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TMI Blog2006 (12) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent, acting on behalf of the Water Resources Department, State of Orissa, invited tenders for "construction of Right Extension Main Canal from RD 8.01 km to 9.03 km including structures" by tender notice dated 9.11.2004. The estimated value of the work as per the tender schedule was Rs.1,69,10,506. In response, 17 tenders were received. The offer of the fifth respondent was the lowest (Rs. 1,22,99,099) and the offer of appellant (J. Mandal) was the second lowest (Rs.1,29,36,579). The Executive Engineer recommended the acceptance of the tender of fifth respondent. 4. The fifth respondent furnished the Earnest Money Deposit (EMD) by pledging a postal Term Deposit of Rs.1,70,000/- (Passbook No.154120 dated 6.12.2004 issued by the Post Master, Mukhiguda) in favour of the second respondent. A written complaint was received by the Department alleging that fifth respondent had made a postal deposit of only Rs.7,000 and had defrauded the Department by altering the figure in the passbook as Rs.1,70,000. In view of the said complaint, the Superintending Engineer wrote to the concerned Post Office on 3.2.2005 requesting confirmation about the authenticity of the said Term deposit. A si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The reasons were furnished in the following reply dated 25.8.2005 of the Post Master General: I am directed to intimate that 1 yr. TD A/c No.154120 for Rs.1,70,000/- has not actually been opened at Mukhiguda SO on 06.12.2004 depositing the amount. But one pass book bearing 1 yr. TD A/c No.154120 has been prepared out of record by the holder Sri Narayan Mohanty in connivance with the SPM Mukhiguda and the said P.B. has been pledged to the Executive Engineer RCD III, Jungarh on 06.12.2004 itself. As 1 yr. TD A/c No.154120 has been prepared without any amount deposited in post office it has been intimated in this office letter of even no. dt. 30.3.2005 not to take into account the TD A/c No.154120 for Rs.1,70,000/- submitted by Sri Narayan Mohanty towards office requirement. 8. The said communication dated 25.8.2005 was placed before the High Court with an affidavit of the Executive Engineer. When the matter came up on 29.8.2005, the High Court appears to have observed that the Department should prosecute the fifth respondent if he had dishonestly Page 0096 and fraudulently tried to secure a contract by utilizing a fake Post Office T.D. Account book. The Government Advocate, conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.02 km', by tender notice dated 9.11.2004 issued by the second Respondent. The estimated cost of the tender schedule work was Rs. 2,23,10,768. There were 14 tenders in response to the said tender notice. Fifth respondent was the lowest tenderer (Rs.1,45,80,338). Laxman Sharma, the appellant was the second lowest tenderer (Rs.1,69,56,180). The Executive Engineer recommended the acceptance of the tender of fifth respondent. 11. One of the main items of work to be executed was 'cement concrete lining' - Item No. 19 of the tender schedule. It was the last among the items of work to be executed. It accounted for nearly one-fifth of the estimated cost of the work. The estimated rate for that item was Rs.2020.50 per cu.m. and the estimated Page 0097 total cost was Rs.41,47,581. The fifth respondent, however, quoted a rate of Rs.20 per cu.m., for item no. 19, in all Rs.41,055. The rate quoted was less than 1% of the estimated rate and thus an unduly low rate. 12. The Committee considered the tenders on 24.3.2005. By proceeding dated 24.3.2005, the lowest tender submitted by the fifth respondent was rejected for the following reasons: a) That in regard to the adjoining work (RD 8.01 k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the contracts awarded to the appellants. 15. In the first case, it was contended that the decision of the committee that the EMD was defective, was based on the communication dated 14.3.2005 of the postal authorities requiring the committee not to take note of the Page 0098 TD passbook for Rs.1,70,000; that the Post Master General had also subsequently confirmed vide communications dated 30.3.2005 and 25.8.2005 that the TD passbook furnished by the fifth respondent was manipulated/forged and not to be acted upon; and that the High Court committed an error in ignoring the findings of the postal department, and in relying on an incomplete inquiry report of the Officer in-charge of the Junagarh police station, submitted during the pendency of the writ petition. Reliance is also placed on the reports placed by the State Government before this Court in pursuance of the order dated 4.9.2006 which showed that Rs.1,70,000 was not deposited by the fifth respondent on 6.12.2004. 16. In the second case, it was contended that the High Court had wrongly allowed the writ petition, without even referring to the facts or considering the contentions. It was submitted that the High Court oug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facets pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. This Court also noted that there are inherent limitations in the exercise of power of judicial review of contractual powers. This Court also observed that the duty to act fairly will vary in extent, depending upon the nature of cases, to which the said principle is sought to be applied. This Court held that the State has the right to refuse the lowest or any other tender, provided it tries to get the best person or the best quotation, and the power to choose is not exercised for any collateral purpose or in infringement of Article 14. 18.3) In Raunaq International Ltd. v. I.V.R. Construction Ltd. , this Court dealt with the matter in some detail. This Court held: The award of a contract, whether it is by a private party or by a public body or the State, is essentially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges, retardation of industrial development, hardship to the general public and substantial cost escalation. When a writ petition is filed in the High court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business with the government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest.... 18.6) In B.S.N. Joshi v. Nair Coal Services Ltd. 2006 (11) SCALE 526, this Court observed: It may be true that a contract need not be given to the lowest tenderer but it is equally true that the employer is the best judge therefor; the same ordinarily being within its domain, court's interference in such matter should be minimal. The High Court's jurisdiction in such matters being limited in a case of this nature, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the face of the record. 19. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. Its purpose is to check whether choice or decision is made 'lawfully' and not to check whether choice or decision is 'sound'. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic Works Department Code ('code' for short) requires the authority considering the tenders to take into consideration several points while determining the validity of the tenders. Two of the points to be so taken into account are whether the tenderer has made the specified EMD and whether the rates quoted contain any unduly low and unworkable rates. 21. The tender conditions give an option to the tenderer, to furnish earnest money deposit, by pledging NSC/postal time deposit/postal saving passbook/deposit receipts issued by any nationalized Bank. The first respondent pledged a postal TD Account passbook relating to a Deposit of Rs.1,70,000 in fulfilment of the condition regarding EMD. The Department is entitled to verify the genuineness of the TD passbook to ensure that the required EMD is furnished. In this case, even before the Committee could consider the tenders, a complaint was also received alleging that the TD passbook produced by fifth respondent was tampered and manipulated. It was therefore but natural for the Department to seek confirmation from the Postal Department as to whether the TD Passbook was genuine and valid. Its query elicited a Page 0103 reply from the Supe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher authority, namely the Superintendent of Police, Kalahandi, states that fifth respondent had obtained a pre-dated passbook in connivance with the Sub-Post Master Mukhiguda. 23. We have referred to various reports only to show that there exist divergent views about the genuineness of the TD passbook. It is wholly unnecessary to record a definite finding on the issue whether the TD passbook submitted by one of the tenderers towards EMD is genuine or forged. In this case, as the Superintendent of Post Offices informed the department that the postal TD passbook produced by fifth respondent should not be acted upon, the Committee proceeded to hold that his tender was 'non-responsive' or defective as it was not accompanied by a valid EMD. In such circumstances, the limited question that had to be considered in a writ petition filed by the unsuccessful tenderer is whether the Committee acted unreasonably in taking such a decision. There can be no doubt that it did not. The tender was to be accompanied by an EMD as prescribed. If the postal department which issued the TD passbook pledged by Page 0104 the fifth respondent towards EMD, said that it should not be acted upon, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong in rejecting the TD passbook. Further, the High Court missed the issue. The question for consideration was not whether the TD passbook pledged by the fifth respondent is genuine or not. The question for consideration was whether the committee acted arbitrarily or irrationally in rejecting the said TD passbook. 26. The learned Counsel for fifth respondent submitted that if the Committee had proceeded on an incorrect basis of facts, then the decision was open to judicial review. Reliance was placed on the following observations of the House of Lords in Secretary of State for Education and Science v. Metropolitan Borough of Tameside 1976 (3) All ER 665: In many statutes a Minister or other authority is given a discretionary power and in these cases the court's power to review any exercise of the discretion, though still real, is limited. In these cases it is said that the courts cannot substitute their opinion for that of the Minister; they can interfere on such grounds as that the Minister has acted right outside Page 0105 his powers or outside the purpose of the Act, or unfairly, or on an incorrect basis of fact. But there is no universal rule as to the principles on which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the work. In regard to the said work, as against the rate of Rs.2020.50 per cu.m., estimated by the department, the fifth respondent quoted an absurdly low rate of Rs. 20 only which was less than 1% of the estimated rate. It is obvious that he could not have executed the work at that rate. The CC lining being the last work, there was every likelihood of the tenderer executing the other items of work for which he had quoted much higher rates than others and leave out the last item, or raise same dispute thereby jeopardizing the work and causing delay. It is true that a contractor could have an answer by contending that he had priced the Page 0106 other items of work in a manner which enabled him to quote a very low rate for one of the items. But then the committee is entitled to consider the effect of such freak rates. Where the absurdly low rate is in regard to a large item of work, which has to be executed at the very end, it is possible for the committee to suspect some ulterior motive on the part of the tenderer. If the committee felt that there was a reasonable possibility of the contractor leaving the work midway on account of the rate quoted for the last item of work ..... X X X X Extracts X X X X X X X X Extracts X X X X
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