ORDER
Sardar Ali Khan, J.
1. These two writ petitions, viz., W.P. No. 18326/88 and W.P. No. 18484/88, raise common questions of fact and law and are apt to be disposed of by a common judgment.
2. W. P. No. 18484/88 is filed for issue of a writ of mandamus declaring the negotiations dt. 3-12-1988 between the 1st respondent and the 5th respondent in regard to the S&C; 13( 14)/88 Cont. 1 of Cherlapally, as arbitrary, illegal and without jurisdiction and consequently to declare the re-commendation of the 1st respondent to the 2nd respondent recommending acceptance of the tender of the 5th respondent as illegal.
3. The other Writ Petition, W.P. 18326/88,is filed for the issue of a writ of mandamusdeclaring the negotiations betweenrespondent 3 and respondent 2 dt. 3-12-1988in respect of SD.CI. 13( 14)/88 H&T; Contract,Cherlapally, and consequentrecommendations of the 1st respondent to the 2nd respondent for accepting the tender of the 3rd respondent as arbitrary, illegal and unconstitutional.
4. Even from a reading of the prayers mentioned above, it is clear that the subject matter of both the writ petitions is one and the same as indeed are the facts governing the case. In this view of the matter both the oases were heard together and are being disposed of by a common judgment.
5. It would be in the fitness of things to take the facts existing in W.P. No. 18484/88 as common facts governing both the cases except to the extent necessary to make a deviation therefrom for the purpose of a decision in this case.
6. In W.P. No. 18484/88 it is alleged that the Food Corporation of India, which is a Corporate Body, is an agency of the Government of India and has taken over the activities of the Food Department of the Government of India. It is charged with the responsibility of procurement, storage and distribution of foodgrains throughout the country and is supposed to be one of the largest establishments of its kind in the whole world. It, therefore, obviously constitutes an Authority' within the meaning of Article 12 of the Constitution of India.
7. The Food Corporation of India entrusts handling and transport work of the foodgrains and fertilisers at various railway sidings to private contractors. The Corporation invites tenders for such handling and transport work which is usually for a period of two years. The tenders arc more or less in a standardised from containing several clauses which are supposed to be binding on the Corporation and the Contractors. The tender questioned in both the writ petitions is one which was quoted as S&C; 13(14)/88 Cont. I of the Handling and Transport contract for Cherlapally. The petitioner, Sri N. Ramesh Kumar, offered 99% ASOR and he is the lowest tenderer. The next lowest tenderer is one Hemadri Transport, Respondent No. 5 herein, who have quoted 104% ASOR. The third lowest tender is that of one Kondur Veeraiah, who is the petitioner in the other writ petition, viz., W,R 18326/88, who has quoted 111% ASOR. After the filing of the tenders, the Corporation sought some more information through a communication addressed to the petitioner and to Sri Samba Murty of Hemadri Transport. However, the allegation of the petitioner is that the communication addressed to him was deliberately wrongly addressed showing the address as 'Vijayanagar Colony' instead of 'Vinayanagar Colony'. Consequently the petitioner never got the communication sent by the respondent-Corporation. It seems, the required information as per the said communication was with regard to the particulars in Appendix-II, which was later on voluntarily filed, after personal enquiries, by the petitioner along with letter of the United Bank of India, Malakpet Branch, offering bank guarantee for Rs. 3 lakhs. The petitioner thereafter made representations before respondents 1 and 2 on 11-11-1988 and 18-11-1988 and also got a letter addressed by Sri Baga Reddy, Leader of the Opposition in the Andhra Pradesh Legislative Assembly, to the Hon'ble Minister for State for Food and Civil Supplies on 18-11-1988 with a copy marked to respondent 2. In spite of all the efforts put in by the petitioner, there was no response to his lowest tender and he was not called for negotiations. The respondent Corporation, however, called the 5th respondent for negotiations on 3-12-1988, who is the next lowest tenderer and recommended his case to respondent 2 for acceptance. Both the petitioners further contend that the nature I of the work, which is mainly concerned with the question of handling and transport of foodgrains and fertilisers, does not require any special training or skill. It is categorically asserted that in the past people who were absolutely new to the contract have been given contracts. It is also asserted that in the conditions of the tender there is no clause requiring any special training or experience for the purpose of the contract. Apart from the above facts, it is further alleged that one of the tenderers, Sri P. Ganesh Rao, who offered 126% ASOR, is the father-in-law of Samba Murty of Hemadri Transport respondent No. 5 herein, and one Rajaiah is the brother of Ganesh Rao and they are all supposed to be living in one house at Nallakunta. The partnership deed of Hemadri Transport was filed on 8-11-1988 showing Mr. Rajaiah and Mr. Ganesh Rao as partners in the firm. The firm itself was not registered and the partnership deed was not filed along with the tender. Subsequently the partnership deed was filed and the same person, i.e., Ganesh Rao, who has quoted a rate as high as 126% ASOR, figures as one of the partners of the firm. On the basis of the above set of facts, it is alleged that there is something suspicious about the transaction and the various partners of Hemadri Transport have come together only with a view to knock away the contract.
8. In Para 8 of the affidavit filed in support of the writ petition serious allegations are made against the Zonal Manager of the Food Corporation of India, Madras, who is the controlling authority of Andhra Pradesh F.C.I. matters. It is alleged that the said Officer has been functioning in a manner not in consonance with the best interests of the Corporation but subserving the interests of only a few. To substantiate the above contention it is stated that discrimination has been practised in case of handling contracts at Khazipet and at Warangal with rates varying from 150% to 115% ASOR while the two places are closely situate to each other. It is also alleged that contracts of this nature should be finalised only in the public interest and not at the whims and fancies of the officers of the respondent-Corporation.
9. The main contention in both the writ petitions is that on 3-12-1988 Hemadri Transport people were called for negotiations and the deal was finalised in their favour. The petitioner in W. P. No. 18484/88, who was the lowest tenderer, and the petitioner in W. P. No. 18326/88, who was the third lowest tenderer, were not called for negotiations. The protest dated 6-12-1988 filed by the petitioners was not of any avail and since there has been short-circuiting of the procedure which is laid down in the guidelines to be followed by the respondent- Corporation, the petitioners pray that the action of respondents Nos. 1 to 3 in calling the 5th respondent for negotiations on 3-12-1988 and the, recommendation of the 1st respondent to accept the tender of the 5th respondent may be struck down as being illegal and arbitrary.
10. A reading of the counter-affidavit filed on behalf of the 1st respondent in W. P. No. 18484/88 reveals that in response to the tender notice issued, 13 tenderers had applied for handling and transport work at Cherlapalli. The work involves unloading of the goods ' from the wagons at Cherlapalli and stacking them in the godowns and wherever necessary transporting them to other godowns etc. The last date for filing the tenders was 14-10-1988 and the validity was extended beyond 29-11-1988. The petitioner obtained the tender form and submitted his tender in time but without Appendix-II, which is a part of the tender form. Similarly, another tenderer Sri Samba Murty also had not submitted Appendix-11. Both the petitioners have deposited EM.D. of Rs. 20,000/- each which is compulsory except in respect of Societies who need not deposit EM.D. It is not denied in the counter-affidavit that the petition is the lowest tenderer, the next lowest being Hemadri Transport with 104% ASOR and the third lowest tenderer is Konduru Veeraiah, the petitioner in the other writ petition W. P. 18326/88. When it came to light that the petitioner and Hemadri Transport, respondent No. 5 herein, did not submit Appendix II, communications were sent to both of them. However, in the case of the petitioner it may be noted that his address is '100-B Vinayanagar Colony' but the communication was sent to '110-B Vinayanagar Colony' by registered post with acknowledgment due on 18-10-1988 and it was returned on 31-10-1988. Another communication was sent on 29-11-1988 merely extending the validity of the tender. In this communication the door number was correctly noted but the locality was given as 'Vijayanagar colony'. The mistake thus committed in giving wrong addresses is regretted in the counter-affidavit filed on behalf of the respondent-Corporation. But, the stand taken is that it in no way caused prejudice to the petitioner who in his letter dt. 11-11-1988 has stated that he has submitted the tender for H & T Contract of Cherlapalli offering a rate of 99% ASOR. Nevertheless, in view of the urgency involved in the matter he had complied with the details required in Appendix-II though he has not received any communication to that effect. However, it remains to be seen whether the petitioner was put at a disadvantage due to the sending of the communication to a wrong address in the light of the record existing in the case. In the counter-affidavit it is also admitted that the tenders from new entrants are considered and if found suitable are accepted. The further ground taken in the counter-affidavit is that the inter se relationship between P. Ganesh Rao, father-in-law of Samba Murty of Hemadri Transport, is not of any consequence as the tenders have to be considered on their own merits. The allegations made against the 3rd respondent are vehemently denied in this counter-affidavit and it may be mentioned that respondent 3 has also filed a separate counter-affidavit denying the allegations of mala fides leveled against him. As stated in the counter-affidavit filed on behalf of the 1st respondent it is seen that on 3-12-1988 the 5th respondent, who was the second lowest tenderer, was called for negotiations. He agreed to reduce his rate to 98% ASOR which -was still considered to be on high side and fresh negotiations were suggested. On 7-12-1988 a representation was filed by the petitioner requesting the respondent-Corporation not to finalise the tender. On the same day another representation was also made by Sri Konduru Veeraiah, the petitioner in the other writ petition, who scaled down his offer to 111% ASOR. On 12-12-1988 a telex message was received from the Headquarters at New Delhi directing the respondent-Corporation to look into the representations sent by the petitioner through Sri Baga Reddy, M.L.A., to the Ministry of Food. At the time when the counter-affidavit was filed on behalf of the respondent-Corporation the matter was still pending with the Zonal Manager, Madras, who is the authority to finalise the matter and before whom the comments and the results of the negotiations were submitted. It is significant to note that there is nothing in this counter-affidavit which shows on what basis negotiations were started with the second lowest tenderer by passing the petitioner who happens to be the lowest tenderer. No reason is given in the counter-affidavit as to why it was deemed fit and proper not to call the lowest tenderer for negotiations and why the authorities have opted for negotiating with the second lowest tenderer who happens to be the 5th respondent in this case.
11. In this connection it would benecessary to refer to the counter-affidavitfiled by the 3rd respondent in W. P.No. 18484/88. In this counter-affidavit whiledenying the allegations made against himself,respondent 3 has stated that the fast date forfiling the tenders was 14-10-1988 but thevalidity was extended up to 29-11-1988. Thepetitioner obtained the tender form andsubmitted his tender in time but withoutAppendix-II which is part of the tender form.It is admitted that the Regional Office,Hyderabad, while asking the petitioner tosubmit Appendix-II, has, by mistake, sent thecommunication to '110-B VinayanagarColony' instead of '100-B VinayanagarColony' which is the correct address and asecond letter was also misaddressed to himintimating the petitioner that the validityperiod was extended to 29-11-1988. The 3rdrespondent has taken serious note of the factthat the petitioner did not comply with therequirement of the Regional Office withregard to submission of details in Appendix-II, ignoring the fact that the communicationssent by the respondent-Corporation askingthe petitioner to supply the necessaryinformation in Appendix-II, were sent to awrong address which were not received byi the petitioner. It is further stated in thiscounter-affidavit that there are several officersinvolved in the scrutiny of the tenderdocuments after which proposals are put upbefore the concerned authorities. When thescrutiny was being made at the Zonal level, arepresentation dt. 11-11-1988 was receivedfrom the petitioner making certain allegations.Thereafter, it seems, a decision was taken tonegotiate with the second lowest tendererignoring the petitioner, who is the lowesttenderer. It is also alleged that in themeanwhile the Regional Office forwardedtheir comments on the representation of thepetitioner and on the reference of Sri BagaReddy, M.L.A., and Leader of the Oppositionin the A.P. Legislative Assembly pointing outthat the petitioner does not have anyexperience or standing in handling andtransport work, that he does not own any lorry and he is having a kirana shop and the house in which he is living belongs to his mother and therefore it was concluded that he is not financially sound. Moreover, since the age of the petitioner at the time of filing of the tender is only 20 years, it is taken for granted that he lacks experience in handling any transport contract work. Hence, it is stated that keeping in view the petitioner's capacity and status and experience and the non-extension of validity period of his offer beyond 19-12-1988, a decision was taken to ignore his tender and to negotiate with the 5th respondent The 5th respondent eventually agreed to come down to 95% ASOR. The Corporation took a final decision to award the contract to the 5th respondent keeping in view the huge operations at Cherlapalli being adversely affected due to the lack of movement of foodgrains. The 3rd respondent denies all the allegations of mala fides and corruption laid against him in this writ petition and requests that suitable action may be taken against the petitioner for leveling such baseless allegations against him. The further contention in the counter affidavit is that fresh stocks arrived at Vizag Port which were to be transported to Cherlapalli for distribution through public distribution system and a new contractor had to be positioned for commencement of work from 20-12-1988 and so the contract was finalised by the Corporation in favour of the 5th respondent.
12. In view of the above stated facts, there are two main points to be considered in this writ petition, viz.,
(1) What is the effect, if any, of sending the communications, to a wrong address, requiring the petitioner to complete Appendix-II attached to the contract?
(2) Is there any justification for overlookingthe petitioner's tender, which happens to bethe lowest, and entering into negotiationswith the 5th respondent who had submittedthe second lowest tender?
13. It may be kept in mind that in so far as W, P. 18326/88 is concerned, that is a case of a person who happens to be the third lowest tenderer and therefore his case will have to be considered only after a conclusion is reached in W. P. No. 18484/88 about the validity of the negotiations entered into with the second lowest tenderer ignoring the petitioner in W. P. 18484/88 who is the lowest tenderer.
14. I have gone through the records of this case meticulously in order to see how this case has been dealt with by the respondent-Corporation. So far as the question of sending communications to a wrong address is concerned, it may be seen that the correct address of the petitioner is '100-B Vinayanagar Colony'. The letter which was sent to Sri N. Ramesh Kumar, the petitioner in W. P. No. 18484/88 was addressed to '110-B Vinayanagar Colony' and, therefore, obviously not delivered to him. It seems a second letter was addressed to him intimating that the validity period was extended up to 29-11-1988 in which the house number is correctly given as '110-B' but instead of 'Vinayanagar Colony' it is written as 'Vijayanagar Colony'. This again was a mistake committed on the administrative side by the respondent-Corporation in sending life letters to a wrong address of the petitioner, lender these circumstances it is evident that the petitioner cannot be blamed for not responding to the said letters for complying with Appendix-II Form. It may be true that subsequently the petitioner himself became aware of the fact that he has to fill in Appendix-II form but that does not absolve the respondent-Corporation from their duty to take care that while dealing with the matter of tenders important letters are not sent to persons at wrong addresses which may result in confusion and give rise to complaints on behalf of such persons. It is significant to note that the authorities have taken serious view of the fact that the petitioner had not complied with the requirements of Appendix II as is evident from the note file which has moved from one stage to another. But it is clear that the petitioner cannot be blamed for not responding to a letter which had never reached him and which was admittedly sent to a wrong address by the respondent- Corporation.
15. The next crucial question to be considered is whether there is any justification for not calling the petitioner for negotiations when he happens to be the lowest tenderer and instead entering into negotiations with the 5th respondent, who is the second lowest tenderer. It may be seen that the respondent-Corporation had promulgated certain guidelines regulating the procedure for calling tenders and to conduct negotiations following an open tender enquiry. In the guidelines contained in Reference No. F-1/15/68-Contract, dt. 18-8-1968, the procedure indicated is that quotations received as a result of open or limited tender enquiry may ordinarily be accepted at competitive rates. Nevertheless, if there is obvious indication of any ring amongst the tenderers or where the lowest rate received is deemed unreasonably high, as compared to rates prevailing in or near the area of operation, action may be taken to re-invite tenders. If, however, the time left for following this procedure is short and will not permit invitation of fresh tenders, negotiations may be held with all the valid tenderers. While inviting the parties for negotiations, it may be explicitly made clear that the Corporation reserves the right to accept the original offer made in the tender even if the party revises or modifies the offer during the course of negotiations. There are certain other matters of procedure regarding negotiations which have been mentioned in the said communication referred to above which need not be gone into for the purpose of this writ petition.
16. The main point emerging from the above said guidelines is that negotiations are to be resorted to only if there is obvious indication of any ring amongst the tenderers or where the lowest rate received is deemed unreasonably high and it will not be possible to re-invite the tenders in view of the short time left at the disposal of the authorities, then negotiations may be held with all the valid tenderers It is significant to note that negotiations recommended in such a situation under the old guidelines are with all the valid tenderers. This policy or guidelines, as the case may be, for the negotiations, was revised in Reference No. F.l/15/68-Cont. dt. 16th March, 1972. In view of the importance of the above circular, it is deemed fit and proper to re-produce below the main features of the guidelines as follows :
'As you are aware, the Head Office hadlaid down, in its circular cited (dated 18-8-1968) the procedure for negotiated tendersin fixing service contracts for clearance,handling and transport of foodgrains. Thatprocedure covered the following three salientfeatures:
i) Ordinarily quotations received as a result i of open or limited tender enquiry may be accepted at competitive rates;
ii) In case there is obvious indication of any 'ring' formation amongst the tenderers or where the lowest rate is deemed to be unreasonably high as compared to rates prevailing in or near the area of operations, action may be taken to re-invite tenders;
iii) However, in case the time left for following the procedure as at (ii) above is short and will not permit re-invitation of tenders, negotiations may be held with all the valid tenderers.
2. It may be emphasized that negotiations should not be resorted to or entered into as a matter of routine but should be undertaken only in exceptional cases. In several recent cases, it has been observed that the initial rates tendered are quoted very high since it appears to have come to be believed that each tender enquiry will be followed by negotiation(s) where the parties could offer a more reasonable rate. If that be the position, which seems to be the case, it would be in the best interests of the Corporation to remove this misapprehension by deciding each case on the basis of the quotations received in open tender; otherwise the sanctity of tenders and re-invite them, in any case, there are definite reasons to believe that the quotations received in response to the tender are abnormally high. Only in exceptional cases should negotiations be resorted to, and these should be real exceptions, and full justifications should be forwarded to the Head Office in support of undertaking such negotiations.
3. In this connection, your reference is invited to the 'Delegation of Powers' in favour of various authorities for conclusion of contracts, as detailed in Section VI of the Head Office circular No. 29(2)/69-Al dt. 15-9-1969. The proposals in all cases, irrespective of the value of the contract, should be submitted to the Head Office for obtaining prior permission to hold negotiations. Decision to conduct negotiations will not be taken by RMS/SRMS/ZMS at their level in future. However, once prior permission to conduct negotiations has been granted by the Head Office, the concerned RMS/SRMS/ZMS may enter into negotiations and take a decision to award the contract falling within their delegated powers. Cases falling within the powers of the MD shall be referred to the Head Office for award of contract after negotiations have been held.'
Even under the revised policy dated 16thMarch, 1972, negotiations, if resorted to incertain extreme cases, were to be held withall the valid tenderers and the procedure forentering into such negotiations has also beenlaid down in detail as can be seen from areading of Paras 2 and 3 of the above citedguidelines. When we come to the letterbearing No. Fl/10/78-Cont., dt 15-2-1980 wecan see that there has been a basic change inI the procedure regarding negotiations to beentered into with contractors for clearance,handling and transport of foodgrains etc. Areading of this letter shows that on the basisof the decision taken in the Senior Officersmeeting held on 3rd and 4th of Dec. 1979 itwas decided to amend item No. (in) of Para 1of Circular dated 16th March 1972 and theamended item reads as follows :
'However, in case the time left for following the procedure as at (ii) above is short and will not permit re-invitation of tenders, negotiations may be held only with the lowest tenderer.'
It is emphasized in the said letter dated 15-2-1980 that the opportunity for negotiations should be resorted to the minimum and re-tendering as a rule should be normally followed. Under the above state of affairs now what remains to be examined is whether there was any justification for the authorities of the respondent-Corporation to enter into negotiations with the second lowest tenderer overlooking the petitioner in W. P. No. 18484/88 who happens to be the lowest tenderer. An examination of the entire record in this case reveales the fact that the only ground on the basis of which Sri N. Ramesh Kumar, the petitioner in W. P. 18484/88, the lowest tenderer who offered 99% ASOR, was not called for negotiations is that the SRM., A.P., has reported that this party is not financially sound and has no previous experience in H & T Work. Moreover, it is stated that when a letter was sent to the party requesting him to furnish full particulars of business experience etc., the same was returned undelivered by the postal authorities after making attempts on five consecutive dates to deliver the same. In so far as the question of the letter sent to the petitioner is concerned, it has already been seen that the letter was sent to a wrong address and, therefore, was not delivered to the petitioner for which the petitioner cannot be blamed. The copy of the letter which is found in the records shows that it has been sent to a different address giving wrong door number as well as wrong name of the residential colony in which the petitioner is living. Therefore, that part of the objection that the petitioner has not furnished the particulars contained in Appendix II even though a letter was sent to him is of no consequence and must be ignored as such. It is interesting to note that in the counter-affidavit filed by the 1st respondent in W. P. 18484/88 nothing is stated as to why the lowest tenderer was not called for negotiations and the authorities called the second lowest tenderer for negotiations. It is stated that the second lowest tenderer initially agreed for 99% ASOR and subsequently reduced it further to 98%. It is only in the counter-affidavit filed on behalf of the 3rd respondent a casual mention is made as to why the lowest tenderer was overlooked and the authorities entered into negotiations with the second lowest tenderer. In para 9 of the said counter affidavit it is stated as follows:
'...............Based on the available particulars and recommendations of the Regional Office about the inability of the petitioner in performing a heavy contract as this, at Zonal level, it was decided to negotiate with the next lowest offer, viz., that of the 5th respondent pending comments and further particulars on the said representation of the petitioner from the Regional Office, Hyderabad.'
Much has been said about the fact that the petitioner had not furnished the details in Appendix II even though a communication was addressed to him asking him to do so but as already stated above the letter was sent to a wrong address and never reached the petitioner at all. It is further stated in Para 11 of the counter-affidavit filed by respondent 3 as follows:
'.............In the meanwhile, the Regional Office forwarded their comments on the representation of the petitioner and also on the VIP reference of Shri Baga Reddy as stated above, inter alia, pointing out that the petitioner does not have any experience or standing in handling and transport work, that he, does not own any lorry and that he is having a kirana shop and the house in which he is living belongs to his mother and, therefore, he does not appear to be financially sound. According to the petitioner's own sayings, he is only 20 years now and his statement that he has got 8 years of experience in handling and transport contract work in FCI and SWC cannot be correct.....'
It is not known by whom such an enquiry was made against the petitioner and in any case it is obvious that whatever enquiry was made was behind the back of the petitioner and he was not aware of any such investigation or enquiry being made about his financial capacity or about his past experience etc. Moreover it is rather extraordinary to state that the house in which the petitioner is living belongs to his mother and, therefore, this is also a minus point against the petitioner. It is well known that immovable properties generally stand in the name of the parents of young persons but that by itself cannot result in disqualification. The further argument that because of his age he cannot claim any experience is also not of much consequence for the reason that in a contract of such nature which deals with handling and transport of goods lying at a particular place, not much experience is called for as in any case the respondent-Corporation has admitted that they have been awarding contracts to persons who are new comers and who have had no experience in transport or handling such contracts. The young age of the petitioner, therefore, should not have been a factor reckoned against him because he could have obviously got the contract executed by other persons who may be associated with him and who may be having enough experience. In any case it does not appeal to reason that only on the basis of so-called discreet enquiry made against the petitioner he was disqualified from entering into negotiations with the authorities of the respondent-Corporation. In fact, the purpose of negotiating with the lowest tenderer as is enjoined in the guidelines is to ascertain all such details that may be relevant with regard to a particular person or a contract which is to be assigned to him and only then if it is found that he is not a suitable person, there may be some justification in entering into negotiations with the next lowest tenderer. If the logic resorted to by the respondent-Corporation is accepted in this case that the lowest tenderer was eliminated from negotiations because of the fact that in the opinion of the Corporation he did not have the necessary financial capability or experience as such, then it would be meaningless to have a clause in the guidelines that negotiations may be resorted to in exceptional cases with the lowest tenderer for it would always be easy to the authorities to go on eliminating one tenderer after another till they come to the person of their own choice on some pretext or other and start negotiations with him. It may be made clear that in so far as the case of the petitioner in the other writ petition, i.e., W.P. 18326/88 is concerned, he is the third lowest tenderer and it has been rightly held by the respondent-Corporation that in any case he does not have any right to be called for negotiations. Therefore, I am considering the case of the petitioner in W. P. 18484/88 only who is the lowest tenderer and who has been overlooked for negotiations contrary to the established procedure laid down in the guidelines referred to above. There cannot be any manner of doubt that the way in which the petitioner has been eliminated from the negotiations savours of arbitrariness and illegality which cannot be condoned in this writ petition.
17. In Ramana v. I. A, Authority of India : (1979)IILLJ217SC which has popularly come to be known as 'the International Airport Authority case', the Supreme Court has laid down the following words which will apply with full force to the case on hand. The relevant paragraph is as follows : (Para 20)
'Now, obviously where a corporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as Government. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such corporation is dealing with the public whether by way of giving jobs or entering into contracts or otherwise and it cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevance.'
The public corporations are charged with the responsibility of not only playing safe but playing fair also while dealing with matters of public interest and they cannot be allowed to finalise contracts or distribute largess in accordance with their own whims and fancies. The responsibility is of an onerous nature and must be discharged in accordance with the principles of fair play and justice. In other words, there cannot be a rule of thumb in such matters and if it is found that the authorities have deviated from the course of action which is to be followed by them, the High Court in exercise of its overall power of judicial review is bound to set aside any such action.
18. In Chaitanya Kumar v. State ofKarnataka, : [1986]2SCR409 a similarprinciple has been adumbrated by theSupreme Court while dealing with the casearising under what has come to be known as'Public interest litigation'. The SupremeCourt observed that the Court cannot closeits eyes and persuade itself to uphold publiclymischievous executive actions which havebeen so exposed. When arbitrariness andperversion are writ large and brought outclearly, the court cannot shirk its duty andrefuse its writ. The object of judicial scrutinyin matters of this nature is to ensure thatwhatever has been done is in accordancewith the settled norms and practice governingthe case.
19. In Rasbihari v. State of Orissa, : [1969]3SCR374 the validity of the schemes adopted by the Government of Orissa for sale of Kendu leaves was under consideration. After discussing the circumstances in which a monopoly was created under the provisions of the Orissa Kendu Leaves (Control of Trade) Act (28 of 1961), the Supreme Court observed that the validity of the law by which the State assumed the monopoly to trade in a given commodity has to be judged by the test whether the entire benefit arising therefrom is to ensure to the State and the monopoly is not used as a cloak for conferring private benefit upon a limited class of persons. The principle so laid down applies to this case as well that the whole exercise on the part of the respondent-Corporation in a matter like this should be to protect and promote the public interest and to award the contract to the best possible person available taking into consideration the rates quoted by him, the circumstances in which he is called upon to work and such other relevant material which may be necessary for the award of the contract. A matter of this nature should not be surrounded with suspicion and no room should be given for any unsavoury comment against the attitude of the public corporation.
20. It was argued by the learned counsel for the respondents in this case that this was essentially a matter arising out of a contract and, therefore, no relief could be granted to the petitioner in a writ petition. I am afraid I am not persuaded by this argument. It is obvious that when there is violation of a well established principle of natural justice or a rule of equity and good conscience then it may not be necessary to drive the petitioner to the necessity of filing a civil suit in a Court of law. The jurisdiction under Article 226 of the Constitution will reach out to such a person to correct the wrong so committed and to strike down the impugned action which is the subject matter of the writ petition. In Ram and Shyam Co. v. State of Haryana, : AIR1985SC1147 the Supreme Court has laid down this laudible principle in the following words: (Para 9)
'Ordinarily it is true that the court has imposed a restraint in its own wisdom on its exercise of jurisdiction under Article 226 where the party invoking the jurisdiction has an effective, adequate alternative remedy. More often, it has been expressly stated that the rule which requires the exhaustion of alternative remedies is a rule of convenience and discretion rather than rule of law. At any rate it does not oust the jurisdiction of the court. Where the order complained against is alleged to be illegal or invalid as being contrary to law, a petition at the instance of person adversely affected by it would lie to the High Court under Article 226 and such a petition cannot be rejected on the ground that an appeal lies to the higher officer or the State Government. An appeal in all cases cannot be said to provide in all situations an alternative effective remedy keeping aside the nice distinction between jurisdiction and merits.'
21. The decision reported in D.F.O. South Kheri v. Ram Sanehi, : AIR1973SC205 is to the same effect wherein it is held that it would not be possible to hold that merely because the source of the right which the respondent claims was initially in a contract for obtaining relief against any arbitrary and unlawful action on the part of the public authority he must resort to a suit and not to a petition by way of a writ.
22. In the light of the above case law, I do no find much force in the argument of the learned counsel for the respondents that the matter is essentially of a contractual nature and, therefore, no relief could be granted to the petitioner in this writ petition.
23. The learned counsel for the respondents relied upon a decision of the Supreme Court reported in Mukunda v. Bangshidhar, : AIR1980SC1524 wherein it is held that the finding of the Board that a particular tenderer does not possess financial capacity is a finding of fact and should not be interfered with under Article 226 of the Constitution. It is not merely a finding that the petitioner does not have the necessary financial capability to carry on the contract which is assailed in this writ petition. The question is in accordance with what procedure or in what manner such a finding was arrived at. If the finding is the result of a subjective satisfaction of the authorities concerned without putting the petitioner on notice to disclose his financial status or as a result of an enquiry which has been held behind the back of the petitioner, then it is not really speaking a finding of fact at all. It would in such a case be a finding which is based merely on the subjective opinion of the concerned authorities. It cannot be termed to be a full-fledged finding of fact, which, as pointed out by the Supreme Court, may be outside the purview of the jurisdiction of the High Court under Article 226. In this case apart from the factual circumstances of the case, what is at stake is the elimination of the petitioner from the field of negotiations even though he happens to be the lowest tenderer only on the ground of subjective satisfaction arrived at by the authorities without any proper enquiry or guidance and definitely without putting the petitioner on notice on the ground that he does not have the financial capability. Such a situation is not covered by the decision of the Supreme Court and, therefore, the citation of the above said case is not applicable to the facts of this case.
24. Taking into consideration all the relevant facts of the case, W. P. No. 18484/88 has to be allowed on the question of lack of negotiations with the lowest tenderer and on the wrong action of the 1st respondent-Corporation in calling the 5th respondent who was the second lowest tenderer for negotiations in preference to the lowest tenderer, the petitioner herein. In this view of the matter it is not proposed to go into the question of lack of bona fides on the part of the 3rd respondent and the other authorities of the 1st respondent-Corporation in this case as the conclusion is based upon the interpretation of the relevant provisions contained in the guidelines referred to above dealing with the question of calling for negotiations the lowest tenderer in certain exceptional circumstances. A writ oi mandamus is, therefore, issued declaring the negotiations dt. 3-12-1988 between the 1st respondent and the 5th respondent in regard to S & C 13(14)/88 Cont. I of Cherlapally as arbitrary, illegal and without jurisdiction thereby rendering the recommendation oi the 1st respondent to the 2nd respondent recommending acceptance of the tender of the 5th respondent as illegal and void.
25. W.P. No. 18484/88 is allowed but in the circumstances of the case there will be no order as to costs.
26. W.P. No. 18326/88 has been filed by the third lowest tenderer who cannot have any grievance for not being called for negotiations in the presence of the other two persons, viz., the lowest tenderer i.e., the petitioner in W.P. No. 18484/88 and the second lowest tenderer the 5th respondent. The facts and circumstances stated in the said writ petition are also identical as those in W.P. No. 18326/88. In view of the fact that the petitioner happens to be the third lowest tenderer, no relief can be granted to him.
27. W.P. No. 18326/88 is, therefore, dismissed but in the circumstances of the case there will be no order as to costs.