2024 Supreme(Online)(SC) 7527
SUPREME COURT OF INDIA
SUBODH KUMAR SINGH RATHOUR – Appellant
Versus
THE CHIEF EXECUTIVE OFFICER – Respondent
C.A. No.-006741-006741 - 2024
The court ruled that the cancellation of a public tender must adhere to principles of fairness and reasonableness, and arbitrary actions lacking genuine justification violate Article 14 of the Constitution.
Headnote:(A) Constitution of India - Article 14 - Judicial Review - The court examined the scope of judicial review in contractual matters, emphasizing that actions of the State must conform to principles of fairness and reasonableness. The cancellation of a tender by the State was challenged as arbitrary and influenced by extraneous considerations, particularly the involvement of a minister's directive without proper justification. (Paras 1-134)
(B) Public-Private Partnership - The court highlighted the importance of maintaining the sanctity of public tenders, asserting that arbitrary terminations undermine public trust and the integrity of contractual relationships. The decision to cancel the tender was deemed arbitrary as it lacked a genuine public interest justification and was not supported by evidence of financial loss or technical faults. (Paras 123-129)
(C)
Findings of Court:
The cancellation of the tender was found to be arbitrary, lacking a legitimate basis, and influenced by external pressures rather than genuine administrative concerns. The court ruled that the appellant's rights were vested and should be upheld despite changes in policy or management. (Paras 130-134)
(D)
Result: The appeal was allowed, the notice of cancellation was quashed, and the High Court's order was set aside.
JUDGEMENTJ.B. PARDIWALA, J.: For the convenience of exposition, this judgment is divided in the following parts: -
INDEX A. FACTUAL MATRIX ................................................................................ B. IMPUGNED ORDER ................................................................................ C. DEVELOPMENTS THAT OCCURRED DURING THE PENDENCY OF THE PRESENT APPEAL. ............................................................... D. SUBMISSIONS ON BEHALF OF THE APPELLANT ........................ E. SUBMISSIONS ON BEHALF OF THE RESPONDENT ..................... F. POINTS FOR DETERMINATION ........................................................ G. ANALYSIS ............................................................................................... i. Scope of Judicial Review of the actions of the State in matters relating to Contract / Tender under Writ Jurisdiction. ................................................ 19 a. Earlier Position of Law and Misconception of the State as a Largesse. .............. 19 b. Concept of ‘Public Law’ Element: Scope of Judicial Review in Contractual Matters. ............................................................................................................. 25 c. Meaning and True Import of Arbitrariness of State Actions in Contractual Disputes. ........................................................................................................... 47 ii. Whether the action of cancelling the tender is arbitrary or unfair and in consequence of violation of Article 14 of the Constitution? ........................ 53 a. Scrutiny of Internal File-Notings and Deliberations of the State. ........................ 55 b. Concept of Public Interest in Administrative Decisions. .................................... 69 iii. Sanctity of Public-Private Partnership Tenders ......................................... 77 H. FINAL CONCLUSION ........................................................................... 1. This appeal arises out of the final judgment and order dated 25.05.2023 passed by the High Court of Calcutta in M.A.T. No. 744 of 2023 (“Impugned Order”), by which the High Court upheld the decision of the respondent to cancel the tender that had been awarded to the appellant for the maintenance of two underpasses on Public-Private Partnership basis, and thereby dismissed the writ appeal filed by the appellant.
A. FACTUAL MATRIX 2. The respondent floated a tender notice dated 12.05.2022 inviting bids for the maintenance of two underpasses on the Eastern Metropolitan Bypass and its abutting area against a License Fee for Advertisement Rights over designated sites at each underpass, for a period of 10-years. As per the aforesaid tender, the scope of work included the regular maintenance of the aforementioned underpasses and the upkeep of its garden area and electro-mechanical fittings.
The relevant portion reads as under: -
No Name of Work License Fee of the Yearly Charge for the 1st year (Rs.)
Allotted Time Period for License & Work (1) (2) (3) (4) (5)
1. REGULAR MAINTENANCE OF BELIAGHATA UNDERPASS INCLUDING UPKEEPING OF UNDERPASS PROPER, GARDEN AREA, AT GRADE UNDERPASS AREA AND ALL ELECTRO-MECHANICAL FITTINGS AGAINST LICENSE FEE OF ADVERTISEMENT RIGHTS OVER (10) YEARS.
Tender ID – 2022_KMDS_380215_1 TO BE QUOTED 5,00,000.00
[Rupees Five Lakh Only]
Online (Net Banking/ NEFT/RTGS) 10 (Ten) Years
2. REGULAR MAINTENANCE OF SWABHUMI UNDERPASS INCLUDING UPKEEPING OF UNDERPASS PROPER, GARDEN AREA, AT GRADE UNDERPASS AREA AND ALL ELECTRO-MECHANICAL FITTINGS AGAINST LICENSE FEE OF ADVERTISEMENT RIGHTS OVER (10) YEARS.
Tender ID – 2022_KMDS_380215_1 TO BE QUOTED 5,00,000.00
[Rupees Five Lakh Only]
Online (Net Banking/ NEFT/RTGS) 10 (Ten) Years
3. Pursuant to the aforesaid, the tendering process was undertaken and the appellant herein on 13.06.2022 submitted his bid with a quotation of Rs. 29,55,555/- for the Beliaghata Underpass and Rs. 23,55,555/- for the Swabhumi Und
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