K.A. Swami, J.
1. In this petition under Articles 226 and 227 of the Constitution, the petitioner has sought for, a declaration that the entire proceedings of respondents 1 to 4 culminating in the acceptance of the tender submitted by the 5th respondent are null and void, and such other reliefs as are deemed fit under the circumstances of the case.
2.1. The petitioner is a registered contractor. It has registered as such with CPWD, KPWD, IAAI, HAL, BWSSB etc. Similarly, the 5th respondent is also aregistered contractor. The 1st respondent is the Board of Trustees of the New Mangalore Port Trust (hereinafter referred to as the Board) constituted by the Central Government under the provisions of the Major Port Trust Act, 1963 (hereinafter referred to as the Act). The 2nd respondent is the Chairman of the Board. Respondents 3 and 4 are theSuperintending and Executive Engineers (Construction Division) Nos. 2 and 1 respectively of the 1st respondent.
2.2. The Board is a body corporate having perpetual succession and common seal with power, subject to the provisions of the Act, to acquire, hold or dispose ofproperty and may, by the name of which it is constituted, sue or be sued. Various provisions of the Act show that it is an instrumentality of the State. Hence, it is 'State' for the purpose of Part-Ill of the Constitution.
3.1. For the purpose of providing roads, drains and stock yard for additional general cargo berth, the 4th respondent on behalf of the 1st respondent invited sealed tenders upto 4 pm. on 12-10-1984 from the registered and eligible contractors of New Mangalore Port Trust, State PWD, CPWD, Railways and MES, who were in possession of or in a position to acquire or hire the central hot mixing plant of the capacity of 20 to 30 tons/Hour, of make Marshall or equivalent, Mechanical Payer, Finishers, Sprayers, Tippers, Lorries, Road Rollers etc. and who had carried out such type of works. The work in respect of which the tenders were invited is described in the notice inviting the tenders bearing No. NIT 1/84-85 CDNI (Produced as Annexure-A), The notice further stated that the 'tender Schedule will be issued only to those who produce authentic records for the proof of possessing or acquiring or hiring the major equipments mentioned above', The aforesaid notice was not published in any newspaper, nor it is stated that it was published in the Official Gazette of the State or the Central Government. It was only sent to four registered contractors, who, as stated by respondents 1 to 4 in the statement of objections were the petitioner,respondent- 5 and Lakshmichand and Y. Parthasarathi. But the said notice states that it is sent to all the District Heads of the Government Department Office with a request to notify the same in their Notice Board and all Division Offices of NMPT with a request to notify the same in their notice board.
3.2. Pursuant to the notice sent to the aforesaid persons inviting tenders, only two of them purchased the schedule viz., the petitioner and the 5th respondent. As noticed above, the tenders were invited for the work estimatedapproximately to cost Rs. 89,23,000/-. But subsequently, it was revised and the estimated cost was reduced to Rs 60,56,500/-. It is the case of respondents 1 to 4 that the remaining workviz., Rs. 28,66,500 was entrusted to the 5th respondent by enforcing an enabling clause contained in the earlier con-tract.
4. The case of the petitioner is that the tender submitted by it was not opened ; that the 2nd respondent intended to favour the 5th respondent ; that it was because of that even though the work was originally estimated to cost Rs. 89,23,000/, it was reduced to Rs. 60,56,500/- and the remaining work was entrusted to the 5th respondent without calling for the tenders ; that the Technical Committee was appointed by the 5th respondent only to see that the petitioner was excluded and the tender submitted by the 5th respondent alone was accepted ; that in the Technical Committee respondent-3, who is no other than the subordinate of the 2nd respondent, was made a member ; that the Tender Committee consisted of only two persons of whom, the 3rd respondent was one of them. Thus, according to the case of the petitioner the Chairman had managed to see that the contract was entrusted to the 5th respondent alone and not to any other person ; that the petitioner is a reputed contractor having executed several works of great magnitude in several places and only with a view to mar the reputation of the petitioner and to favour the 5th respondent, the report of the Committee had been got up ; that the petitioner had no notice of the adverse report made by the Committee; that neither the Tender Committee nor the 2nd respondent nor at least the 1st respondent gave an opportunity to the petitioner with reference to the adverse report made by the Technical Committee ; that neither the Technical Committee nor the Tender Committee nor respondents 1 and 2 had acted fairly and they did not consider the tender submitted by the petitioner in a fair and just manner ; that the whole proceeding was vitiated by discrimination that the tender submitted by the petitioner, was for a sum lesser than that of the 5th respondent ; that the petitioner possessed all the necessary equipments and technology, staff, laboratory, and labour ; that in spite of this, neither the Tender Committee opened the tender submitted by the petitioner nor the Board of Trustees who were the final authority in the matter, opened and considered the tender submitted by the petitioner; that the tender submitted by the petitioner had been excluded from consideration only on the basis of the report made by the Technical Committee as per Annexure-I. Thus, it is the case of the petitioner that it has been dealt with unreasonably and it has been discriminated. It is also the case of the petitioner that the estimate made by respondents 1 to 4 is nowhere near the actuality. It is far in excess and this is clear when it is compared with similar estimates made on the basis of PWD Schedule and it has been done only with a view to see that the 5th respondent isbenefited. Therefore, it is the case of the petitioner that the tender submitted by the petitioner though it is for a lesser sum, it has not been considered only with a view to favour, and accept the tender submitted by the 5th respondent.
5. The Writ Petition was filed on 24-10-1984. It came up for preliminary hearing on 30-10-1984. On that day, Sri C. B. Nandeeswar, Learned Counsel for Respondents 1 to 4, took notice and the Petition was directed to be brought up for preliminary hearing on 31-10-1984. Thereafter, the Petition came up before the Court only on 5-11-1984 and Sri C. B. Nandeeswar requested for time till 6-11-1984. Accordingly, it was adjourned to 6-11-1984 and again on 6-11-1984 to 7-11-1984. On that day, Respondents 1 to 4 filed their statement of objections. Whereas, Respondent-5 who voluntarily put in appearance, sought for time till 8-11-1984 to file statement of objections. On 9-11-1984, when the statement of objections was also filed by the 5th Respondent, the petitioner also filed an application seeking amendment to the Writ Petition. The same was allowed. Thereafter, the Respondents have also filed additional statements of objections. Certain documents are also filed by the parties. It was agreed by Learned Counsel appearing on both sides that the main Petition itself be taken up for hearing in view of the fact that the interim prayer made by the petitioner was not considered.
6. In the meanwhile, on 30-10-1984, after Respondents 1 to 4 put in appearance through their counsel, it was revealed from the statement of objections filed by them that the tender submitted by the 5th Respondent was accepted on 30-10-1984 as per Annexure-7. The records of the tender submitted bythe 5th Respondent were also produced by Respondents 1 to 4. The same also revealed that the 5th Respondents had executed the contract on 31-10-1984.
7.1. The case of Respondents 1 to 4 is that Mazagon Docks Ltd. Mangalore Yard (MDL) setup and worked by the Ministry of Defence since 1983 desired to export heavy coated pipes each weighing upto 36 to 40tones (of the total quantity of 4 lakh tonnes) and also heavy fabricated off-shore platforms from the said berth for the use by the Oil and Natural Gas Commission (ONGC), in the Bombay High. For the said purposes, they had to transport the said material in heavy loaded 8 wheeler trailers on the approach roads to ship the said material to the berth for purposes of export therefrom. Therefore, M.P.L. expressed their apprehensions that it would not be possible for them to move their heavy loaded trailers to the said berth unless proper approach roads were constructed according to the necessary requirements of Indian Road Congress standards. It is because of this, it became necessary to construct the proper roads and stack yards as per the Ministry of Trans-port (MOT) specifications in order to facilitate smooth and quick movement of heavily loaded cargo lorries and trailers; that it also became necessary to provide culverts, additional crusts to existingroads , masonry drains with RCC slabs, RCC service trenches andstockyards etc ; that in the meanwhile Engineers India Ltd. of New Delhi, who had provided the lay out plan for the said additional general cargo berth, also recommended to the 1st Respondent that it would be necessary to provide 4 lane roads for quick and easy movement of the increasing heavy traffic at this berth.
7.2. Therefore, the tenders were invited as per the Notification produced as Annexure-A, and the invitations were sent to the petitioner and 5th Respondent and two others i.e. . Lakshmichand and Y. Parthasarathi. It is their further case that after consideration of all the matters a tentative estimate of the required work was made at Rs. 89,23,000/- on or about 21-9-1984 and the notices inviting tenders for the work were issued to the petitioner and 5th Respondent and two others. However the material particulars of the schedule of quantities and rates in respect of the work had not been finalised and were not given. In this regard, the case of the petitioner is that the particulars were given and it was only subsequently with a view to favour the 5th Respondent the work costing about Rs. 28 lakhs and odd had been taken away from the tender.
7.3. Further case of Respondents 1 to 4 is that a few days later the entire matter was reviewed and the particulars of the schedule of quantities in respect of the work to be taken on hand was finally prepared for a total sum of Rs. 60,56,500/- and the same was issued to the petitioner, the 5th Respondent and two others named above. Only the petitioner and the 5th Respondent purchased the tender papers and submitted their tenders. The team of experts consisting of Dr. B.S. Basavarajaiah, Principal of the Karnataka Regional Engineering College, Sri S.G.Honnappa Ex. Engineer, National Highways Division and Dr. K.R. Narayanaswamy Setty, Asst. Professor of Civil Engineering, Karnataka Regional Engineering College assessed the capabilities of the Plant and Machineries, the infrastructures and the past performance of the petitioner and the 5th respondent in the matter of executing the intended work ; that the team of experts were assisted by respondents 3 and 4 in the matter, made a confidential report in this behalf to the 2nd respondent on 16-10-1984 ; that on 17-10-1984, the tender papers were submitted by the petitioner and 5th respondent in sealed covers ; that the Tender Committee consisting of the 3rd respondent and Financial Advisor of the 1st respondent met in the afternoon of 17-10-1984 in the presence of the representatives of the petitioner and the 5th respondent; and on that occasion, a confidential report made by the aforesaid team of exports as per Annexure-I, was made available to the Tender Committee by the 2nd Respondent in sealed cover with a written direction that the Tender Committee may open the sealed cover and peruse the report of the aforesaid team of experts ; that the 2nd Respondent had not issued any secret message or otherwise to the Tender Committee as alleged by the petitioner ; that the Tender Committee considered the report made by the team of experts as per Annexure I and it agreed with the assessment made by the team of experts, and was of the opinion that the petitioner was not a competent organisation to execute the work and that it would not be in the public interest to entrust the work to thepetitioner and the 5th Respondent was competent enough by the availability of the plant and machinery and his past performance to execute the work ; that on the basis of the said opinion formed by the Tender Committee, it felt that no useful purpose would be served by opening the tender papers submitted by the petitioner ; therefore, the Tender Committee did not open the tender papers submitted by the petitioner and thereafter, the Tender Committee opened the tender papers of the 5th Respondent, and found that the 5th Respondent had quoted Rs.69,13,515/- for the work as against the estimated cost of Rupees 60,56,500/- that in the course of negotiations with the Tender Committee, the 5th Respondent gave a firm offer to execute the work for a total sum of Rs. 66,10,875/-; that thereafter, the Tender Committee recommended to the Chairman of the New Mangalore Port Trust, that the matter of accepting the tender of the 5th Respondent at the said negotiated amount may be considered. A copy of the proceedings of the Tender Committee is produced as Axnnexure-2.
7.4. The further case of Respondents 1 to 4 is that the 2nd Respondent himself being a Technocrat of more than 25 years standing particularly in road construction, made an independent assessment and recorded his note as per Annexure-3 on 25-10-1984 and recommended to the 1st Respondent to accept the tender of the 5th Respondent, that the 1st Respondent on 30-10-1984 considered the tender submitted by the 5th Respondent and after discussion agreed with the observations and recommendations of the team of experts, the Tender Committee and the Chairman's note and considered the Technical competency and other factors of the persons who had submitted the tenders and resolved to award the contract work to the 5th Respondent with a suggestion to the Chairman (2nd Respondent) to negotiate for a further reduction. A copy of the proceedings of the 1st Respondent is produced as Annexure-5.
7.5. The further case of respondents 1 to 4 is that during such negotiation held on 30-10-84 the contractor gave a rebate of 1% over the amount stated in the tender and thus the contract was awarded to the 5th respondent for a total sum of Rs. 65,44,766.25 on 30-10-1984 and the work order was issued to the 5th respondent on 31-10-84. Consequently, it is their case that the contract with the 5th respondent was made on 31-10-84.
7.6. It is also their case that the tender submitted by the petitioner was not opened not on account of the instructions, confidential or otherwise of the 1st or the 2nd respondent; that the 2nd respondent had not given any such instructions to the tender Committee and the instruction that was given by the 2nd respondent was only to open the sealed cover of the team of experts and to consider the observations of the Committee of Experts in the matter of assessing the competency or otherwise of the tenderers; that the decision not to open the tender papers of the petitioner was taken entirely by the Tender Committee.
7.7. Regarding reduction in the quantum of work, it is the case of respondents 1 to 4 that the petitioner did not at any time assert that he should be allowed to submit his tender in respect of the work estimated to cost Rs. 89,23,000/-nor did he submit his tender papers for such work; that the fact that the petitioner has submitted its tender for a sum which is less than Rs. 20 lakhs from the sum quoted in the tender submitted by the 5th respondent would by itself be an indicative of the fact that the petitioner would not be a competent person to whom the execution of the work of the nature in question should be entrusted having due regard to the public interest inasmuch as the estimated cost of the work itself was Rs. 60,56,500/- ; that some of the work which was originally intended to be made part of the work on hand was entrusted to the 5th respondent by the 1st respondent taking advantage of the already existing contract between the 1st respondent and the 5th respondent and that execution of the work on hand with a view to secure the benefit of the rates that had already been agreed upon in about March 1984 between them and in view of the urgency, and thereby the 1st respondent stood to gain financially by reason of the fact that the 5th respondent was bound to execute the said part of the work at the rates already agreed; that respondents 1 to 4 have acted bona fide and they have not acted unreasonably or discriminately on the report made by the team of experts and the opinion submitted by the Tender Committee.
7.8. Respondents 1 to 4 have also filed additional statement of objections and have produced certain photo-graphs to show that the work executed by the petitioner is not of the required standard; that the equipments possessed by it are also of not required quality and capacity; that they have also produced the affidavit of the 2nd respondent denying the allegations of malafides made against him, at a later stagei.e. after the respondents closed their arguments and the petitioner started to give reply : Certain material is also produced by the petitioner and respondents 1 to 4 as to the difference in the estimated cost and the tender amount with reference to the case of the petitioner that the estimated cost is far in excess of actuality.
7.9. The 5th respondent has also filed his statement of objections. He has claimed that he is a contractor who has executed several works of great magnitude and that he has accepted the work by reducing the sum which he had quoted in his tender only with a view to keep good relationship with respondents 1 to 4. The stand of the 5th respondent is not in any way different from the one taken by respondents 1 to 4. It is also one of the objections of the 5th respondent that the Writ Petition is filed by the Area Manager on behalf of . Recondo Ltd., and it can be filed only by the Managing Director of the Company, therefore, it is not maintainable. This stand is also subsequently adopted by respondents 1 to 4. In support of the contentions urged by the petitioner as well as respondents 1 to 5, several decisions also have been relied upon which will be referred to at the appropriate stage.
8. Having regard to the several contentions raised by the petitioner and respondents 1 to 5 the following points arise for consideration :
(i) Whether the Petition is filed by a proper person ?
(ii) Whether Respondents 1 to 4 have acted in a fair and reasonable manner and to the standards they have set out in the notification inviting tenders in accepting the tender of the 5th Respondent ?
(in) Whether the proceeding suffers from any lack of bona fides ; and
(iv) What order
8.1. Point No. 1. It is not possible to hold that the Petition is not filed by a proper person. The Petition is filed by . Recondo Ltd. It is not pointed out by the respondents with reference to the Articles of Association of the Company or with reference to the provisions of the Companies Act or with reference to any other provision of law that the Managing Director alone is entitled to file the Petition on behalf of Recondo Ltd. On the contrary, the petitioner has producedPhotostat copies of the power of attornies. One of them is executed in favour of Bakht Karamchand Ajwani of Poona by Recondo Ltd., on 11-8-1971 constituting him as the lawful power of attorney for and in the name and on behalf of Recondo Pvt. Ltd., to do and execute the following acts and deeds and things i.e. to say :
'(1) To sign and submit tenders are quotations or to negotiate item rates and to enter into and carry into effect contracts resulting from the said tenders quotations or negotiated item rates.
(2) To sign measurement books recording the quantity or work completed and materials collected.
(3) To sign or endorse on behalf of the Company all letters, receipts releases, discharges, railway receipts and other mercantile documents for about or in connection with the business of the company.
(4) To purchase and sell goods wares merchandise stores effects and things necessary or convenient for carrying on the business of the Company.
(5) To ask demand or receive of and from any Government or authority and all and every person persons firm Company or Corporate Body all and every sum or sums of money goods securities and effects due to the Company in his or their custody or possession and for which such Government person/persons firm company or Corporate Body is are or shall be liable or accountable to the Company in any wise and upon receipt thereof to give and execute effectual release and discharges for the same.
(6) To demand collect distrain sue for and give receipts for any rents royalties or other payment due to the Company ; also to enforce the performance of any covenants or agreements by Lessees tenants contractors sub-contractors or others and to take up any steps for evicting or recovering damages from them.
(7) To represent the Company in any Law Courts is connection with any suits appeals or matters wherein the Company may be interested and in connection therewith to make sign execute present and file applications petitions plaints written statements tabular statements and other documents necessary to be filed in any Court and to apply for receive back documents filed in any Court AND GENERALLY to do all such acts deeds matters and things as may be required or necessary in connection with premises as occasion shall require.
(8) To submit to arbitration any dispute or question which may arise between the Company and any Government or authority or any person/ persons firm Company or Corporate Body and for that purpose to execute any bonds or agreements of submission and to perform the award made in pursuance thereof.
(9) To appoint any substitute or substitutes for all or any of the purposes stated in this Power of Attorney and at his discretion to revoke any such appointments or appointment.
10. To register or record this Power of Attorney or a copy thereof in all proper offices or places and to do and execute all acts and things which may be necessary for giving full legal validity and effect to this Power of Attorney or to anything to be executed or done in pursuance hereof according to any local laws usages or customs.'
From the aforesaid para-9 of the power of attorney, it is clear that Sri Bakht Karamchand Ajwani is also empowered to appoint any substitute or substitutes for all or any of the purposes stated in the power of attorney and at his discretion to revoke any such appointments or appointment. The second document is the power of attorney dated 19-10-84 executed by the said Bakht Karamchand Ajwani as the power of attorney of Recondo Ltd., in favour of Mr. Arangali Mani Sadasivan of Bangalore as lawful attorney (as the lawful substitute attorney for him for Bhakt Karamchand Ajwani and as attorney of the company to perform all and singular the following acts and things). From para 7 at page 7 of the aforesaid power of attorney, it is clear that the said A. M, Sadasivan has been authorized to represent the company in any law Courts in connection with any suits appeals or matters wherein the company may be interested and in connection therewith to make sign execute present and file applications Petitions plaints writtenstatements tabular statements and other documents necessary to be filed in any Court and to apply for and receive documents filed in any Court and generally to do all such acts deeds matters and things as may be required or necessary in connection with premises as occasion shall require. It is also pertinent to note that during the course of hearing the sealed cover containing the tender submitted by the petitioner was on the direction of the Court produced by respondents 1 to 4. It was opened in the Court and found that even the tender on behalf of . Recondo Ltd., was submitted by A.M. Sadasivan. The tender was also accompanied by aPhotostat copy of the power of attorney dated 3 6-1984 executed by Bakht Karama chand Ajwani in favour of A. M. Sadasivan. This power of attorney also is more or less similar to the one dated 19 10-1984 referred to above. Thus, from the aforesaid true copies of the power of attornies, it is clear that Bakht Karamchand Ajwani was authorized to appoint substitute proper power of attorney for and on behalf of . Recondo Ltd., and accordingly, he had appointed Sri A. M. Sadasivan as the substitute power of attorney for the purpose of submitting the tenders as per the power of attorney found along with the tender papers submitted on behalf of the petitioner and also for the purposes of filing, and prosecuting the Writ Petition as per the power of attorney dated 19-10-1984. That being so, it is not possible to hold that Sri A. M. Sadasivan, the Area Manager of the petitioner Company, is not competent to file the Petition and prosecute it on behalf of the petitioner company.
8.2) In this regard it is pertinent to notice the decision in All India Reporter Ltd., Bombay with Branch Office at Nagpur and another -v.- Ramachandra Dhondo Datar, : AIR1961Bom292 wherein on consideration of the provisions contained in O. 6 R. 14, 15 and 17 and O. 29 R. 1, O. 6 R. 14, O, 3 Rs. 1 and 2 of C.P. Code it has been held that in a suit by the Company, signing of the plaint by the duly authorized person is valid one. It is held in that decision that the plaint can be signed by a Secretary or a Director or other Principal Officer under 0. 29 R. 1, C.P.C. or by any person duly authorized by the company under O. 6 R. 14, C.P.C. The words 'Duly authorized' in O. 6 R. 14, C.P.C. need not be restricted to mean authorized by proper written authority or by power of attorney. Similarly, in The Jaipur UdyogLtd., Swaimadhopur and others -v.- The Union of India and others whileconsidering O. 29 R. 1, C.P.C., it is held that the said provisions apply to a Petition under Article 226 of the constitution and the Petition signed and verified on behalf of theCompany by its Principal Officer, who is able to depose to the facts of the case, is sufficient, and does not make thePetition defective merely because there is no resolution of the Company empowering him to present the Petition. The provisions of the C.P. Code are made applicable to the Writ Proceedings under the Rules framed by the High Court of Karnataka in this regard. In the instant case, as it is already pointed out, the power of attorney of the company, namely, Sri B. K. Ajwani has constituted Sri A. M. Sadashivan substituted power of attorney which empowers him to file the present Petition also.
8.3) However, Learned Counsel for respondents 1 to 4 and respondent No. 5 have placed reliance on a decision of this Court in Tejraj M. Jain and etc. -v.- Karnataka State Agro Corn Products Ltd., Bangalore and another. : AIR1984Kant146 It is not possible to hold that the said decision in any way helps the Respondents. It is not possible to gather the necessary facts from the decision. However, in para-28 of the decision, it is stated thus:
'The petitioner in Writ Petition No. 11736/1983 claims to be the Manager of Jyoti Traders. A Manager cannot maintain a Writ Petition on behalf of the person that has offered the tender. On this ground also this Writ Petition is liable to be dismissed.'
Whether Jyoti Traders had submitted the tender or whether there was no power of attorney authorising the Manager to file and prosecute the Writ Petition are not clear from the judgment. In addition to this, the effect of Order 6 Rule 14 and Order 29 Rule 1 of the Code of Civil Procedure, have not been considered. Therefore, it is not possible to hold that the aforesaid decision governs the case where there is a power of attorney authorising the person to file the Petition on behalf of the company. Accordingly, the first point is answered against the respondents and in favour of the petitioner and it is held that the Writ Petition is validly instituted and it is filed by the person who is authorized to file and prosecute it.
9.1 POINT NO.2: It is the case of the Petitioner that it is a reputed public company involved in the execution of contracts of the nature in question and has executed several such contracts involving works of more or less of the nature in question. In support of this, the petitioner has produced ample evidence. Several documents which are marked as Annexures-G, Gl to G8 and H and HI bear testimony to this. Annexure-G dated 6th November, 1984 is a certificate issued by the Mazagon Dock Ltd., Bombay, Mangalore Yard, Mangalore. This relates to four works entrusted to the petitioner; all put together, it comes to more than Rs. l 1/2 Crores. It is stated in the said certificate that the petitioner is well equipped and has required plant and machinery for the work ; and it has got qualified and experienced staff at site and the quality and progress of work is quitesatisfactory. It is also further stated that the petitioner has erected a Hot Mix plant of the capacity of 30/40 MT per hour capable of producing Mix as per the specification and has got a well equipped laboratory to carry out the test on Asphaltic Mix. This certificate establishes that the petitioner has got a Hot Mix Plant of the capacity of 30/40 MT per hour ; and has also got a well equipped laboratory to carryout the test. Annexure-G 1 is dated 29-10 1982, issued by the Chief Engineer, Corporation of Madras, Madras. It shows that the petitioner has carried out bituminous road works to the tune of Rs. 100 Lakhs during the year 1980-81 with satisfactory quality. Annexure G2 shows that the petitioner has executed the work of the building of 10 Weirs on the Khasa Chairman River where it crosses the City of Kirkuk in Iraq. It shows that the petitioner has executed the work satisfactorily in Iraq. The certificate further states as follows :
'Knowing the skill of this contractor in carrying out concrete works and his honesty and reliability in business, we do not hesitate to recommend him to whoever it may concern.'
Other certificates which are issued by the Dy. Municipal Commissioner (Engg.). Municipal Corporation of Greater Bombay ; Executive Engineer, Trivandrum Central Division, Central P.W.D. Trivandrum ; Project Manager of Inter-national Airports Authority of India, Bangalore Project; Superintending Engineer (Civil) of International Airports Authority of India, Bombay Project ; and the Engineer, Corporation of Madras, Works Department; go to show that several other works have been completed by the petitioner satisfactorily.
9.2) The tender submitted by the petitioner has been excluded from consideration only on the ground that the team of experts on consideration of the work done, and the equipment possessed, by the petitioner has opined that . Recondo's Plant has a capacity of 15- 20 tons per hour, without grading bins, temperature control system, dust-catchers and the generator of the old type; whereas, Raja Mohan Reddy's Bituminous Mixing Plant has a capacity of 40 tons per hour with grading bins, temperature control devices with latest technology possessing a quality control laboratory along with . Recondo's plant does not possess the latest equipment and does not appear to have a quality control laboratory at the site. Even equipment-wise, the 5th respondent firm appears to have more number ofequipments and more labour. The Committee has observed that the roads executed by . Recondo Ltd., in MDL area have already developed pot-holes, undulations and lack in gradient and camber, whereas roads executed by the 5threspondent have proper gradient and camber and are free from pot-holes; and they also exhibit smooth riding surface. On the basis of the plant equipment, materials supply and grading bin, labour force and the performance of the existing roads which have been executed according to MOT specifications, the petitioner's works do not compare with those of the fifth respondent.
The documents produced by the petitioner have already been adverted to. The aforesaid documents go to show that the report of the team of experts does not represent correct facts. If the petitioner is a contractor not possessing adequate facilities and equipments, it could not have executed several works both within and outside the country. Further, even though the petitioner as per Annexure G possesses requisite laboratory and hot mix plant of 30/40 MT per hour, the report states that it does not possess these facilities. In addition to this, the works so far executed by the petitioner are certified to be satisfactory as per Annexures of G series. Even then, the report of the Team of Experts states that the work at Mazagon Dock, Mangalore Yard, is not satisfactory. This incompatibility between the report of the team of experts and several certificates expressing satisfaction, issued regarding the works executed by the petitioner by those whose works the petitioner has executed, would go to lend support to the case of the petitioner that it has not been treated fairly and it has been subjected to hostile discrimination with a view to eliminate it. It is the case of the petitioner that the report made by the so called team of experts which also consisted one of the members of the Tender Committee, who is no other than thesubordinate of the 2nd respondent, and also the 4th respondent who is also another subordinate of the 2nd respondent amounts to nothing but black-listing the petitioner, if the tender has to be rejected on such a ground. In all fairness, if not a copy of the report supplied to the petitioner,at least it ought to have informed of the opinion and afforded an opportunity to put forth its say in the matter. It is also further submitted that the tender notification sets outeligibility for a contractor to seek the contract in question and it is with reference to the eligibility and the standard set out in the notification, the 1st respondent and even the so called committee of team of experts and the Tender Committee ought to have considered the tenders submitted by the petitioner and the 5th respondent.
9.3) Law on this point is well settled. Whatever may be the position prior to R.D.Shetty's case : (1979)IILLJ217SC . The said decision and also the decision in Chinglepet Bottlers' case,A.I.R 1954 SC 1030 do govern the present case. After referring to the earlier decisions in R.D. Shetty's case, the Supreme Court has approved the proposition laid down by Mr. Justice Frankfurter in Vitarelli -v.- Seaton (1959) 359 USA 535In R.D. Shetty's case, it is laid down that it is well settled rule of administrative law which has been judicially evolved as a check against exercise of arbitrary power by the executive authority, that-
'an executive agency must be rigorously held to the standards by which it professes its action to be judged and it must scrupulously observe those standards.'
This rule, it has been held in R.D. Shetty's case is applicable to India even earlier to R.D.Shetty's case.
9.4) This rule has been held applicable to India by the Supreme Court in Dr.Amarjit Singh Ahluwalia -v.- the State of Punjab and Others AIR 1976 SC 984 and Sukhadev -v.- Bhagatram : (1975)ILLJ399SC . After reviewing the entire law, their Lordships of the Supreme Court have held that it is true that no party has any right to enter into any contract but they are entitled to equal treatment with others who offered tender or quotations for the purchase of the goods. It is also further held that though the State is entitled to refuse to enter into relationship with anyone, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly situated but it must act in conformity with some standard or principle which meets the test of reasonableness and non-discrimination and departure from such standard or principle WOULD BE INVALID, unless it can be supported or justified on some rational or non-discriminatory ground. It is also further observed that the Government must necessarily be entitled to make a choice. But that does not mean that the choice can be arbitrary or fanciful. The choice must be dictated by public interest and must not be unreasoned and unprincipled. It has also been further held that having regard to the Constitutional mandate of Article 14 as also judicially evolved rule of administrative law the authority is not entitled to act arbitrarily in accepting the tender and it is open to conform to the standard or norm laid down by it in the tender notification.
9.5) Even in Fertilizer Corporation Kamagar Union (Regd) Sindri and Others -v.- Union of India and Others AIR 1981 SC 344 which is relied upon by Sri Nandeeswar, Learned Counsel for respondents 1 to 4, it has been held that the Court cannot as a Super Auditor, take the Board of Directors to task. The function of the Court is limited to testing whether the administrative action has been fair and free from the taint of unreasonableness and has substantially complied with the norms of procedure set for it by rules of public administration. Thus, the stress has been on the action being fair, reasonable and free from taint of unreasonableness and complying with the norms set down by it.
9.6)In the instant case, the notification-Annexure-A inviting the tenders states that a contractor registered with New Mangalore Port Trust, State P.W.D., C.P.W.D., Railways and Institutions and in possession of, or in a position to acquire, or hire, the Central hot mixing plant of capacity of 20 to 30 tons per hour of make Marshall or equivalent, Mechanical Payer, Finishers, Sprayers, Tippers Lorries, Road Rollers etc., and who has carried such type of works is eligible. It is further stated that it is only to those who produce authentic records for the proof of possession or acquiring or hiring the major equipments mentioned above, a tender schedule shall be issued. In the instant case, neither the team of experts nor the Tender Committee, nor the first respondent had examined the plant and machinery and other equipments possessed by the petitioner The opinion of the team of experts does not reflect correct factual position both in respect of the quality of the works executed, plants and equipments possessed, by the petitioner. This aspect with reference to Annexure-G series has already been pointed out. This apart even if respondents 1 to 4 were of the opinion that the machinery possessed by the petitioner were not of required standard or quality, it could have considered as to whether the petitioner was capable of acquiring them or hiring them. According to the notification, it is not necessary that a contractor who submits the tender must be in possession of all the machinery. Even if he is capable of acquiring or hiring them, he will be eligible to seek the contract. In addition to this, it is very pertinent to notice that the certificate produced by the petitioner from Mazagon Dock Ltd., shows that it has done the work of the nature in question. It also goes to show that the petitioner is in possession of the machinery of the required quality and is also in possession of the requisite laboratory on the work site. Thus, it is clear that theproceedings have not been conducted in a fair and just manner.
It appears to me, from the manner in which the proceedings have gone on, that respondents 2 to 4 intended to exclude the petitioner. Where tenders are submitted forconsideration, the minimum that is required to be done in order to show that one has acted reasonably and without bias or favour, is to open the tenders received in time, and there being no other threshold bar to consider them, and examine them in a fair and reasonable manner free from taint of unreasonableness and by applying the standards or norms set down for selecting and accepting the tender. In the instant case, respondents 1 to 4 have not even opened the tender submitted by the petitioner. There was no threshold bar to open and consider it. The tender did not suffer any such infirmity so as to exclude it from consideration itself. There is an endorsement made on the cover containing the tender papers submitted by the petitioner. The said endorsement reads thus : -
'Based on the assessment report of the technical committee Constituted by CM dated 16-1O-1984 Tender is not opened.'
Though the tender committee consisted of only two persons, but there are three signatures found below the aforesaid endorsement. It is not explained as to how three signatures are found on the sealed cover containing the tender papers submitted by the petitioner. Learned Counsel forrespondents 1 to 4 was not able to explain how three persons had signed on the sealed cover submitted by the petitionercontaining its tender papers. As far as the 1st respondent is concerned, it is guided by respondent-2 and the note put up by him and the reports of the Tender Committee and the team of experts. It is already pointed out that none of them has acted in a fair and just manner and the reports do not square with the established facts.
9.7)The next question is whether the petitioner ought to have been given an opportunity regarding the quality of the work done by it and the nature of equipmentpossessed by it. In . Chinglepet Bottlers -v.- Majestic Bottling Co. the Supreme Court has held that it is quite pro-per for the authority to make secret and discreet enquiries from confidential sources and that there is no duty to disclose it to the applicant, the source of adverse information or to give an opportunity to confront the informant. But, it is held thatthe rules of fair play only enjoin that the applicant should know the case against him. That was a case of granting privilege for sale of arrack bottling. The instant case relates to awarding of a contract. The principle laid down in the said case applies in greater force to the present case. The relevant portions of the judgment, are as follows :
'25........ While the Learned Counsel concedes that the right to know the case to the met does not necessarily involve any right to know the source of adverse inference or to confront informants, for in many cases it will be quite proper for the authority to employ confidential sources the rules of natural justice require that the information itself should be disclosed so that there is a fair opportunity of meeting the case.
XX XX XX 26. xxx xxx xxx xxx '27. We do not think that the Commissioner was under anobligation to turnish . Chingleput Bottlers with a copy of the report submitted by the Collector or of the representation made by Majestic Bottling Company. This equally applies to the two-page note appearing in the file of Chingleput Bottlers. It was quite proper for the commissioner to make secret and discreet inquiries from confidential sources. There was no duty cast on him to disclose to , Chingleput Bottlers tne sources of adverse information or to give them an opportunity to confront the informants. Rules of fairplay only enjoin that . Chingleput Bottlers should know the case against them. This apparently they didfrom the questionnaire issued by the Commissioner and the questions put by the Commissioner on July 5, 1982 on the basis of the information gathered by him...'
XX XX 41.It must follow that the grant of a liquor licence under Rule 7 of the Rules does not involve any right or expectation but it is a matter of privilege. The commissioner was therefore under no obligation either to disclose the sources of information or the gist of the information that he had. All that was required was that he should act fairly and deal with the applications withoutany bias and not in an arbitrary and capricious manner. There is no suggestion of any mala fides on the part of the Commissioner or the State Government..... The commissioner separately heard both the parties and had their statement recorded with respect to all the relevant aspects. It cannot be said the commissioner in dealing with the applications did not act fairly in not furnishing a copy of the report of the collector or in taking a representation from Majestic Bottling Company.'
Thus, from the aforesaid decision, it is clear that the petitioner ought to have been made known the case that was made against it. It is not the case of the respondents that on 17-10-1984 when the TenderCommittee met, the case made against the petitioner by the report made by the team of experts was made known to the representative of the petitioner and an explanation, if any, was sought in that regard. The ratio decidendi of the decision rendered in Chingleput Bottlers' case is to the effect that in such a case, the case made against the party be made known to it. But, it does not mean that the information in the form it is received must be supplied to the party and personal hearing must be given to it or him; but what is necessary is that the adverse case found against it or him must be made known and an opportunity to explain it must be provided. In Chingleput Bottlers' case, the Supreme Court found that the case made out against Chingleput Bottlers through the discreet enquiries from confidential sources was made known to Chingleput Bottlers by issuing a questionnaire, even though a copy of the report was not supplied to them, and in addition to this the revision of the Chingleput Bottlers was also separately heard by the Commissioner. Under these circum-stances, it was held by the Supreme Court that theCommissioner acted fairly. In the instant case, the report of the team of experts produced as Annexure-1 is of such a nature that it disqualifies the petitioner to secure contract of the nature in question even in future also. Thus, it is more or less on par with the decision in . Erusian Equipment and Chemicals Ltd. -v.- State of West Bengal and Another : 2SCR674 . In that case the several tenders submitted by the applicant were rejected on the ground that there were certain enquiries going on against thelander or in respect of certain matters which were not at any point of time made known to the applicant. Therefore, the Supreme Court held that placing of reliance on such a material and rejection of the tenders were highly improper and opposed to justice and fair play. In the instant case no doubt there was no proceeding of any sort pending against the petitioner, but the report of the team of experts was of such a nature that it held that the petitioner was not capable of executing the work of the nature in question; that it did not possess the required amount of machinery, material and labour. Of course, if the so called team of experts had inspected the workexecuted by the petitioner anti respondent No. 5 and inspected the machinery possessed by them in the presence of a representative of the petitioner and respondent-5, there was no question of further informing the petitioner. But even according to the case of respondents 1 to 4 a confidential and discreet enquiry was made through the team of experts. No doubt, the respondents 1 and 2 were entitled to have such an enquiry made and the material collected confidentially; but when it came to rely upon it and reject the tender on that basis, the petitioner ought to have been informed of the case made against it. In the instant case, far from informing it, the tender itself bad not been opened. There-fore, it is not possible to hold that respondents I and 2, have acted in a fair and reasonable manner. R.D. Shetty's case settles the position that in the matter of disposing of the contracts by the State or the authority it must act on a reasonable basis and on the basis of norms set out by the State or the authority itself. In this case it is not in dispute that the first respondent is required to act in accordance with Art. 14 of the Constitution, because it is the instrumentality of the Central Government. That being so, it was required not only to act in accordance with the principles under lying Art. 14 of the Constitution but also in accordance with the Rules of Administrative Law as evolved by Judicial decisions to which a reference has already been made.
9.8) Learned Counsel for Respondents 1 to 4 has also relied upon a decision of the Supreme Court in State of U. P. and others -v.- Vijay Bahadur Singh and others : AIR1982SC1234 . In the said decision no doubt it is stated that the StateGovernment is free to accept or reject the bid irrespective of the bid being highest or lowest. But in the very decision it is also further stated that there might be valid, good and sufficient reasons apart from inadequacy of the bid which may impel the Government not to accept the highest bid. But the Government must have sufficient reasons not to accept the highest bid. Thus, without sufficient reasons there cannot be any acceptance or rejection of the tender. Therefore, it is not possible to hold that the said decision lays down that it is open to the authority to reject or accept the tender without any limitation on its power. Reliance is also placed on a decision of the Supreme Court in Mukund Bore -v.- Bangshidhar Burogdham and others : AIR1980SC1524 . It is held in that decision that a finding of fact recorded by a domestic Tribunal is not liable to be interfered with. We are not so much concerned with the finding of fact. We are concerned with the manner in whichthe contract is disposed of. It is already pointed out that the manner in which it is done, is not in accordance with the principles of fair play and justice.
9.9) Learned Counsel for Respondent No. 5 has placed reliance on the decisions of the Supreme Court in The Bihar Gangetic Fishermen Corporation Society Ltd. : 1SCR375 Hungerford Investment Trust Ltd. (in voluntary liquidation) -v.- Haridar Mundra and others AIR 1972 SC 816 and Mani Subrat Jain etc., etc., -v.-State of Haryana and others : 2SCR361 . It is not necessary to refer to these decisions in greater detail in view of the fact that the said decisions are not on the point.
10) Sri Rudregowda, Learned Counsel for Respondent No. 5 has also placed reliance on a decision of the Supreme Court in Pursotama Ramanata Quenin -v.- Makan Kalyan Tandal and others : 3SCR64 . This decision is considered in R. D. Shetty's case. Therefore, it is not necessary to make any special reference to it. In view of the decision in R. D. Shetty's case, it is also not possible to hold that the decision in the aforesaid case (P. R. Quenin -v.- M. K. Tandal) holds the field. The Respondents have also placed reliance on a decision of the Supreme Court in P. Kasilingam -v.-P.S.G. College of Technology : (1981)ILLJ358SC . The said decision arose out of the disciplinary proceedings. It is not possible to hold that it has any bearing on the question involved in the present case.
Similarly, the decision reported in AIR 1976 SC 23 Swaran Singh v.. State of Punjab, on which also reliance is placed by Learned Counsel for Respondents, is not on the point in as much as it relates to scope of interference with the finding of fact, under Article 226 of the Constitution. Thus, I am of the view that the second point has to be answered in favour of the petitioner. Accordingly, it is held that the proceedings culminating in the acceptance of the tender of the 5th Respondent have not been just and fair, and the same are discriminatory.Respondents 1 to 4 have not acted in a fair and reasonable manner and they have also not acted to standards set out in the notification inviting tenders in accepting the tendersubmitted by Respondent No. 5.
10.1) POINT NO. 8 :
There are allegations of mala fides made against Respondent No. 2. No doubt the burden is upon the petitioner to plead and establish the same. The case of the petitioner in this regard is that the second Respondent with a view to favour the fifth Respondent hasmaneuvered with the team of Committee of Experts and the Tender Committee and has even gone to the extent of sending instructions to the Committee not to accept the tender of the petitioner. Until Sri Nandeeswar completed his arguments there was no affidavit of the second respondent filed denying the allegations of mala fides. It is only when the reply was commenced on behalf of the petitioner and reliance was placed on the decisions of the Supreme Court reported inS. Pratap Singh -v.- State of Punjab : (1966)ILLJ458SC and in Kedar Nath Bahl -v.- State of Punjab and Others : 1SCR1089 an affidavit of the second respondent is filed. It appears to me that it is not necessary to go into these aspects having regard to the fact that the petitioner is entitled to succeed in view of the conclusion reached by me on the second point.
10.2) The case of the petitioner is that it is only with a view to favour the fifth respondent the work which was notified and estimated to cost Rs. 89,23,000/-was reduced to Rs. 60,56,500/-and the work covering the difference of the amount i.e., Rs. 28,00,000/- and odd was given to the fifth respondent and this was done with a view to favour the fifth respondent. In this regard as it is already pointed out, the case of respondents 1 to 4 is that it has been done in exercise of powers vested in the first respondent under the terms of the contract earlier entered into with the fifth respondent. The same is also stated in the affidavit of the second respondent. No doubt the terms of the contract have not been produced but the 5th respondent hasspecifically stated in para-7 ofhis statement of objections, the circumstances under which the work came to be entrusted to him. The circumstances under which the work came to be entrusted to him also go to show that the entrustment of the work to the 5th Respondent to the tune of about Rs. 29,00,000/- by splitting the tender cannot be found fault with. Therefore, it is not necessary to probe any further in view of the fact that the petitioner is entitled to succeed on the conclusion reached by me on the points i and 2.
10.3) However, Sri Nandeeswar, Learned Counsel for Respondents 1 to 4 contends that the specific case of the petitioner is that a secret letter was sent to the Tender Committee not to open the tender submitted by thepetitioner, and the 4th Respondent told to the representative of the petitioner that the Chairman had sent a confidential letter to him stating not to open the tender referring to in the confidential report of the technical committee. It is also further stated in para-7(2) of the Petition that thepetitioner company is fully qualified and eligible and has submitted the tender within the time with Rs. 20,000/- Earnest Money Deposit.In spite of this, the second Respondent had sent a confidential letter to the 4th Respondent not to open the tender, submitted by the petitioner, withmalafide intention to favour the 5th Respondent. As it is already pointed out the Chairman has filed the affidavit denying these allegations. The 4th Respondent states that what was sent by the Chairman was annexure '6' containing the report made by a Committee of Experts of which Dr. B. S. Basavarajaiah was the Chairman. According to annexure '6' there is an endorsement made by the Chairman(Respondent No. 2) as par the case of Respondents 1 to 4 which reads thus :
'Tender committee may open this'
On the cover it is also super scribed as 'Confidential.' It is submitted that apart from this no letter was sent by the Chairman (Respondent No. 2) to the Committee of Experts and the Tender Committee after reading the report of the team of experts decided not to open the tender submitted by the petitioner on its own accord and not on the basis of the alleged letter sent by the second Respondent. In fact there was no such letter.
10.4) There is no proof coming forward to establish the allegations that the second Respondent had really sent a letter to the Tender Committee not to open the tender submitted by the petitioner. Therefore, it is not possible to accept the case of the petitioner that the Chairman had sent a letter to the Tender Committee directing it not to open the tender. According to the case made out by respondents 1 to 4, the tender committee on its own accord decided not to open the tender. There is no doubt that the Tender Committee failed to discharge its function and failed to act in a fair and proper manner in not opening the tender of the petitioner. However, respondent 1 being the final authority to accept or reject the tenders, ought to have opened the tender submitted by the petitioner and considered it on merits. The 1st respondent also has failed to do it. I think it is not necessary to go into further details having a bearing on Point No. 3, in view of the finding recorded on Point No. 2 which is sufficient for the purpose of the case.
11. Sri Nandeeswar, Learned Counsel for respondents 1 to 4, and Sri Rudregowda, Learned Counsel forRespondent No. 5, submit that now that the sealed cover sent by the petitioner containing tender papers has been opened and it is now noticed that the petitioner has offered Rs. 43,82,884/- ; whereas the work is estimated to cost Rs. 60,56, 500/- and this vast difference itself would go to show that the petitioner is not likely to execute the work with that quality which respondent No. 1 requires. It appears to me that it is not necessary to consider this because neither the first respondent nor the Tender Committee has opened the Tender of the petitioner and considered and rejected it on that ground. In addition to this, there is a difference of opinion between the petitioner and respondents as to the correctness of the estimate itself. According to the petitioner, it is not in conformity with the actual cost. In support of this submission, certain estimates made on the basis of the rates of P.W.D. have been submitted and the same are also refuted by the 3rd respondent in hisstatement.
12. Learned Counsel for Respondent-5 has also contended that the petitioner has no right to challenge the contract awarded to the 5th respondent because no right is accrued to it by submitting the tender. Hence, it is not entitled to any relief. It is too late in the day to contend in the afore-said manner. It is now a settled position of law that the State or an authority falling either within the definition of State or being an instrumentality of the State, is bound to act in the matter of disposal of contracts in accordance with theprinciples embodied in Article 14 of the Constitution, and it is also required to follow the procedure which is at once fair and reasonable and is free from taint of unreason ableness and accords with settled principles ofAdministrative Rules consistent with fair play and justice, and it is also bound to act according to the standards set out by it. Therefore, every tenderer is entitled to question the validity and legality of the proceeding relating to disposal of the contract. Hence, it is not possible to accept the contention.
13. The work is of great magnitude involving several millions. It is not possible to appreciate as to why an advertisement calling for tenders was not given in the newspapers having circulation all over the Country. In that event, many contractors would have submitted their tenders and the 1st respondent would have had several tenders for selection.
14. For the reasons stated above, this Petition is allowed. The proceedings culminating in the acceptance of the tender dated 17 10 1984 submitted by the 5th Respondent for the work of providing Mechanised Bituminous pavements for roads and stack-yards of Additional General Cargo Berth ; and the agreement executed by the 5th Respondent on 31-10 1984 produced at page -1 of Annexure-36, are hereby quashed. However, there will be no order as to costs.