TMI Blog2012 (8) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... aid criterion was withdrawn by the KSRTC. Thereafter, the KSRTC modified the pre-qualification criteria and issued a Tender being No. G-23-07 dated 05.07.2007 wherein, a new pre-qualification criterion was specified. (c) Being aggrieved by the said pre-qualification criteria, the Appellant-Company preferred a Writ Petition being No. 11951 of 2007 before the High Court. By judgment dated 13.09.2007, the learned Single Judge of the High Court dismissed their writ petition. (d) Challenging the said judgment, the Appellant filed a Writ Appeal being No. 1928 of 2007 before the Division Bench of the High Court. By impugned judgment dated 02.07.2008, the Division Bench of the High Court dismissed the same. (e) Being aggrieved by the said judgment, the Appellant-Company has preferred this appeal by way of special leave before this Court. 4. Heard Ms. Madhurima Tatia, Learned Counsel for the Appellant-Company and Mr. S.N. Bhat, Learned Counsel for Respondent Nos. 2 3 and Mr. V.N. Raghupathy, Learned Counsel for the State. 5. Ms. Madhurima Tatia, Learned Counsel for the Appellant-Company, after taking us through the tender pre-qualification criteria and their performance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Only the tyre manufacturers who have supplied a minimum average of 5000 sets of Tyres, Tubes and Flaps set per annum, in the preceding three years out of 2003-04, 2004-05, 2005-06 and 2006-07 to any one of the OE chassis manufacturer, i.e. Ashok Leyland, Tata Motors, Eicher, Swaraj Mazda and Volvo are eligible to participate, for supply of respective size/type of Tyres, Tubes and Flaps set. They should produce purchase order copies and invoice supplies in support of the same. (b) The firm should have minimum average annual turnover of ₹ 500 crores in the preceding three years out of 2003-04, 2004-05, 2005-06 and 2006-07 from the sale of tyres, Tubes and Flaps. 8. Being aggrieved by the above-mentioned conditions, viz., 2(a) and 2(b) of the tender dated 05.07.2007, the Appellant- Company preferred W.P No. 11951 of 2007 before the High Court. After filing of the said writ petition, before opening of the tender bids, the KSRTC amended the tender conditions as were incorporated in the earlier tender document replacing Condition Nos. 2(a) and 2(b) with Condition Nos. 4(a) and 4(b). Condition Nos. 4(a) and 4(b) read as under: 4. Pre-qualification criteria for procurement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. ... (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts 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. 11. In Raunaq International Ltd. v. I.V.R. Construction Ltd. and Ors. (1999) 1 SCC 492, this Court reiterated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scathed. 23. Reasonableness of restriction is to be determined in an objective manner and from the standpoint of interests of the general public and not from the standpoint of the interests of persons upon whom the restrictions have been imposed or upon abstract consideration. A restriction cannot be said to be unreasonable merely because in a given case, it operates harshly. In determining whether there is any unfairness involved; the nature of the right alleged to have been infringed, the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing condition at the relevant time, enter into judicial verdict. The reasonableness of the legitimate expectation has to be determined with respect to the circumstances relating to the trade or business in question. Canalisation of a particular business in favour of even a specified individual is reasonable where the interests of the country are concerned or where the business affects the economy of the country. (See Parbhani Transport Coop. Society Ltd. v. Regional Transport Authority, Shree Meenakshi Mills Ltd. v. Union of India, Ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the Petitioners therein was that fixing such high turnover for such a new business is only for the purpose of advancing the business interests of a group of companies having foreign links and support. It is impossible for any indigenous manufacturer of security plates to have a turnover of approximately 12.5 crores from the high security registration plates which were sought to be introduced in India for the first time and the implementation of the project has not yet started in any of the States. On behalf of the Union of India, the State authorities and Counsel appearing for the contesting manufacturers, in their replies, have tried to justify the manner and implementation of the policy contained in Rule 50 of the Motor Vehicles Rules. On behalf of the Union of India, learned ASG submitted that Rule 50 read with Statutory Order of 2001 issued Under Section 109(3) of the Motor Vehicles Act, the State Governments are legally competent to formulate an appropriate policy for choosing a sole or more manufacturers in order to fulfil the object of affixation of security plates. The Scheme contained in Rule 50 read with the Statutory Order of 2001 leaves it to the discretion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opoly, as contended, in violation of Article 19(1)(g) of the Constitution read with Clause (6) of the said article. As is sought to be pointed out, the implementation involves large network of operations of highly sophisticated materials. The manufacturer has to have embossing stations within the premises of the RTO. He has to maintain the data of each plate which he would be getting from his main unit. It has to be cross-checked by the RTO data. There has to be a server in the RTO's office which is linked with all RTOs in each State and thereon linked to the whole nation. Maintenance of the record by one and supervision over its activity would be simpler for the State if there is one manufacturer instead of multi-manufacturers as suppliers. The actual operation of the scheme through the RTOs in their premises would get complicated and confused if multi-manufacturers are involved. That would also seriously impair the high security concept in affixation of new plates on the vehicles. If there is a single manufacturer he can be forced to go and serve rural areas with thin vehicular population and less volume of business. Multi-manufacturers might concentrate only on urban areas w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. 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 contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Courts is very limited; (c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted; (d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and (e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government. 20. Therefore, a Court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions: (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: the decision is such that no responsible auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and reliable supply of materials and there was no ulterior motive in stipulating the said conditions. 25. Both the Counsel for the Respondents have brought to our notice that the two impugned conditions were incorporated in the tender notice pursuant to a decision of the Contract Management Group (CMG) of the KSRTC, which is an institutional mechanism for the purpose of devising proper method in the matter, inter alia, of procurement of materials to the KSRTC. The said Group consists of various high level officials representing different departments of KSRTC. The CMG constitutes of the following officials: a) Managing Director, Bangalore Metropolitan Transport Corporation b) Managing Directors of four sister Corporations c) Director, Security Vigilance d) Director, Personnel and Environment e) Chief Accounts Officer f) Chief Engineer (Production) g) Chief Engineer(Maintenance) h) Chief Accounts Officer(Internal Audit) i) Controller of Stores and Purchase Thus it is clear that the said CMG is a widely represented body within the Respondent No. 2-KSRTC. 26. Further materials placed by KSRTC show that the CMG met on 17.05.2007 and deliberated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries vi) M/s MRF Ltd vii) M/s Michigan Rubber (Former Betul Tyres) It is brought to our notice that successful bidders were CEAT and JK Tyres. Accordingly, contracts were entered into with the said two companies by the KSRTC and the purchase orders were placed and they have also effected supplies and completed the contract and the KSRTC also made payments to the said suppliers. 30. It is pertinent to point out that the second Respondent has also issued 4 (four) more tender notices after the tender notice dated 05.07.2007. The said tender notices were dated 04.03.2008, 22.08.2008, 24.10.2008 and 19.03.2009. Pursuant to the tender notices dated 04.03.2008, 22.08.2008 and 24.10.2008, contracts have been awarded and have been substantially performed. It is also brought to our notice that all the said four subsequent tender notices also contained identical conditions as that of the impugned conditions contained in tender notice dated 05.07.2007. 31. As observed earlier, the Court would not normally interfere with the policy decision and in matters challenging the award of contract by the State or public authorities. In view of the above, the Appellant has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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