M/S Bhat Constructions vs Ut Of Jammu And Kashmir And Ors

1 Through the medium of instant petition, the petitioner has challenged Cancellation Notice bearing No. PHQ\3516-22 dated 17/12/202 in terms

whereof e-NIT No. 23 of 2020-21 for item No.1 has been cancelled. A further direction to the respondents to open the financial bid of the petitioner

along with other eligible tenderers for e-NIT No.23 and to allot the contract for Retrofitting of Water Supply Scheme Waltengoo in favour of the

lowest tenderer in terms of e-NIT No. 23 of 2020-21 has also been sought against the respondents. Apart from the above, the petitioner has also

prayed for a Writ of Prohibition, restraining the respondents from issuing a fresh tender for the aforementioned works.

2 As per case of the petitioner, vide e-NIT bearing no 23/PHEQ of 2020-21 dated 25/09/2020, respondent No.4 issued a tender notice for the purpose

of execution of various works including the work pertaining to Retrofitting of Water Supply Scheme Waltengoo by way of providing, laying and fitting

of pipes, construction of chain link fencing around SR Chitergam, laying of dome to existing RR at Wasaknag, including installation of 198 numbers

FHTC’s for WSS Waltengoo (under JJM). The petitioner is stated to have offered his bid in response to the aforesaid tender notices. As per the

contents of the tender notice bearing 23/PHEQ of 2020-21, the technical bid was to be opened on 07.10.2020.

3 It is the case of the petitioner that regarding item No.1 of e-NIT No. 23, only two tenderers/bidders including the petitioner had qualified for the said

item in the technical bid. It is contended that having qualified in the technical bid for item No.1 as aforestated, the petitioner- firm was having

legitimate expectation to qualify in the financial bid in respect of the aforesaid item which would have entitled it to grant of contract for the aforesaid

work, but the respondents, in terms of the impugned notice dated 17.12.2020 cancelled e-NIT bearing No. 23 of 2020 so far as it pertained to certain

items including item No.1.

4 The petitioner has challenged the aforesaid Cancellation Notice on the grounds that the action of the respondents is shrouded in mala fides; that the

action of cancellation of e-NIT by the respondents is unreasonable and unjustified in law; that by the impugned action of the respondents, larger public

interest has been harmed, inasmuch as the work, that was to be executed, was for the benefit of the public at large; that the ground on which the

impugned notice of cancellation has been issued by the respondents, is not plausible; that the impugned actions of the respondents are violative of the

rights of the petitioner as it had a legitimate expectation of being the successful bidder for allotment of the contract.; that the respondents have

resorted to selective cancellation of e-NIT No. 23 while allowing it to proceed in respect of certain other items.

5 The writ petition has been resisted by the respondents by filing reply thereto. In their reply, the respondents have submitted that none of the rights of

the petitioner has been violated due to the impugned action of the respondents, as such, the petition itself is not maintainable. On merits, it has been

submitted that after undertaking technical evaluation of the bids it was found that only two tenders were received for item No.1 of e-NIT No. 23 and

both the bidders had served notices under Section 80 of CPC challenging the qualification of technical bid of each other. According to the respondents,

in such an atmosphere coupled with the fact that there was meager experience of the bidders for execution of similar works, the respondents were

prompted to resort to cancellation of tender and, accordingly, e-tendering process was cancelled and a decision was taken to float fresh tender so as

to have healthy competition. The respondents have also disputed the experience of the petitioner in execution of works. It has also been contended

that because only two bids were received, as such, there was very poor competition which prompted the respondents to cancel the tender and invite

fresh tenders.

6 I have heard learned counsel for the parties and perused the record.

7 The main ground urged by the petitioner during the course of arguments is that the petitioner had qualified the technical bid and, as such, legitimate

expectation had arisen in its favour that its bid would have found favour with the respondents which would have paved way for award of contract in

its favour. The other ground urged by the petitioner is that the action of the respondents is arbitrary and illegal, inasmuch as they have resorted to

cancellation of tender only in respect of selective items and not in respect of all the items.

8 Before embarking on determination of the merits of the aforesaid submissions of learned counsel for the petitioner, let me analyze the scope of

jurisdiction of the Court to review the decisions of the public authorities in matters relating to tenders.

9 The Supreme Court in the case of Tata Cellular v. Union of India, (1994) 6 SCC 651, has laid down the principles relating to scope of judicial review

in contract and tender matters in the following words:

“(1) The modern trend points to judicial restraint in administrative action.

(2) The court does 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.

Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers.

More often than not, such decisions are made qualitatively by experts.

(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 expenditureâ€​

10 In Dwarkadas Marfatia and Sons v. Port of Bombay,(1989) 3 SCC 293, the Supreme Court has held that the constitutional courts are concerned

with the decision making process and that if a decision, having been arrived at through a valid process, is challenged, the constitutional courts can

interfere if the decision is perverse. The Court further observed that the constitutional courts are expected to exercise restraint in interfering with the

administrative decisions and ought not to substitute its view for that of the administrative authority.

11 In Central Coalfields Limited and another v. SLL- SML (Joint Venture Consortium) and others, (2016) 8 SCC 622, it was held that the decision

making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with and that the

interference is permissible only if the decision making process is mala fide or is intended to favour someone. The Court further went on to hold that

the decision should not be interfered with unless the decision is so arbitrary and irrational that the Court could say that the decision is one which no

responsible authority acting reasonably and in accordance with law could have reached. In other words, the decision-making process or the decision

should be perverse and not merely faulty or incorrect or erroneous.

12 In Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, the Supreme Court laid down tests for judicial interference in administrative actions. The

same are reproduced as under:

22......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 say: the decision is such that no responsible

authority acting reasonably and in accordance with relevant law could have reached:

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference under Article 226.

13 In the backdrop of aforesaid legal position and bearing in mind that scope of judicial review in administrative matters, especially in those pertaining

to tender matters, is very limited, let me now advert to the facts of the instant case.

14 The first ground urged by the petitioner is that upon being successful in the technical bid, the petitioner had a legitimate expectation of getting the

contract. Per contra, the respondents have contended that no right much less an enforceable legal right had accrued in favour of the petitioner merely

upon submission of its bid.

15 In the instant case, there is no dispute to the fact that the tender has been cancelled by the respondents at a stage when even the financial bid was

not opened. The petitioner had merely submitted its bid in response to the tender notice and, according to it, it had qualified the technical bid. Although,

the petitioner has placed on record some office noting to support his contention that he had qualified the technical bid, yet there is nothing authentic on

record to substantiate this fact. In fact, the respondents have specifically stated in their reply that petitioner did not have the necessary work

experience. Be that as it may, the fact remains that the respondents have cancelled the tender notification in respect of the item regarding which the

petitioner had submitted its bid at a stage when the said bid was yet to be accepted. A tender notice is nothing more than an invitation to offer. Unless

the offer of tenderer in response to such an invitation is accepted is accepted by the employer, it cannot be stated that a concluded contract has taken

place between the parties.

16 In the backdrop of aforesaid facts, the question, that arises for consideration, is about the scope of the Writ Court to interfere in matters pertaining

to cancellation of tenders at a stage when the bids are yet to be accepted.

17 The Supreme Court had an occasion to rule on the scope of judicial review into the cancellation/discharge of a tender process after submission of

bids/tenders in the Judgment reported at (2014) 3 SCC 760, Maa Binda Express Carrier and another vs Northeast Frontier Railway and ors. So far as

the right of participants in the bid is concerned, in para 8 of the said judgment, the Supreme Court has held as under:

“The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of

decisions of this Court. While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard

to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice

inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders

participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the

highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the

Government. All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of

their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the

basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not

open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers.

So also the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such

relaxation is permissible under the terms governing the tender processâ€​.

18 This Court, in the case of Drangdhuran Hydro Power Consortium and another Vs Chenab Valley Power Projects Private Limited and others

(OWP No.635/2016, decided on 28.01.2017) while upholding the cancellation of tender notices and issuance of fresh tenders, held that such actions

are immune from judicial review in the absence of mala fide, prejudice, unreasonableness, arbitrariness and extraneous consideration.

19 From the aforesaid enunciation of law on the subject, it is clear that participating bidders are only entitled to a fair, equal and non-discriminatory

treatment in the matter of evaluation of their tenders and they have no right to insist that their tenders should be accepted. Unless it is shown that the

process adopted or the decision taken by the respondents with regard to cancellation of tender is mala fide or intended to favour someone, a tenderer

has no right to challenge the same. In the instant case, although the petitioner has made a vague allegation that the action of the respondents is mala

fide in nature, but neither there is any specific allegation, nor it has been pleaded as to who is the intended beneficiary of the action of the respondents.

Therefore, the petitioner has failed to show that the action of cancellation of tender by the respondents is shrouded in mala fides or favoritism.

20 It has been further contended by learned counsel for the petitioner that the petitioner had a legitimate expectation of getting the award of contract

in its favour after submitting the bid and after succeeding in the technical bid. Although, it is disputed by the respondents that the petitioner had

succeeded in the technical bid, yet assuming that the petitioner did so, still then even in such eventuality, the Court is required to consider as to whether

the respondents had made a representation or held out a promise to grant contract to the petitioner. Further, even if it could be held that there was a

promise or representation made by the authorities to the petitioner, it has to be shown that such a promise or representation gives rise to a basis for

holding the Government bound by the same.

21 In the instant case, there was no promise made by the respondents to grant the contract to the petitioner. The cancellation of tender took place at a

stage when only bids were invited by respondents and even the financial bids were not opened. Thus, there is no question of holding the respondents

bound by any promise which, in the facts and circumstances of the case, was not even in existence. Even otherwise, the Government is well within its

powers to withdraw from its representation/promise or change its policy if the same is in public interest.

22 Apart from the above circumstances, in the instant case, only two bids were received by the respondents in response to the tender notice which

means that there was poor response to it. The respondents were, therefore, well within their rights to cancel the entire process and issue fresh tenders

to explore the possibility of having a healthy competition. In fact, clause 14 of the tender notice authorizes respondent No. 2 to reject any or all tenders

without assigning any reasons thereof. It reads as under:

“14.0 The Chief Engineer PHE Kashmir/Superintending Engineer Hydraulic Circle Anantnag/Kulgam/Anantnag HQ;

Anantnag/Executive Engineer, PHE Division, Qazigund ( (whichever applicable) reserves the right to postpone the

tendersubmission/opening date and to accept/reject any or all tenders without assigning any resaons thereof. The decision of the Chief

Engineer PHE Kashmir/Superintending Engineer Hydraulic Circle Anantnag/Kulgam/Anantnag HQ; Anantnag/Executive Engineer, PHE

Division, Qazigund (whichever applicable) after assessment of suitability as per eligibility criteria shall be final and bindingâ€​

The aforesaid clause, thus, specifically entitles the tender inviting authority to reject any or all the tenders without assigning any reasons.

23 The petitioner participated in the tender process accepting the terms and conditions including the above condition as well. Therefore, having

accepted those conditions, the petitioner is not entitled to question the cancellation of tender notice, more particularly when it is not put to any prejudice

or hardship by such cancellation. It is not the case of the petitioner that it could not participate in the fresh tender process, as such, there is absolutely

no prejudice against it.

23 For all the foregoing reasons, I find no merit in this petition. The same is, accordingly, dismissed. Interim order dated 31.12.2020 passed by this

Court shall stand vacated.