Ratan Kumar Gupta, Birendra Kumar Singh and Others, Bharat V. Patel and Shivam Enterprises vs State of Jharkhand and Others

Narendra Nath Tiwari, J.—The main grievance of the writ petitioners in all these writ petitions is almost common. These writ petitions are, thus, heard together with the consent of the parties and the same are being disposed of by this common order.

The writ petitioners are contractors. They are aggrieved by the decision of the Tender Committee, whereby the allotment of the works has been made in respect to the tender invited by the Drinking Water and Sanitation Department, Government of Jharkhand, Ranchi, being No. 1 of 2006-2007.

Notice was published inviting the said Tender (NIT for short), bearing No. 01 for construction/installation of 17,000/-tube-wells in 22 districts of the State of Jharkhand.

The petitioners, being old registered contractors of the department, participated in the said tender for different circles, namely, Deoghar, Ranchi, Chaibasa, Gumla, Medninagar and Giridih Circles.

A decision was taken by the Tender Committee in the meeting held on 20th April, 2007 that the person having Rig Machine registered in the State of Jharkhand and those persons, who are having Rig Machine, registered in other State as also persons having lease deed for the purpose of Rig Machine, the contract shall be awarded in the ratio of 4 : 3 : 2 and in any case maximum upto 125 tube-wells per Rig Machine.

The petitioners were in the hope of getting the works in accordance with the said ratio/decision. But deviating from the said decision, either no work was allotted to the eligible petitioners or the works allotted to some of them were not in accordance with the proper ratio. On the contrary, works were allotted to the private respondents even in contravention of the terms of the NIT.

The petitioners subsequently came to know that Tender Committee by its decision dated 8th February, 2007 sought to add one more condition that in spite of fulfilling other requirements, works will be allotted to only those tenderers, who furnish written consent/undertaking that, on allotment, they will commence the work within one week. No notice was served on the petitioners regarding the subsequent addition of the term and for want of knowledge they could not furnish the undertaking, which could have been easily done while the persons to whom favour was to be made they were informed about the same and undertaking was obtained and work was allotted.

Grievance of the petitioners is that the decision taken by the Tender Committee dated 8th May. 2007 is arbitrary and illegal, beyond the scope of NIT and was intended to exclude the experienced contractors and to favour the contractors of the choice of the respondents. The said decision provided a ground to discriminate the tenderers who could not furnish written undertaking within time for want of knowledge about such decision of Tender Committee taken behind their back.

The State respondents contested the said writ petitions, denying the allegations of the petitioners. According to the State respondents, the decision of the Tender Committee dated 8th May. 2007 is not in violation of or contrary to the terms specified in the NIT, rather it is in consonance with the terms of the NIT.

It has been stated that Clause 11 of the said NIT already provides that if within one week of the allotment of work order to any contractor, the work Is not commenced, the said work order will be cancelled and steps shall be taken for blacklisting of those contractors. The primary object was to ensure that hand-pumps/tube-wells are installed in all the districts of the State of Jharkhand to provide drinking water within the stipulated time. The decision dated 8th May, 2007 was taken in the public interest, keeping in view of the extreme heat of summer and to provide drinking water without any delay and with that public interest in view it was decided to give preference to those contractors, who submitted their tender and furnished their written consent/undertaking for starting the work forthwith. The said decision of the Tender Committee is, thus, neither contrary to the terms of the NIT nor beyond its scope.

According to the respondents, some of the petitioners, who got the work under the same terms and conditions, but not to the extent of the number applied for, have also complained against the decision of the Tender Committee dated 8th May, 2007, though bona fide decision was taken by the public authority in larger public interest for allotting the work to more numbers of contractors for installment of tube-wells in small fragments in order to ensure timely completion of the work. There was no illegality or arbitrariness in taking the decision in the meeting dated 8th May, 2007 and the complain of the petitioners is frivolous and baseless.

Before proceeding to decide the said issue, commonly involved almost in all the writ petitions, it is necessary to deal with the Individual case.

WP (C) No. 3026 of 2007 (Ratan Kiunar Gupta v. State of Jharkhand and Ors.) - In this writ petition, the petitioner has prayed for a direction on the respondents to issue work order in favour of the petitioner, as he is the oldest contractor of the district, having his own Rig Machine, registered in the State of Jharkhand and for declaring the entire decision-making process for the award of the tender for Giridih Circle as vitiated, arbitrary and illegal.

(i) The petitioner is a Government Contractor, registered under Group A in erstwhile State of Bihar since 1982. His application for renewal is pending before the State of Jharkhand, but he was allowed to participate in the tender by the Chief Engineer, Drinking Water and Sanitation Department, Government of Jharkhand. He participated in the tender and furnished all the relevant documents, as required by the BOQ. He was in the hope of getting allotment, but no work was allotted to him. He filed representation before the Department, but the same was not heeded upon. The petitioner, thereafter filed this writ petition.

(ii) It has been specifically stated that no notice was given to the petitioner regarding inclusion of condition under Clause-Ga by the decision of the Tender Committee dated 8th May, 2007, whereby a Clause requiring written consent/undertaking for commencing the work within one week as an essential condition for allotment was introduced.

(iii) The State respondents replied, stating, inter alia, that the condition required in Clause-Ga by the decision of the Tender Committee dated 8th May, 2007 was not arbitrary and was in consonance with the terms of the NIT and the same was taken in the public interest, keeping in view of the extreme summer heat in order to provide drinking water without any delay. The condition of the Tender Committee was bona fide, which does not attract any interference or review by this Court.

(iv) The petitioner''s grievance is contrary to his own prayer, as he has sought direction to issue work order to the petitioner under the same tender, which he has sought to assail. The petitioner''s complain that he was not given notice of the inclusion of the Clause is also denied. It is stated that Clause 25 of the NIT stipulates for publishing information on the Notice Board of every circle and that the said requirement of furnishing the written consent/undertaking was published on Notice Board of all the circles and the petitioner had sufficient opportunity to know about the said decision of the Tender Committee.

WP (C) No. 3031 of 2007 (Birendra Kumar Singh and Ors. v. State of Jharkhand and Ors.) - Similar prayer, as in WP (C) No. 3026 of 2007, has been made in this writ petition, praying for declaration of the entire decision-making process for the award of tender for Pakur Circle as vitiated, arbitrary and illegal. The petitioners, who claim to be the oldest contractors, having their own Rig Machine, were registered in the State of Jharkhand and they have taken other grounds, as were taken in the writ petition of Ratan Kumar Gupta.

The State respondents, in addition to the grounds taken in the case of Ratan Kumar Gupta, in Para 13 of the Counter affidavit, stated that the works have already been allotted to different contractors/firms on the basis of their written undertaking/consent submitted by them. The details have been given showing allotment of works. It has been stated that the works have been allotted in fragmentation to a number of persons/contractors and the allegation of favouring any person is wholly baseless.

WP (C) No. 3030 of 2007 (Bharat V. Patel v. State of Jharkhand and Ors.) - In this writ petition, the petitioner has prayed for a direction on the respondents to issue work order in favour of the petitioner, claiming himself as the oldest contractor of the district and having his own Rig Machine registered in the State of Jharkhand and for declaring the entire decision-making process for the award of the tender for Ranchi, Dhanbad, Hazaribagh and Simdega Circles as wholly illegal and arbitrary.

(i) In Para 20 of the writ petition, the petitioner has claimed that he was entitled to get at least 250 units of tube-wells, but no work has been allotted to him.

(ii) The respondents have contested the writ petition on the aforesaid ground and, in addition, in Para 9 of the counter affidavit, it has been stated that the petitioner has been allotted the work of 235 units of tube-wells in Group No. ANDH-1 for Dhanbad Circle and that the petitioner having got sufficient number of tube-wells Le. 235 out of 250 claimed by him under the same NIT and same process, the petitioner is not entitled to any relief and the writ petition is liable to be dismissed.

WP (C) No. 3002 of 2007 (Shivam Enterprises v. State of Jharkhand and Ors.) - In this writ petition, the petitioner has prayed for quashing the entire decision-making process with respect to ASMN-1 for Medninagar Circle, arising out of Tender Notice No. 1 of 2006-2007 and sought for a direction on the respondents to issue work order with respect to the said group for Medninagar Circle. Petitioner''s claim is based on the same ground as that of WP (C) No. 3026 of 2007.

The State respondents in their counter affidavit, in addition to the grounds taken in the aforesaid cases, stated that though the petitioner was declared L-1 along with other contractors, but did not give written consent/undertaking for executing the works immediately, whereas six other contractors out of ten in respect of Group No. ASMN-1 for Medninagar Circle had given their written consent/undertaking in terms of the decision of the high level Tender Committee dated 8th May, 2007. The work orders were given to the successful tenderers and the works have been allotted to them. In Para 13 of the counter affidavit, details of the said persons have been specifically mentioned.

According to the terms of the NIT, the work of installation of hand-pumps/tube-wells were to commence within one week of the allotment of work. The interveners in WP (C) Nos. 3026 and 3002 of 2007 who were allotted the works, appeared and claimed that the works allotted to them were substantially executed and they acted bona fide and looking to the urgency of the works and also in consonance with the terms and conditions under which these works were allotted to them. Though in some of the cases, the contractors, who were allotted the works, have been sought to be impleaded as party, but in some other even the persons, who were allotted the works, have neither been impleaded as party nor appeared.

The main issue involved in these writ petitions is as to whether insertion of Clause-Ga by the decision of the Tender Committee dated 8th May, 2007, which requires written consent/undertaking to commence the work immediately and that too without serving notice to the petitioners, is arbitrary and vitiated and shall attract upon the petitioners.

The Tender Committee in its meeting dated 8th May, 2007 inserted Clause-Ga, which reads as follows:

(Ga) Janhit me karya ki prathmikta evam garmi ko dekhte huye vaise samvedak jinhone nivida me bhag liya hai tatha karya karne hetu bina vilamb/shart ke apni likhit swikriti dete hai un he rig mashin ke satyapit kagjaton ke adhar par karya abantan kiya jay.

According to the petitioners, the said Clause has given rise to the cause of discrimination, arbitrariness and controversies ventilated in these writ petition. Petitioners'' complaint that the said decision is an inclusion of a new condition contrary to the terms of the NIT and is arbitrary. Secondly, the said condition was included without giving prior notice to the petitioners and as such, the same is violative of principle of natural justice.

The State respondents, on the other hand, defended the decision on the ground that the same was in consonance with the terms of the NIT, particularly Clause 11 thereof. The said Clause 11 stipulates that if the allotted work is not commenced within one week of the agreement, the security deposit shall be forfeited and action shall be taken for blacklisting the contractors. It has been further contended on behalf of the respondents that the decision of the Tender Committee seeking a written consent/undertaking for allotting the work was in conformity with the terms of the NIT and was in larger public interest and there was no arbitrariness or violation of Article 14 of the Constitution of India.

It has been stated that the said decision was taken in bona fide manner and even if the same was not in strict conformity with the conditions of the NIT, the validity thereof cannot be challenged before this Court in view of the decision of the Supreme Court in the case of Tata Cellular v. Union of India reported in (1994) 6 SCC 651.

It has been submitted on behalf of the respondents that this Court, while exercising the power of judicial review of the decision-making process, has to primarily examine the arbitrariness of the decision. There is no element of any arbitrariness in the instant case and the decision was in the public interest, which outweighs the legitimate expectation of a particular contractor, if any, and does not attract any cause for such review. Learned Counsel appearing on behalf of the respondents relied on a decision of the Supreme Court in the case of Food Corporation of India Vs. M/s. Kamdhenu Cattle Feed Industries, .

In Tata Cellular (supra), the Supreme Court held as follows:

The principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.

A guideline has been provided in the said decision by deducing the principles for intervention of the Court and to test: whether something has gone wrong of that nature requiring intervention of the Court. The Apex Court held:

(i) the modern trend points to judicial restraint in administrative action.

(ii) The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made.

(ii) 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.

(iv) 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 fiers. More often than not, such decisions are made qualitatively by experts.

(v) 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.

(vi) Quashing decisions may in pace heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

In Food Corporation of India (supra), the Supreme Court held as follows:

In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is ''fairplay in action''. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision-making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review.

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