Judgment:
ORDER
G. Rohini, J.
1. This writ petition is filed seeking a writ of mandamus declaring the action pf the 1st respondent-Municipal Corporation of Rajahmundry in confining the works of laying pavement only to the tile manufacturing companies and also in awarding most of the works to the respondents 2 and 3 in violation of the procedure in respect of tender notification No.45/2002-03 dated 27.12.2002 as arbitrary and illegal and seeking consequential directions.
2. The case of the petitioner is that being a Class-Ill contractor, he is eligible to be entrusted with the works worth Rs.50.00 lakhs and he is competent to execute the civil works of any nature like constructing buildings, laying roads, pavements with interlocking tiles and etc., The 1st respondent issued tender notice No.45/2002-03 dated 27.12.2002 inviting tenders for execution of 104 civil works like laying roads, pavements, construction of culverts, drainages and etc., It was mentioned that the last date for applying for tender schedules on payment of the fees in the Treasury of Corporation is 17.1.2003, and that the last date for issuing the tender schedules was 29.1.2003. The last date for payment of Earnest Money Deposit was 30.1.2003 and the tenders were to be received till 3.00 p.m. on 30.1.2003. The tenders will be opened on 30.1.2003 at 3.30 p.m. The petitioner applied for tender schedules in respect of 12 works within the time prescribed along with 221 other contractors. All of them paid the schedule fees through Treasury challan as prescribed in the tender notice. They have also paid the EMD as prescribed in the tender notice. The tenders were opened on 31.1.2003 and surprisingly it was found that several works were allotted to respondents 2 and 3, who did not pay the schedule fees by way of Treasury challan nor paid the EMD through pay orders as required under the tender notice. The petitioner further pleaded that one of the conditions imposed by the 1st respondent in the tender notice that only those companies which, are manufacturing interlocking tiles can bid for certain works of laying pavements is arbitrary, unreasonable and tailor-made to suit some of the tile manufacturing companies in whom the Commissioner of Municipal Corporation of Rajahmundry is interested. It is also alleged that the procedure followed by the 1st respondent lacks transparency and the entire action of the respondents is liable to be declared as arbitrary and illegal and it is necessary to direct them to call for fresh tenders.
3. On behalf of the respondents 1 and 4 a counter-affidavit has been filed stating that the petitioner being an unsuccessful bidder in respect of 12 works is not entitled to challenge the entire tender process consisting of 104 works. It is further contended that the respondents 2 and 3 have submitted their tenders duly following the procedure prescribed under the tender notice and the allegations contra made by the writ petitioner are all incorrect and baseless. Since the respondents 2 and 3 are the lowest bidders for 14 and 11 works respectively out of 104 works, their tenders were accepted and work orders, were issued to them. It is also stated that tenders, were called for laying interlocking tiles footpaths only from manufacturers of interlocking tiles as the said work involves very less amount of civil works as the tiles are only to be spread over on the foot-paths. It is a specialised field and the manufacturers of interlocking tiles would enable the respondents to check the quality of tiles during production also and therefore, they have rightly imposed a condition that only the manufacturing companies in interlocking tiles are entitled to submit the tenders. The said condition is imposed only to ensure quality, price advantage and timely execution of the works and it is not open to the writ petitioner who is an unsuccessful bidder to challenge the validity of the said condition. It is also pointed out that it has come to the notice of the respondents that local contractors are forming cartel and preventing outsiders from participating in tenders. Since the local contractors are forming rings and quoting higher rates, they were constrained to cancel the tenders in the earlier two occasions on the basis of the complaints that they are preventing others from participating in the tenders. In the circumstances, it was decided to keep tender boxes at places like Offices of the Sub-Collector and Deputy Superintendent of Police also to enable the contractors to submit their tenders at any one of the places and thus the entire tender process was conducted strictly in accordance with law maintaining transparency and all the allegations made by the petitioner are motivated and untenable,
4. Heard both sides. The learned Counsel for the petitioner reiterated the contentions raised in the Writ Petition and submitted that there is no justification in reserving the works of laying footpaths only for tile manufacturing companies. He contends that in view of the said condition many civil contractors including the petitioner, though they are competent to execute the said works, are eliminated from participating in the tenders. The said condition, according to the learned Counsel, is arbitrary and discriminatory and violative of Article 14 of the Constitution of India.
5. So far as the allegation that the respondents 2 and 3 did not purchase the tender schedules on payment of the fees through treasury challans, the learned Counsel for the petitioner contends that since the said allegation has not been denied in the counter of the 1st respondent, the respondents 2 and 3 ought not to have been allowed to participate in the tender process, I am unable to agree with the said contention. On a careful consideration of the terms of the tender notice in question and as rightly submitted by the learned Counsel for the respondents 1 and 4, I am of the opinion that acceptance of tender schedule fees paid by any other mode is not prohibited either expressly or by necessary implication under the tender notice. It is also explained by the respondents in their counter that not only respondents 2 and 3 but other contractors also paid tender schedule fees by way of pay orders and demand drafts and the same have been accepted. Having regard to the facts and circumstances of the case, even assuming that there is any deviation in the mode of payment of tender schedule fees, it cannot be said that the deviation, in any way has materially affected the tender process. Therefore, I do not find any merit in the contention that the tenders of the respondents 2 and 3 have been accepted contrary to the tender conditions.
6. The learned Counsel for the petitioner basing on the particulars furnished in the counter-affidavit, pointed out that the demand drafts submitted by the respondents 2 and 3 towards the tender schedule fee are dated 19.12.2002 and 17.10.2002 respectively, whereas the tender notice is dated 27.12.2002. Therefore, he contends that the fact that the demand drafts were obtained by the respondents 2 and 3 much prior to the issuance of tender notice shows that there is a collusion between the 1st respondent and the respondents 2 and 3 and that the 1st respondent has predetermined to award the works to the respondents 2 and 3. As rightly submitted by the learned Counsel for the 1 st respondent the demand drafts as on the date of the submission of tenders are valid and in the absence of any material to establish the alleged collusion, no motives can be attributed to the respondents only on the ground that the demand drafts were purchased by some of the tenderers prior to the date of tender notice.
7. Thus the only point that remains for consideration is whether the 1st respondent is justified in restricting some of the works only to tile manufacturing companies and whether the said tender condition can be declared as arbitrary and violative of Article 14 of the Constitution of India.
8. The law relating to the scope of judicial review with regard to the awarding of contracts by the State and its instrumentalities is well-settled. In Tata Cellular v. Union of India, (1994) 6 SCC 651, the Apex Court having considered the said issue in detail laid down the following principles:
'...1. The modern trend points to judicial restraint in administrative action.
2. The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made.
3. The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
4. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
5. The government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
6. Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. Based on these principles we will examine the facts of this case since they commend to us as the correct principles.'
9. Again in Air India Limited v. Cochin International Airport Limited, : [2000]1SCR505 , the Supreme Court after reviewing all the relevant decisions on the said aspect reiterated the principles governing the award of contract by the State and its instrumentalities.
'..The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that it not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bow fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms; standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene.'
10. Thus it is clear that the tender conditions cannot be normally subjected to judicial scrutiny unless they are so arbitrary or irrational or ex facie in violation of Article 14 of the Constitution of India. In the instant case, tenders were invited by the 1st respondent-Corporation for 104 works like laying roads and pavements, construction of culverts, drainages and etc., Some of the said works were described as 'construction of pavements with interlocking tiles' and for the said works the qualification fixed was that the tenderer should be a manufacturing company of interlocking tiles. It is explained in the counter that the work of laying 'interlocking tiles foot-paths' involves very less amount of civil works since it requires only spreading of tiles over the foot-paths. It is the case of the respondent No.1 that the manufacturer of interlocking tiles will be in a better position to execute the said works and that tenders were restricted only to manufacturing companies of interlocking tiles to ensure quality, price advantage and timely execution of the said works in question. Keeping in view the nature of the work the said qualification or eligibility criteria prescribed by the 1st respondent cannot be said to be unreasonable or discriminatory. There is absolutely no reason to hold that the said condition is either arbitrary, or irrational nor it can be held that it was prescribed to suit some of the tenderers.
11. However, the learned Counsel for the petitioner while placing reliance upon the decision of the Supreme Court in Comptroller and Auditor General v. K. V. Mehta, 2003 (1) Scale 351, contended that the classification made by the 1st respondent in inviting tenders only from the manufacturers of interlocking tiles has no nexus with the object sought to be achieved.
12. In the said case the Apex Court was dealing with the validity of the advertisement by the Comptroller and Auditor General inviting applications from the firms of the Chartered Accountants for the purpose of empanelment for audit of the Government companies. The said advertisement stipulated that in some of the States mentioned therein only the Partnership Firms of the Chartered Accountants are made eligible for enrolment and the proprietary firms of the Chartered Accountants were made ineligible either to apply or to be empanelled for being assigned audit work of the Government companies. However, in several other States the proprietary firms based in those States were made eligible for being brought on the panel for audit work of Government Companies and concerns.
13. While considering the validity of the said condition stipulated in the impugned advertisement the Supreme Court held as follows:
' ...A partnership concern is not a legal entity like company; it is a group of individual partners. In a partnership firm, it is the partner who will be assisted in carrying out the work but quite remains the eligible Chartered Accountant. It is the same situation as in a proprietary concern where a Chartered Accountant would be carrying on audit work all-in-one. Merely because some of the Chartered Accountants have formed a partnership firm, it cannot be assumed that they become more efficient for carrying out audit work than the individual Chartered Accountant who forms proprietary concern. It is, therefore, evident that the appellant himself erroneously assumed that the partnership firms are more efficient than the proprietary concern in the matter of audit of accounts of the public sector undertakings or of the government concerns.'
14. Thus the Supreme Court concluded that the classification between the proprietary and partnership firm is arbitrary and unfair and accordingly falls on the anvil of Article 14 of the Constitution.
15. As can be seen the Supreme Court while dealing with the facts and circumstances in the above case arrived at a conclusion that there is no valid reason for creating a sub-classification from the general class of eligible Chartered Accountants and confining the work in question only to the partnership firms of the Chartered Accountants and making the proprietary concerns ineligible.
16. The facts in the instant case are entirely different. The work in question is 'construction of pavements with interlocking tiles', which does not involve much civil work. The 1st respondent taking into consideration the nature of the work and keeping in view the price advantage and timely execution of the works, apart from ensuring quality thought it fit that inviting applications only from the manufacturing companies of the interlocking tiles would be advantageous. In my considered opinion the action of the 1st respondent cannot be said to be making a classification without having any nexus with the object sought to be achieved. Obviously the work is different from construction of usual pavements. The qualification in respect of the said works was prescribed with an object to get quality of work as well as timely execution of work. Certainly the manufacturers of interlocking tiles and civil contractors form two distinct and different classes. Therefore there is no merit in the contention that the condition in question is discriminatory or violative of Article 14 of the Constitution of India.
17. Thus the facts in the present case are clearly distinguishable and the ratio of the decision in Comptroller and Auditor General v. K.V. Mehta (supra) has no application to the facts on hand.
18. For the aforesaid reasons, I am of the view that the action of the 1st respondent in confining the tenders in question only to manufacturing companies of interlocking tiles cannot be said to be arbitrary or in violation of Article 14 of Constitution of India. It is welt settled that the State or its instrumentalities can choose their own terms of invitation to tender. When the 1st respondent has fixed a specific criteria which does not suffer from any vice of arbitrariness, this Court in exercise of jurisdiction under Article 226 will not sit in appeal and substitute its own opinion.
19. It is also pertinent to note that the dispute is purely between the rival tenderers and absolutely no element of public interest is involved. That apart, except vague allegation that the condition impugned is tailor-made to suit the manufacturing companies in whom the 1st respondent is interested there is no material to establish that the decision making process is vitiated by any mala fides. It is also relevant to note that the petitioner is an unsuccessful bidder who did not fulfill the qualifying criteria as mentioned in the tender notice and participated in the tender process without raising any objection whatsoever.
20. In the circumstances, it is not open to the petitioner to question the tender conditions at this stage and on that ground alone the writ petition is liable to be dismissed.
21. For the aforesaid reasons, I do not find any merit in the writ petition.
22. The Writ Petition is accordingly dismissed. No costs.