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State of Rajasthan and anr. Vs. Chirag Enterprises and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberCivil Special Appeal No. 43 of 1981
Judge
Reported inAIR1982Raj169; 1981()WLN112
ActsConstitution of India - Articles 14, 226 and 299
AppellantState of Rajasthan and anr.
RespondentChirag Enterprises and ors.
Appellant Advocate D.S. Shishodia, Govt. Adv.
Respondent Advocate L.R. Mehta, Adv.
DispositionAppeal allowed
Cases ReferredMohinder Singh Gill v. Chief Election Commr.
Excerpt:
central store purchases organisation manual - nature of--it is in nature of administrative instructions & has no statutory force.;the manual, in our opinion, has no statutory force. it is in the nature of administrative instructions for guidance for making purchases.;(b) central store purchase organisation manual - clauses 2&3--powers of organisation & committee--decision to purchase a particular item through rate contract--held, it is empowered to revise its earlier decision.;what we find is that it is the function of the organisation and the committee as provided in clauses 2 and 3 to decide and determine the stores articles for which rate contracts are to be concluded even when the organisation and the committee have decided once that a particular store article has to be.....jain, j.1. this is an appeal under section 18 of the rajasthan high court ordinance against the order of the learned single judge dated feb. 12, 1981, whereby the petitioner-respondent's writ petition was allowed and the appellants were directed to immediately convene a meeting of the central stores purchase committee (hereinafter referred to as 'the cspc') and decide the matter afresh on the basis of the tenders received for the year 1980-81 within a period of three weeks from the date of the order,2. the facts of the case lie within a narrow compass. they may be recalled as hereunder :the deputy secretary (administration) and the stores purchase officer (administration), secretariat, jaipur, issued a tender notice no. 2/80 on behalf of the cspo of the government of rajasthan inviting.....
Judgment:

Jain, J.

1. This is an appeal under Section 18 of the Rajasthan High Court Ordinance against the order of the learned single Judge dated Feb. 12, 1981, whereby the petitioner-respondent's writ petition was allowed and the appellants were directed to immediately convene a meeting of the Central Stores Purchase Committee (hereinafter referred to as 'the CSPC') and decide the matter afresh on the basis of the tenders received for the year 1980-81 within a period of three weeks from the date of the order,

2. The facts of the case lie within a narrow compass. They may be recalled as hereunder :

The Deputy Secretary (Administration) and the Stores Purchase Officer (Administration), Secretariat, Jaipur, issued a tender notice No. 2/80 on behalf of the CSPO of the Government of Rajasthan inviting tenders for the supply inter alia of hose pipes (PVC and Rubber). The said tender notice was published in the Rajasthan Patrika. By this tender a rate contract for purchase of PVC hose pipes was to be entered between the supplier on the one part and the Stores Purchase Officer, Finance Department, Government of Rajasthan, on the other to supply to the Government Departments, Local Authorities and other Organisations. The petitioner-respondents and others submitted their tenders in the prescribed tender form within time. The tenders were opened on July 21, 1980. The tenders were processed and were sent for technical opinion. The Additional Chief Engineer (Mech.)/Public Health Engineering Department, Rajasthan, Shri. K.L. Goel, after considering the various tenders, samples and test certificates, submitted his technical report. He opined as under :--

'I had earlier also brought to the notice of C.S.P.O. that in each size of P.V.C. Flexible Pipes material is available in varying thicknesses and weights per meter length. Neither the CSPO specifications provide for any specific thickness/weight per meter nor most of the firms have mentioned this important parameter in their tenders. Measurements taken in respect of various samples received by the CSPO also indicate that the thicknesses and weights per meter considerably vary from one sample to another sample. Statements showing these measurements for all the 4 sizes of pipes are enclosed. Therefore, unless we compare rates on an uniform basis in respect of weight per meter, it is very difficult to make selection. Since there is no ISS for this product, it is all the more necessary that the specifications are comprehensive and clear. Furthermore, although the condition in the schedule of the specifications provides that Test Certificates may be from any Government Test House. 1 am hesitant to recommend acceptance of test certificates issued by department laboratories which are generally meant for routine testing and are not fully equipped to carry out all the required tests. There are thus, only 2 firms whose Test Certificates are from laboratories of repute (.Shri Ram Test House and N. T. M.. Alipur) but even out of these 2 one firm i.e. MGR Industries, Calcutta had not submitted samples. It is thus evident that there is little scope for comparison of quality and rates certificates as well as sample. It is recommended that the specifications should be re-casted after mentioning the required pipe thickness, weight per meter, permissible tolerance etc. The specifications should also clearly mention laboratories whose certificates would be acceptable and should also state the tests whose results should be included in the certificates.'

The Committee considered the technical report along with the tenders and decided for PVC hose pipes in its meeting held on Oct. 3, 1980, that 'this year no rate contract should be entered for this item' and hence none of the tenders were accepted for the year 1980-81.

3. The petitioner's case is that out of the tenders received, the tender submitted by the petitioner was the lowest for the sizes of 40 MM and 75 MM. The petitioner having found its tender to be the lowest, it proceeded to make preparations for the supply of the material to the extent indicated in the pro forma tender form, as in the event of the failure to make the supply, the petitioner would have suffered penalty as per condition No. 18 of the conditions of the contract. The petitioners-firm proceeded to make stocks of the material and managed to keep stores worth over rupees one lac to meet the requirements of the purchase officers likely to purchase PVC hose pipes during the period ending March 31, 1981. Mr. Jitendra Maheshwari, partner of the petitioners-firm having learnt that purchases are being made directly from the different parties by the purchasing officers contacted Shri R.L. Jain, Stores Purchase Officer on Oct. 21, 1980, on phone and it was informed that he does not propose to enter into a rate contract and has directed the purchasing officers to directly effect purchases. The petitioner challenged the action of the appellants on the grounds stated in para 11 of the writ petition, to which we shall advert, while dealing with the contentions advanced before us, and prayed that the appellants be directed to enter into a rate contract with the petitioner and not to effect purchases of PVC hose pipes otherwise than by way of rate contract, and the appellants may be further forbidden from going back after inviting tenders for rate contract

4. The writ petition was resisted by the appellants. A return to the writ petition was filed wherein reference to the technical report and consequently decision taken on that basis by the Committee was made and it was stated that the petitioner has no legal right to enforce entering into a rate contract, as the petitioner had simply answered ?n invitation to offer and the offer was not accepted by the appellants. A replication to the return was also filed by the petitioner and in turn a further rejoinder to the replication was filed by the appellants. In view of some defect in verification of the affidavit of Shri R. S. Sharma, Senior Accounts Officer. Finance (W. & M.) Department, Rajaa-than, Jaipur, his fresh affidavit was filed and further affidavit of Shri K.L. Goel, Additional Chief Engineer (Mech.), PHED, was also placed on record after conclusion of the arguments. The parties were of course heard on the additional affidavits. The learned Judge, however, rejected the affidavit of Shri K. L. Goel and after making reference of some of the provisions of the Central Stores Purchase Manual and the decisions of the Supreme Court in kamana Dayaram Shetty v. International Airport Authority of India (AIR 1979 SC 1628) and Kasturi Lal Lakshmi Reddy v. State of J. & K. (AIR 1980 SC 1992), held that it gives a right of action in law Court to a limited extent. The learned Judge held --'That being so it is not possible to accept the defence put forward by the respondent and justification for the order refusing to take tenders for rate contract for this item for the year 1980-81. Undoubtedly the order as it stand is arbitrary and the respondents have not been able to justify it by putting relevant material providing jusiftication for it' The learned Judge then conduded -- 'Therefore, there is no escape but to quash the impugned order, by which all tenders including that of the petitioner have not been considered for rate contract for PVC Hose Pipes in Rajasthan for the year 1980-81. The petitioner cannot claim acceptance of his tender from this Court an it is for the Committee to reconsider it.' Consequently the learned Judge by accepting the writ petition gave the direction as stated above.

5. Aggrieved by the direction given by the learned single Judge, the State of Rajas-than and the Stores Purchase Officer-cum-Deputy Secretary Finance (C.S.F.O.) Department, Government of Rajasthan, have preferred this appeal.

6. We have heard Shri D.S. Shishodia, learned Government Advocate, for the appellants and Shri L.R. Mehta, learned counsel for the petitioner-respondents.

7. Shri D.S. Shishodia, learned counsel for the appellants, vehemently submitted that the direction given by the learned Judge for convening the meeting of the CSPC and for considering the tenders afresh within a period of three weeks, was absolutely uncalled for and unwarranted. The learned Judge seriously erred in holding that the decision of the Committee was arbitrary. The reasoning and the consideration made by the learned Judge in arriving at the above finding, has absolutely no basis and the entire reasoning is faulty. He urged that there is no provision in the Manual making it obligatory for the Organisation to enter into a rate contract and not to effect purchases otherwise than by entering into a rate contract. Reference was made by Shri Shishodia to some provisions of the Manual, which go to show that it is entirely the look out of the Committee to decide as to whether any article in the centralised list is to be purchased through a rate contract or not and it is also in the discretion of the Committee to accept or reject all tenders and to re-invite tenders and to accept the technical report and take a decision on that basis. He submitted that the decision of the Committee was absolutely an administrative decision, which is not open to challenge in a Court of law. He maintained that the order of the learned Judge makes reference to unfounded facts and uncalled for the incongruous observations.

8. Shri L.R. Mehta, learned counsel for the petitioner-respondents, on the other hand, defended the order of the learned Judge and submitted that the learned Judge has given an innocuous direction for consideration of the tenders on merits in accordance with the specifications mentioned in the tender notice after holding that the decision of the Committee was arbitrary in character. He urged that in the field of public law, the Government cannot be allowed to act arbitrarily. The tenderers were entitled to consideration of the tenders in accordance with the terms of the tender notice. After having called the tenders, the Committee could not decide that no rate contract should be entered for the item of hose pipes for the year 1980-81. The appellants are estopped from doing so. The decision of the Committee was also attacked on some other grounds, which we shall presently discuss. He submitted that the conclusions and the findings and consequently the direction given on their basis, is unassailable, even when observations made by the learned Judge here and there in the order are ignored.

9. Before deailing with the points and controversy raised in the present appeal and before adverting to the arguments and contentions advanced by both the sides, it would be proper to refer to some of the pronouncements of the Supreme Court dealing with the rule of Administrative Law inhibiting arbitrary action of the Government and the rule flowing from Article 14 of the Constitution.

9-A. In Ramana Dayaram Shetty v. International Airport Authority of India (AIR 1979 SC 1628) (supra), Justice P.N. Bhagwati reviewed the case law and observed as under, in para 12 of the Report:--

'It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant The power or direction of the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc., must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the government departs front such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory,'

Apart from the rule of Administrative Law inhibiting arbitrary action Bhagwati, J., also considered the matter from the stand-point of doctrine of equality embodied in Article 14. It was observed as under (para 21):--

'It is now well settled as a result of the decision of this Court in E. P. Royappa v. State of Tamil Nadu, (1974) 2 SCR 348 : (AIR 1974 SC 555) and Maneka Gandhi v. Union of India, (1978) 1 SCR 248 : (AIR 1978 SC 597) that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is non-discriminatory; it must not be guided by any extraneous or irrelevant consideration, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness is projected by Article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and non-discriminatory.'

After referring to a decision in Erusian Equipment and Chemicals Ltd. v. State of West Bengali, (AIR 1975 SC 266) it was further observed as under (at paras 14 and 17) :--

'A citizen has a right to claim equal treatment to enter into a contract which may be proper, necessary and essential to his lawful calling -- It is true that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods.' It must, therefore, follow as a necessary corollary from the principle of equality enshrined in Article 14 that though the State is entitled to refuse to enter into relationship with any one, yet if it does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some standard or principle which meets the test of reasonableness and non-discrimination and any departure from such standard or principle would be invalid unless it can be supported or justified on some rational and non-discriminatory ground.' (underlined mine).

His Lordship Bhagwati, J., then referred to the decisions of the Supreme Court in Rasbihari Panda v. State of Orissa, (1969) 3 SCR 374 : (AIR 1969 SC 1081); C. K. Achutan v. State of Kerala, (1959) Supp (1) SCR 787 : (AIR 1959 SC 490); Trilochan Mishra v. State of Orissa, (1971) 3 SCR 153 : (AIR 1971 SC 733); State of Orissa v. Harinarayan Jaiswal, (1972) 2 SCC 36 : (AIR 1972 SC 1816) and P.R. Quenim v. M.K. Tandel, (1974) 3 SCR 64 : (AIR 1974 SC 651) and stated in para 26 as under :--

'This decision merely reiterates the principle laid in the earlier decisions in Trilochan Mishra v. State of Orissa (AIR 1971 SC 733) (supra) and State of Orissa v. Harinarayan Jaiswal (AIR 1972 SC 1816) (supra) and points out that a condition that the Government shall be at liberty to accept or reject any bid without assigning any reason therefor is not violative of Article 14 and that 'in matters relating to contracts with the Government, the latter is not bound to accept the tender of the person who offers the highest amount'. Nowhere does it say that such a condition permits the Government to act arbitrarily in accepting a tender or that under the guise or pretext of such a condition, the Government may enter into a contract with any person it likes, arbitrarily and without reason. In fact the Court pointed out at the end of the judgment that the act of the Government was not 'shown to be vitiated by such arbitrariness as should call for interference by the Court', recognising clearly that if the rejection of the tender of the 1st respondent were arbitrary, the Court would have been justified in striking it down as invalid.'

10. In Kasturi Lal Lakshmi Reddy v. State of J. & K. (AIR 1980 SC 1992) (supra) after referring to the case of Ramana Dayaram Shetty v. International Airport Authority of India (AIR 1979 SC 1628) (supra) Bhagwati, J., observed that the discretion of the Government has been held to be not unlimited in that the Government cannot give largess in its arbitrary discretion or at its sweet will or on such terms as it chooses in its absolute discretion. There are two limitations imposed by law which structure and control the discretion of the Government in this behalf. The first is in regard to the terms on which largess may be granted and the other, in regard to the persons who may be recipients of such largess. Bhagwati, J., further observed that (at p. 2000 of AIR 1980 SC 1992),--

'Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost State; such an action would be both unreasonable and contrary to public interest.'

(Underlined mine).

His Lordship Bhagwati, J., then made the following observations in connection with presumption of reasonableness and public interest of the governmental action and heavy burden on the party to make out a case of unreasonableness of action or action without public interest (at p. 2001 of AIR 1980 SC 1992) :--

'But one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it was wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because, as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the Court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied, it would be the plainest duty of the Court under the Constitution to invalidate the governmental action. This is one of the most important functions of the Court and also one of the most essential for preservation of the rules of law. It is imperative in a democracy governed by the rule of law that governmental action must be kept within the limits of the law and if there is any transgression, the Court must be ready to condemn it. It is a matter of historical experience that there is a tendency in every government to assume more and more powers and since it is not an uncommon phenomenon in some countries that the legislative check is getting diluted, it is left to the Court as the only other reviewing authority under the Constitution to be increasingly vigilant to ensure observance with the rule of law and in this task, the Court must not flinch or falter. It may be pointed out that this ground of invalidity, namely, that the governmental action is unreasonable or lacking in the quality of public interest, is different from that of mala fides though it may, in a given case, furnish evidence of mala fides.'

(Underlined mine).

While referring to the second limitation on the discretion of the Government in grant of iargess to the persons to whom such largess may be granted, it was observed that (at p. 2001 of AIR 1980 SC 1992),--

'The Government is not free, like an ordinary individual, in selecting the recipients for its largess and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The Jaw is now well established that the Government need not deal with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure. Where the Government is dealing with the public whether by way of giving jobs or entering into contracts or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must he in conformity with some standard or norm which is not arbitrary, irrational or irrelevant, The governmental action must be arbitrary or capricious, but must be based on some principle which meets the test of reason and relevance. This rule was enunciated by the Court as a rule of administrative law and it was also validated by the Court as an emanation flowing directly from the doctrine of equality embodied in Article 14.'

(Underlined mine)

10. Having quoted the excerpts in extenso from the two decisions of the Supreme Court, it will be seen as to whether in the present case the petitioner-respondents have any right of action as has been found by the learned Judge, in the light of the law laid down by the Supreme Court.

11. The learned Judge on the basis of the provisions of the Manual has further found that there is a right of action in the petitioner for which it is essential to advert to the provisions of the Manual. It may be stated that the Manual, in our opinion, has no statutory force. It is in the nature of administrative instructions for guidance for making purchases. In connection with the Central Stores purchases the Government has established an Organisation, namely, CSPO and to that Organisation has been attached a Committee, namely, CSPC, consisting of the Financial Commissioner as Chairman, three officers as members and a Stores Purchase Officer as Member Secretary. Clause 2 of the Manual provides for the General functions of the Organisation. The general functions inter alia are (1) to enter into rate contract for the stores which are purchased in large quantities and are in common use in several departments of the Government, (2) to decide and determine the store articles or material, the purchase of which is to be made on the rate contracts concluded by the Organisation, (3) to draw up standard specifications of various items of stores as far as practicable, in consultations with the departments concerned, (4) to invite tenders for items on the centralised list, scrutinize the same, settle terms of rates, mode of delivery and terms of payment, convey acceptance, execute agreement and issue Rate Contract Orders for the information of the Direct Demanding Officers. Clause 3 lays down the functions of Central Stores Purchase Committee. Inter alia the functions are, to decide and determine,-- (1) Stores articles for which rate contracts are to be concluded; (2) specifications, approximate quantity, duration of rate contract and delivery period; and (3) Conditions of tender and contract including special conditions, if any. Clause (5) lays down the procedure for concluding rate contract. It provides that the Organisation shall review the period of expiry of various items of Stores from time to time and with the approval of Committee, the Stores Purchase Officer shall issue tender notice in newspapers unless the Committee decide that the Organisation shall negotiate with firms holding D. G. S. and D/other State Government rate contracts and the firms agree to supply on the same rates and on such conditions as may be mutually agreed. Clauses 6 to 12 deal with details of notice, tender form fees, details of tender form, sale of tender form, receipt of tender form, opening of tenders, and tabulation of tenders. Clause 13 provides for demonstration of sample/technical inspection. The Stores Purchase Officer shall take action for the practical demonstration of samples before such experts as the Committee may direct and the tenderers may be asked to demonstrate their samples personally and bring to the notice of experts important features of their articles. Sub-clause (3) of Clause 13 is as under :--

'(3) The Stores Purchase Officer may obtain recommendations of experts in writing specifically mentioning whether they approve the samples and if not for what reasons. In such cases where experts can give general reasons for rejecting a particular make/type/ specification, detailed reason for rejecting each tender may not be recorded.'

Sub-clause (4) of Clause 13 empowers the Committee to dispense with the necessity of demonstration/testing. It further provides that the decision of the Committee whether any test certificate is acceptable or not shall be final. Sub-clause (6) of Clause 13 further provides that the tenderer shall not be informed of reasons for rejection of articles of stores on the basis of experts recommendation based on testing and decision of the Committee shall be final whether the Committee agrees or disagrees with the recommendations of the experts. Reasons shall, however, be recorded where expert's recommendations are not accepted by the Committee. Clause 14 deals with the approval of Committee. This clause enjoins on the Stores Purchase Officer to convene a meeting of the Committee after preparation of tabular statement and getting technical report of expert about demonstration/testing, if any, and at the meeting some or all of the experts may also be specially invited to attend the meeting of the Committee for explaining any point in the technical report. Sub-clause (3) of Clause 14 provides that other things remaining the same, the Committee may keeping in view of the production capacity approve lowest quotations; and Sub-clause (4) of Clause 14 lays down that if the Committee rejects lowest offers, reasons for the same may be recorded suitably justifying the same. Sub-clause (7) of Clause 14 provides as under :--

'(7) The Committee may reject all tenders, re-invite fresh tenders and authorise all Direct Demanding Officers to purchase article from open market during the period when there is no rate contract in force.'

Clauses 15, 16 and 17 deal with acceptance of tenders, issue of rate contract order, and earnest money and security deposit.

12. Clause (25) of the Conditions of Tender and Contract (Annexure 2) is to the effect that the Stores Purchase Organisation reserves the right to accept any tender not necessarily the lowest, reject any tender without assigning any reasons and accept tender for all or any one or more of the articles for which lender has been given.

13. It may be mentioned that there is no provision in the Manual nor we have been referred to any such clause, which makes it obligatory for the Organisation to effect purchase of articles in the centralised list contained in Appendix 'A' only through a rate contract. On the contrary what we find is that it is the function of the Organisation and the Committee as provided in Clauses 2 and 3 to decide and determine the Stores articles for which rate contracts are to be concluded even when the Organisation and the Committee have decided once that a particular store article has to be purchased through rate contract. It implies that it has also the power to revise the earlier decision and decide that rate contract may not be concluded for any store articles for a particular year. From the survey of the relevant pro-visions of the Manual and the relevant conditions it is to be seen as to whether they furnish any right of action to the petitioner, when the Committee has decided not to enter into any rate contract for the item of PVC hose pipes for the year 1980-81. From the perusal of Sub-clause (3) of Clause 13, Sub-clause (7) of Clause 14 and condition 25 of the Conditions of Tender and Contract, it is abundantly clear that the Committee has the power of rejection of tenders and where Committee agrees with the opinion of the expert it is not necessary to record any reasons for rejection of each tender. Further the Organisation has the power to accept any tender not necessarily lowest and reject any tender without assigning any reasons and it may accept tender for all or any one or more of the articles for which tender has been given We need not go into the question of constitutional validity of such provisions, as the same has not been canvassed before us. We are only called upon to examine the validity of the decision of the Committee in not entering into a rate contract for the item of PVC hose pipes for the year 1980-81.

14. It would appear from the narration of the facts given above that the Committee took the impugned decision on the basis of the technical report. It appears that the Committee agreed with the report of Shri K.L. Goel, Additional Chief Engineer (Mech.), PHED, Jaipur, who was of the opinion that the specifications were wanting in some respects. The given specifications did not provide for any specific thickness and weight per meter. The technical report attached a comparative statement of the samples of the various parties relating to the measurements of thickness and weight per meter and the expert was of the opinion that the thickness and weight per meter of the samples considerably vary. The expert also advised about the test certificates to be required from the tenderers. The expert was of the opinion that the specifications should be recast after mentioning the required pipe thickness, weight per meter, permissible tolerance etc. and the specifications should also clearly mention the laboratories whose certificates would be acceptable and should also state the tests whose results should be included in the certificates. Acting on the opinion of the technical expert, the Committee resolved not to enter into any rate contract for the year 1980-81. The decision so; reached by the Committee, in our considered] opinion, cannot be said to be arbitrary, irrational or unprincipled. It appears that the learned single Judge reached to the conclusion that the decision of the Committee is arbitrary on the basis that the appellants have not placed relevant material justifying the decision of the Committee and it appears from the order of the learned single Judge that the learned single Judge rejected the affidavit of Shri K.L. Goel, firstly on the ground that the affidavit was filed at a late stage and secondly, Shri Goel was not one of the members of the Committee. Both these basis have not been pressed into service before us by the learned counsel for the petitioner-respondents, as it has been conceded before us that Shri K. L. Goel was the member of the Committee and it is also conceded that the report of the technical expert was placed before the learned single Judge. Further there was no valid ground for the rejection of the affidavit of Shri K.L. Goel. The learned single Judge proceeded to record his finding on the basis that in the absence of the affidavit of Shri K.L. Goel, there is nothing on record to make out a valid defence for complete rejection of all the tenders for the item of PVC hose pipes for the relevant year. It is submitted by Shri Shishodia that the learned single Judge ventured to enter into the question as to why the specifications were wanting in some respects, as stated in the report of the technical expert and for the first time the expert recommended that the names of the laboratories should be mentioned in the specifications, whose certificates would be accepted and the learned single Judge also wrongly assumed that during the last year also the tenders were not accepted. The appellants' case for the last year was that the item of PVC hose pipes was deleted from the centralised list of CSPO in view of the estimated demand for the year 1979-80 as per the decision of the Committee, taken in its meeting held on Nov. 27, 1979. Shri Shishodia, learned Government Advocate, also submitted that apart from the affidavit of Shri K.L. Goel there was the affidavit of Shri R.S. Sharma, Officer-in-Charge. Though he may not have any personal knowledge regarding the decision of the Committee, still on the basis of the record he has sworn this fact that the report of the technical expert was considered by the Committee and the Committee after consideration of the report decided not to enter into any rate contract. In this connection suffice it to say that in view of the principle expounded in Kasturi Lal Lakshmi Reddy v. State of J. & K.'s case (AIR 1980 SC 1992) (supra) that there is always a presumption that the governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest, and this burden is a heavy one. In our opinion the petitioners have failed to discharge this heavy burden. On the contrary, by positive material evidence, the appellants have established that the decision taken by the Committee was not an arbitrary one. The two decisions of the Supreme Court of which excerpts have been extracted above, do not in any way help the petitioner. They have no application to the facts of the present case and are clearly distinguishable. In the decision of Ramana Dayaram Shetty v. International Airport Authority of India (AIR 1979 SC 1628) (supra) tenders were invited from Registered Second Class Hoteliers having at least five years' experience for putting up and running a Second Class Restaurant and two snack Bars at the Airport for a period of three years. This was a condition of eligibility. The International Airport Authority in disregard of this eligibility condition, accepted the tender of the 4th respondents who did not have the requisite experience as a Second Class Hostelier for the prescribed length of time and on the facts of that case it was held that the International Airport Authority of India was not entitled to act arbitrarily in accepting the tender of the 4th respondents, but was bound to conform to the standard or norm laid down in para t of the notice inviting tenders and it was further observed that the first respondent, namely, International Airport Authority-in accepting the tender of the 4th respondents denied equality of opportunity to others similarly situate in the matter of tendering for the contract, as they were precluded from doing so by the condition of eligibility requiring five years' experience, so it was held that the action of the first respondent was clearly discriminatory and it was also arbitrary and without reason. It was held that the acceptance of the tender of the 4th respondents was invalid as being violative of the equality clause of the Constitution as also of the rule of the administrative law inhibiting arbitrary action.

15. In Kasturi Lal Lakshmi Reddy v. State of J. & K. (supra) the State passed an order sanctioning 11.85 lacs blazes in inaccessible areas to the 2nd respondents for a period of 10 years on the terms and conditions set out in the Order. The order of the State Government was challenged on the ground that it was arbitrary, mala fide and not in public interest and it creates monopoly in favour of 2nd respondents and that the State has acted arbitrarily in selecting the 2nd respondents for awarding tapping contract, without affording any opportunity to others to compete for obtaining such contract and this action of the State is not based on any rational or relevant principle and is, therefore, violative of Article 14 of the Constitution and the rule of administrative law. All the three grounds, on which the order was challenged, were rejected and it was held that in pursuance of the particular policy of the State Govt. the order was passed by the State sanctioning allotment of blazes to the 2nd respondents.

16. It may be stated here that in the present case no rate contract was entered into with any of the tenderers. Thus, all the tenderers have been treated equally and question of differential or discriminatory treatment, does not arise. In the field of public law, action of the State is open to challenge only when the action is arbitrary, irrational, unreasonable and opposed to public interest or when the action is discriminatory in nature or violative of Article 14 of the Constitution and the State action is not otherwise open to challenge. It may be mentioned that the State is free not to deal with any person. Such a proposition is abundantly clear from some of the excerpts quoted above. What has been done in the present case, is only this that the Committee decided not to enter into any rate contract and that too in view of the report of the technical expert. Such a decision of the Committee, in our opinion, cannot be said to be arbitrary, irrational or opposed to public interest. We have not been referred to any decision, which may have direct bearing on the facts of the present case.

17. It is contended by Shri Mehta that though the appellants are not bound to enter into a rate contract, but they are under an obligation to take into consideration the tenders submitted by the tenderers. The Committee has not even, considered the tenders. It may be pointed out that factually this submission has no basis. It has been categorically averred by the appellants in paras 1 and 2 of the additional pleas of the reply to the writ petition that the tenders of the tenderers were considered and the samples of the tenderers along with the petitioners' samples were put for technical opinion and further on the receipt of the technical report, the technical report along with the lenders etc. were put before the Committee for taking necessary decision. Shri K.L. Goel, in his affidavit, has mentioned the item which was put on Agenda. The Agenda was 'Consideration of tenders for PVC and rubber hose pipes''. Under this Agenda the contents of the technical report and consideration of the recommendations, are placed before the Committee. Thus, this contention has no factual basis that the tenders were not considered.

18. It is next contended by Shri Mehta, learned counsel for the respondents, that the decision of not entering into any rate contract, should have preceded the act of inviting tenders and it should not have been decided after inviting the tenders. Having decided to invite tenders, the tenders should have been considered on the given specifications. This contention has no merit in view of the provisions of the relevant Manual and the relevanl condition of the tender and contract The Committee could revise its decision to enter into the rate contract for the item in question on finding that the specifications given in the tender notice are wanting in material respects and the requirements of test certificates also need to be changed. It has not been canvassed before us, nor it could be successfully canvassed that deliberately with ulterior motive and design, the required specifications were not given in the tender notice and a device is found through the expert report for not entering into a rate contract. It may be stated that the Committee is a High Power Committee as envisaged in Clause 3 and its personnel consists of the authorities mentioned in Sub-clause (2) of Clause 1. It cannot be conceived that such a High Power Committee would deliberately conspire beforehand to reach a decision already in their view. It appears that when the samples were compared by the technical expert, who himself was the member of the Committee, it was found that there is a considerable variance in the samples in thickness and weight per meter and it was also considered what certificates would be accepted containing what requirements. So on the basis of the expert report, the Committee decided not to enter into a rate contract. As to the requirements of specifications and test certificates we may say that it is not for the Court to enter into that question, for it cannot be expected from the Court to pronounce its opinion on the technical aspects of the specifications. Thus, the decision of the Committee is not rendered invalid on the ground that it was reached after inviting tenders.

19. It is next argued by Shri Mehta, learned counsel for the respondents that the Committee is precluded from rejecting all the tenders on any extraneous or irrelevant consideration and the Committee must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them. Reference was made to the following rule enunciated by Mr. Justice Frankfurter in Vitarelli v. Seaton, (1959) 359 US 535 : 3 Law Ed 2d 1012 :--

'An executive agency must be rigorously held to the standards by which it professes its action to be judged. ........ Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed. ........ This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword.'

Shri Mehta urged that the consideration of the tenders should have been made only in accordance with the standard or norm with regard to the specifications, as mentioned in the tender notice. Consideration of the tenders on different specifications is nothing, but an arbitrary action on the part of the Committee. We are unable to accept this contention of Shri Mehta. It may be stated that if the Committee had accepted any tender with different specifications not mentioned in the tender notice, then this argument could have been legitimately advanced. In the present case the Committee has not acted in such a manner. It has rejected all the tenders and adopted the same standard or norm for all by not entering into any rate contract for the year 1980-81 in the light of the expert report and it cannot be said that the Committee acted on any extraneous or irrelevant consideration.

20. Shri Mehta, learned counsel for the appellants, further urged that the expert's report cannot be looked into inasmuch as the same has not been referred to in the decision of the Committee and the reasons, which led to the decision of the Committee, cannot be supplied. Thus, the decision of the Committee suffers from the vice that it is a non-speaking and an unreasoned one. Reference was made by Shri Mehta to a decision of the Supreme Court in Mohinder Singh Gill v. Chief Election Commr., New Delhi (AIR 1978 SC 851), wherein it has been observed that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out. In our opinion these observations have been made while considering an order made by a statutory functionary where certain reasons have been given. In the present case it is not so. The Committee cannot be said to be a statutory functionary and further in the decision of the Committee no reasons have been given. Had any reasons been given, perhaps it could be said that further reasons cannot be allowed to be supplied. The Committee is discharging its administrative or executive function. While discharging such a function it was not obligatory for the Committee to state the reasons on which its decision or resolution is based. The Committee could, on consideration of the report of the expert, take a decision. Such a decision does not become invalid on account of lack of reasons.

21. It was next urged by Shri Mehta, learned counsel for the respondents, that under Rule 14 (7) the only course, which was open to the Committee, was to reinvite fresh tenders after rejection of all the tenders. Such a course has not been followed in the present case. This submission of Shri Mehta, in our opinion, ignores the essential nature of the function of the Organisation and the Committee. It was entirely within the discretion of the Organisation and the Committee to reinvite fresh tenders or to decline reinviting such tenders. By declining to reinvite fresh tenders, it cannot be contended that the public interest would suffer. The direct demanding officers in the various departments are required to act in accordance with the provisions of Chap. XII dealing with Stores, of the Genera] Finance ft Account Rules (hereinafter referred to as 'the GFAR'). Even when no rate contract is entered into, the authorities are competent to purchase stores acting in accordance with the provisions of the GFAR. Rule 255 provides that all purchases of Stores for use in the public service should be regulated in strict conformity with the Stores Rules and the subsidiary instructions as may be issued by the Government from time to time. Reference may be made to Appendix XVI. Appendix XVI makes elaborate rules for the purchase of stores. Rule 2 thereof provides that the tenders shall be invited for the supply of all articles unless the value of the order to be placed is small or sufficient reasons, to be recorded, exist which indicate that it is not in public interest to call for the tenders. Rule 3 makes a provision for obtaining fenders and provides that the tenders should be obtained :-- (i) by advertisement (open tenders), (ii) by direct invitation to a limited number of firms (limited tender), (iii) by invitation to one firm only (single tender or private purchase), and (iv) by negotiations. According to Rule 4 the 'Open Tender' system i.e. invitation to tender by public advertisement, should be used as a general rule and must be adopted subject to the exceptions noted in subsequent rules, in all the cases in which tike estimated value of the tenders to be received is Rs. 5,000/-or over. The 'single tender' system may be adopted in the case of small orders, or when the articles required are of a proprietary character and competition is not considered necessary, as per Rule 7. It is further stated in this rule that a 'Small order' shall be interpreted to mean for this purpose an order the total value of which does not exceed Rs. 500/-. Thus, there is ample safeguard of public interest provided under the GFAR,

22. Shri Mehta, learned counsel for the respondents, urged that if the . v. State of U. P. (AIR 1979 SC 621). That case dealt with the doctrine of promissory estoppel. In our opinion the principles enunciated in that case, have no application to the facts of the present case. In that case in older to provide incentive to new industrial units the State of Uttar Pradesh decided to give exemption from sales lax for a period of three years and a news appeared in the National Herald. When a letter was addressed by the appellant, the Chief Secretary to the Government in his letter in reply stated categorically that the proposed Vanaspati factory would be entitled to exemption from sales tax for a period of three yean from the date of commencement of production at the factory and that this would apply to all vanaspati sold during this period in Uttar Pradesh itself. In that case it was held that the facts necessary for invoking the doctrine of promissory estoppel were clearly present and the Government was bound to carry out the representation and exempt the appellant from sales tax in respect of sales of vanaspati effected by it in Uttar Pradesh for a period of three years from the date of commencement of the production. In our opinion no estoppel in any form arises in the present case, as it was never given out by the Organisation or the Committee that a rate contract will necessarily be entered into on the specifications given in the tender notice.

23. Shri Mehta, learned counsel for the appellants, also submitted that an ancilliary contract has arisen between the parties for taking a decision on the tenders. An ancilliary contract may finally culminate into a final contract. The Committee is at least bound to deal with the tenders in accordance with the terms of the proposal, as accepted and acted upon by the tenderers. As regards this argument suffice it to say that the Government tender notice is only an invitation to offer. No proposal has been made by the Government within the meaning of Section 2(a) of the Contract Act. The proposal has actually emanated from the tenderers. As such no ancillary contract can be said to have arisen from the facts of the present case.

24. The petitioners tried to persuade us to apply the judicially evolved rule of adminstrative law against arbitrary action or the role of estoppel even to a case where tenders are rejected or not considered for want of details or of required specifications in the tender notice. We hardly see any ground for application of such rules in such a case. Having regard to the nature of the functions exercised by the Organisation and the Committee, no interference is possible in an administrative discretion, as has been exercised in the present case.

25. No other point survives for consideration, nor any other point is pressed before us.

26. In the light of the foregoing discussion the inevitable result is that this appeal succeeds.

27. Accordingly, the appeal is allowed and the impugned order of the learned single Judge is set aside and the writ petition is dismissed. The parties are left to bear their own costs throughout.


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