Power to non-acceptance of highest bid not to be exercised arbitrarily.

Markandey Katju , CJ.

This writ appeal has been filed against the order dated 9-8-2004 passed by the learned single Judge, dismissing the writ petitions filed by the appellant herein.

2. The respondent-Municipality conducted a public auction on 19-3-2004 in respect of the right to collect the rent from the road-side vendors for the period 2004-05. In the said public auction, second respondent herein was the highest bidder, but due to the intervention of General Elections, the bid was not confirmed in his favour. The appellant, who was the licence-holder for the earlier period, viz. 2003-04, was allowed to continue till May 2004 on payment of proportionate lease amount. The appellant, after the auction process was over on 19-3-2004, wrote a letter to the Municipality expressing her willingness to offer Rs.6,000/- more than the amount offered by the second respondent. When the respondent-Municipality intended to hold a fresh auction, the second respondent herein, who was the highest bidder in the auction held on 19-3-2004, filed a writ petition (W.P. No.13434 of 2004) praying for a Writ of Mandamus directing the respondent-Municipality to confirm the auction in his favour by accepting his bid. The appellant also filed two writ petitions against the respondent-Municipality, viz. (W.P. No.2379 of 2004 and W.P. No.14177 of 2004) directing the respondent-Municipality to renew the lease in her favour on the premise that after the conclusion of the auction proceedings on 19-3-2004, she expressed her willingness to offer Rs.6,000/- more than the bid offered by the second respondent herein. The learned single Judge, by a common order, dismissed the writ petitions filed by the appellant herein. It is against this order, that the present appeal has been filed.

3. Heard the learned counsel for the appellant and the learned counsel for the respondent. We have carefully perused the impugned order.

4. It is an admitted fact that the right to collect rent from the road-side vendors was put to public auction by the respondent-Municipality after notifying the same in well-known dailies having wide circulation in the locality and in the public auction, the second respondent was the highest bidder but, his bid was not confirmed and the contract was not awarded in his favour.

5. Learned counsel for the appellant contends that after the auction was over on 19-3-2004, on the very day itself, the appellant, by private negotiation with the Municipality, expressed her willingness to offer Rs.6,000/- more than the bid offered by the second respondent and, therefore, the contract should be awarded in her favour.

6. The law is well-settled that contracts by the State, its corporations, instrumentalities and agencies must be normally granted through public-auction/public tender by inviting tenders from eligible persons and the notification of the public-auction or inviting tenders should be advertised in well-known dailies having wide circulation in the locality, with all relevant details such as date, time and place of auction, subject-matter of auction, estimated cost, Earnest Money Deposit, etc. The award of Government contracts through public-auction/public tender is to ensure transparency in the public procurement, to maximise economy and efficiency in Government procurement, to promote healthy competition among the tenderers, to provide for fair and equitable treatment of all tenderers, and to eliminate irregularities, interference and corrupt practices by the authorities concerned. This is required by Article 14 of the Constitution. However, in rare and exceptional cases, for instance during natural calamities and emergencies declared by the Government; where the procurement is available from a single source only; where the supplier or contractor has exclusive rights in respect of the goods or services and no reasonable alternative or substitute exists; where the auction was held on several dates but there were no bidders or the bids offered