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TMI Blog1986 (5) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2 and 3. The appellant as a registered contractor has been supplying fresh buffaloes and cows milk to respondent Nos. 2 and 3 as per the requirements for the last twenty years. The appellant is on their approved list for the same period and his supplies and work were always appreciated and accepted by the respondents for all these periods. The appellant is also capable of supplying any quantity of pasteurized milk and, indeed, he had been supplying to various organisations the milk and milk products and also pasteurized milk. Later on Respondent No. 2, the officer- incharge of the Military Farms, Pimpri, directed that the local purchase of milk be stopped and regular supply under a contract by inviting tenders be effected. Accordingly, the appellant's contract for supply of fresh buffalo and cow milk ended in 1984 The Military Farm had its own plant for pasteurization and for all these years respondents Nos. 2 and 3 had been making purchases of only fresh buffalo milk and used to pasteurize the milk for their own purposes in their own plant. The plant of respondents 2 and 3 is very much in operation till to-day and also on the date of inviting tenders in question . Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The rates given by the appellant in the tender for supply of fresh buffalo milk was lower and tender of respondent No. 4 could be of no consequence as it was for a different item not contemplated by the tender notice. The tender given by Respondent No. 4 was however accepted on November 19-20, 1985 and the tender of the appellant was rejected although it was lower than that of respondent No. 4. The concerned officer had made a report to the higher authorities about the two tenders, one from the appellant and the other from respondent No. 4, vide letter dated August 23, 1985. It will be appreciated at this stage to refer to the advice given by the officer concerned which is as follow: "CONCLUSION OF CONTRACT FOR SUPPLY OF MILK AT PR MF KIRKEE / PIMPRI. 1. Reference discussion DDME and ADMP of date. 2. The information required is given below: (a) The cost of blended milk and standard milk taking the buff milk rate of ₹ 421 for 100 litres works out to: i) Blended Milk (Taking -Rs.3.59per lit of BMP ₹ 28 per kg.) 10% price preference -Rs.0.36 -------- ii) Standard Milk (Taking cost of -Rs.3.48 per litre separated milk ₹ 2.30 per litre) 10% price p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was absolutely no justification whatsoever for not accepting the tender of the appellant. To start with the appellant had made an offer of Rupees four hundred fifty per hundred litres but para 16 of the tender notice provided for negotiations by respondents 2 and 3 with the contractors on rates or otherwise. As a result of subsequent negotiations between the appellant and the respondents, the offer of ₹ 450 was reduced to ₹ 421 per hundred litres. If the tender notice had indicated for the supply of pasteurized milk there was no difficulty for the appellant to have done so. But in the absence of any such indication in the tender notice and in the absence of any subsequent negotiations between the appellant and the respondents under para 16 of the tender notice, the appellant offered to supply the buffaloes or cows fresh milk. Feeling aggrieved by the rejection of his tender, the appellant challenged the order of the authority concerned by a Writ Petition in the High Court. The Writ Petition was, however, dismissed in limine by a cryptic order as under: "Heard both sides. The Writ Petition involves Questions relating to contractual obligations. Even otherwise, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in rejecting the tender of the appellant. It was contended for the appellant that he being the lowest bid der, the authorities concerned acted arbitrarily in accepting the bid of respondent No. 4 which was higher than that of the appellant. We find considerable force in this contention. In Ramana Dayaram Shetty v. The International Airport Authority of India and Ors., [1979] 3 SCR 1014, this Court laid down the law in this respect in the following words: "Where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largess must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contended for the appellant that the tender submitted by respondent No. 4 did not satisfy the requirement of para 2 of the tender notice. The tenders had been invited for the supply of pure fresh buffaloes milk or fresh cows milk but the respondent had submitted tender for supplying pasteurized milk, and therefore, the tender submitted by respondent No. 4 being not in conformity with the tender notice should not have been accepted by the authorities. In any case, if the tender of respondent No. 4 regarding supply of pasteurized milk was accepted and the original terms of the tender notice were changed, the appellant should have been given an opportunity to submit his tender in conformity with the changed terms but this was not done which has caused serious prejudice to the appellant. If the tender forms submitted by any party is not in conformity with the conditions of the tender notice the same should not have been accepted but the authorities concerned arbitrarily and in a fanciful manner accepted the tender of respondent No. 4. The State of its instrumentality has to act in accordance with the conditions laid down in the tender notice. In any case if the authorities chose to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the prescribed form were invited from Registered Second Class Hoteliers having at least five years experience for putting up and running a Second Class Restaurant and two Snack Bars at the Bombay Airport for a period of three years. Paragraph 8 stated that the acceptance of the tender would rest with the Airport Director who does not bind himself to accept any tender and reserve to himself the right to accept or reject any tender received without assigning any reason therefor. Out of the six tenders received only the tender of the 4th Respondent was complete and offered the highest amount as licence fee. All the other tenders were rejected because they were incomplete. As the 4th respondent did not satisfy the description of a Registered Second Class Hotelier having at least five years experience prescirbed in paragraph (1) of the tender notice, the first respondent called upon the 4th respondent to produce documentary evidence whether they were registered second class hoteliers having at least five years experience. The Fourth Respondent stated once again that they had considerable experience of catering for various reputed commercial houses, clubs, messes and banks and that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal." Shri Anil Dev Singh, appearing for the respondents, has contended that respondent No. 4 being the State Government agency was rightly awarded the contract as per the policy of the Government of India as laid down in Letter No. 12(1)/1/85/D/(QS) dated August 13, 1985. The policy adopted by said letter dated August 13, 1985 came in after the 16th July, 1985 when respondent No. 2 issued tender notice for the supply of fresh buffalo or cow milk. As such the notification dated August 13, 1985 is of no avail to the respondent in so far as the acceptance of the tender of respondent No. 4 is concerned. Acceptance or rejection of tender made by the appellant or the respondent No. 4 will depend upon the compliance of the terms of tender notice. It is true that the Government may enter into a contract with any person but in so doing the State or its instrumentalities cannot act arbitrarily. In the instant case, tenders were inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving effect to the orders of the Central Government issued under Section 27A, priority is accorded in the matter of transport of goods consigned to Central or State Government or class of goods specified in the general or special order issued in this behalf, the action of the railway administration in complying with such special or general order could not be said as tentamounting to giving undue or unreasonable preference or advantage to or in favour of any particular person or railway administration. What section 28 forbids is discrimination in the matter of transport of goods against a class but this is subject to the permissible classification that would be introduced by a special or general order issued by the Central Government in exercise of the power conferred by Section 27A. It may be recalled that the Preferential Traffic Schedule according to Priority `C' to transport of coal by those mentioned therein has been issued in exercise of the power conferred by Section 27A. Therefore, the submission that petitioners in the matter of transport of coal are similarly situated with the Central or State Government or transporters given priority by general or special order iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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