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2005 Supreme(Mad) 28
High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. MARKANDEY KATJU & THE HONOURABLE MR. JUSTICE D. MURUGESAN
J.V.Gokal & Co. - Appellant
Versus
The State of Tamilnadu & Another - Respondents
W.A. No. 4221 of 2004 and W.P. No. 30434 of 2004
Decided On : 06 January 2005
Limited scope for judicial review of tender terms and the principle of judicial restraint in administrative matters.
Headnote:
Tender Notice - Eligibility Criteria - The court upheld the eligibility criteria mentioned in the tender notice for a contract to supply DI pipes for transporting water, emphasizing the need for reliability and experience of the bidders. The court also highlighted the limited scope for judicial review of tender terms and the principle of judicial restraint in administrative matters.
Fact of the Case:
A tender notice was advertised inviting bids from manufacturers of Ductile Iron pipes. The appellant, a marketing agent, challenged the notice on the grounds of creating a monopoly and not fulfilling the eligibility criteria.
Finding of the Court:
The court dismissed the writ appeal and the writ petition, upholding the eligibility criteria mentioned in the tender notice and emphasizing the need for reliability and experience of the bidders in such big contracts. The court exercised judicial restraint in administrative matters and highlighted the limited scope for judicial review of tender terms.
Issues: Challenge to tender notice on grounds of creating a monopoly and not fulfilling eligibility criteria.
Ratio Decidendi: The terms of the invitation to tender are not open to judicial scrutiny, and the authority inviting tenders has the discretion to set out the terms of the tender. Judicial interference is limited to cases of arbitrariness, discrimination, or mala fide intentions.
Final Decision: Both the writ appeal and the writ petition were dismissed, with no costs awarded. Consequently, WAMP No.8004 of 2004 was also dismissed.
Markandey Katju, CJ.
This writ appeal has been filed against the interlocutory order dated 20.10.2004 in WPMP No.36898 of 2004 in W.P. No.30434 of 2004. With the consent of the parties we are disposing off the writ appeal as well as the writ petition.
2. Heard learned counsel for the parties.
3. The facts of the case are that a tender notice was advertised in the newspaper inviting bids from the manufacturers of Ductile Iron pipes. The conditions of the tender notice including eligibility criteria have been mentioned in the aforesaid tender notice dated 22.9.2004.
4. The appellant challenged this tender notice on the ground that it would create a monopoly as only two companies in India are fulfilling the eligibility criteria mentioned in the tender notice.
5. Admittedly the appellant is not a manufacturer, but is the marketing agent of a Hongkong firm which in turn is the marketing agent of a manufacturer in China. Learned counsel for the appellant has relied on a decision of the Supreme Court in Union of India v. Dinesh Engineering Corporation {(2001)8 SCC 491}. We have carefully perused the said decision. In our opinion the said decision has no application in this case. It may be mentioned that a decision is applicable to the facts of a particular case and it is not that every decision can be applied as a precedent in every case. The aforesaid decision in our opinion was delivered on the facts of that particular case and cannot be said to have application to every case of a tender.
6. Admittedly the appellant does not fulfill any of the eligibility criteria mentioned in the tender notice. The contract in question is for supply of DI pipes for transporting water from river Kollidam near lower Anaicut, Thanjavur District to Veeranam. The distance is about 128 kms. and this contract has to be completed for providing drinking water to Chennai city. This contract has to be completed in eight months.
7. In such big contracts naturally the authority who invites tenders needs to know about experience, financial status, background etc. of the bidders because the person to whom the contract is given must be a reliable person. Hence there is nothing unreasonable in the eligibility criteria which has been mentioned in the tender notice and in fact this is done very often. As regards the appellant firm it appears to be a new entity in the business field in India and it cannot claim that it should not be required to fulfill the eligibility criteria regarding experience, financial status, reliability etc.
8. As held by the Supreme Court in Directorate of Education v. Educomp Datamatics Ltd. {(2004)4 SCC 19} it is for the authority concerned to set out the terms of the tender and ordinarily there is no scope for judicial review of such terms as they are in the realm of contract. It is observed in paragraph 12 of the aforesaid decision as follows:
"It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide."
9. As regards the submission of the learned counsel for the appellant that the said terms would create a monopoly, it has been held by another decision of the Supreme Court in Association of Registration Plates v. Union of India (JT 20
