarding their experience, which was one of the eligibility criteria.
Issues: 1. Whether the appointment of the 3rd respondent as the distributing agent was arbitrary, unreasonable, or unfair? 2. Whether the petitioners had a legitimate expectation to be appointed as the distributing agent? 3. Whether the government's decision to award the contract to the 3rd respondent was subject to judicial review?
Ratio Decidendi: 1. The court held that the government's action in appointing the 3rd respondent as the distributing agent was not arbitrary, unreasonable, or unfair. The court found that the 3rd respondent had offered the highest guaranteed profit and had the requisite experience and financial soundness. The court also held that the petitioners had not furnished the necessary information regarding their experience, which was one of the eligibility criteria. 2. The court held that the petitioners did not have a legitimate expectation to be appointed as the distributing agent. The court found that the NIT clearly stated that the government reserved the right to accept or reject any of the tenders without assigning any reason thereof. 3. The court held that the government's decision to award the contract to the 3rd respondent was subject to judicial review. However, the court held that the petitioners had not shown that the government's decision was vitiated by any vice of arbitrariness, unreasonableness, or unfairness.
Final Decision: The court dismissed the petitions.
Both the Civil Rules relate to a common fact and involve common questions of law. Therefore, I propose to dispose of both the Civil Rules by a common judgment.
2. Petitioners in both the Civil Rules challenged the notice dated 18-1-95 issued by the Principal Secretary to the Government of Meghalaya, Excise, Registration, Taxation and Stamps Department, Shillong. The petitioner in Civil Rule No.292/95 also challenged the agreement dated 6-1-95 entered into by and between the respondent No.3 and the Government of Meghalaya and prayed for issuance of a Writ of Mandamus and other appropriate Writ or direction for quashing the notice dated 18-1-95 and also the agreement dated 6-1-95.
3. The case of the petitioner in Civil Rule No. 329/95, inter alia, is as follows:-
The petitioner is a partnership firm carrying on the business of marketing and trading State Government lotteries with its registered office at New Delhi and a local office at Mouchak Market, Guwahati. In the month of November, 1994, the Government of Meghalaya, represented by its Principal Secretary, Excise Registration, Taxation and Stamps Department issued notice inviting tenders (for short, NIT ) from registered firms / companies of repute having sufficient experience in the lottery business for appointing as distributing Agent for the Meghalaya State Lottery for a period of about three years. The conditions mentioned in the said NIT were inter alia as follows:-
"2. Minimum annual guaranteed profit expected is Rs. 3 crores which is 2% of the turnover of Rs.l50 crores of the gross total of tickets which may be printed for sale.
3. The prospective Tenderers already running the Lotteries in other States and Union Territories need submit authenticated copies of agreements entered into by them with the respective State Govts. and Union Territory Administrations."
... ... ..."
The last date of receipt of tender papers was fifteen days from the date of publication of the NIT in the news papers and it was mentioned in the said NIT that the tenders would be opened on the last date at 4 p.m. in presence of the tenderers or their authorised agents / representative at the office of the Director, Meghalaya State Lottery, Shillong. The said NIT, however, reserved the right to accept or reject any of the tenders without assigning any reason thereof.
Pursuant to the said NIT the petitioner submitted its tender fulfilling all the terms and conditions mentioned in the said NIT. Petitioner in its tender guaranteed a profit of Rs. 12,000 /- per draw and also guaranteed a minimum profit to the Government per year as per the terms of the notice i. e. at Rs.3 crores. Besides petitioner, 11 other parties also submitted tenders. On primary scrutiny 6 parties were selected. Out of the said 6 parties, petitioner and 3rd respondent were also selected. The 3rd respondent guaranteed minimum profit of Rs.3000/- per draw. The said tenders were opened on 4-1-95 in presence of the tenderers. According to the petitioner, a comparative study would show that it guaranteed much higher profit to the Government than that of respondent No. 3. Moreover, profit per draw was the only consideration for appointing distributing agent. Subsequent to the opening of the tenders on 4-1-95 the petitioner came to know that there was a move on the part of respondents 1 and 2 to appoint the 3rd respondent as distributing agent for Meghalaya State Lotteries though the 3rd respondent had assured a minimum guaranteed profit of Rs 3,000 /- per draw and the petitioner had guaranteed a minimum profit of Rs. 12,000 /per draw. The petitioner was at a better footing and was entitled to be selected as distributing agent in place of 3rd respondent. On coming to know about the move, the petitioner approached the concerned authorities on several occasions, but the attitude of the respondent authorities compelled the petitioner to apprehend that there was a strong move for appointing the 3rd respondent as distrib
