Tci Seaways Limited Vs Food Corporation of India Regional Officer Haca and anr - Citation 445084 - Court Judgment

Judgment:

AR. Lakshmanan, C.J.

1. These two appeals arising out of WP No. 5046 of 2002 are directed against the Judgment dated 3rd July, 2002 of the learned single Judge directing the 1st respondent to accept the technical bid of the writ petitioner-M/s Gati Coast to Coast, M.G. Road, Secunderabad and to consider the same along with the financial bid of the 2nd respondent - M/s Transport Corporation of India Seaways Ltd., Chennai and to finalise the matter as early as possible.

2. While W.A. No. 1165 of 2002 has been filed by the 2nd respondent in the writ petition, WA No. 1235 of 2002 has been preferred by the 1st respondent viz., the Food Corporation of India. Since both the appeals raise common questions of fact and law, they were heard together and are being disposed of by this judgment. For convenience sake, the parties will be referred to by their status in the writ petition.

Facts:

3. The writ petition was filed seeking a writ in the nature of mandamus declaring the action of the 1st respondent therein viz., the Food Corporation of India in rejecting the writ petitioner's technical tender bid offered by the petitioner in response to the Food Corporation of India's Tender Notice No. S&Sl;(3)/2001-Sales, dated 1-3-2002, and refusing to consider the petitioner's tender on the ground that the tonnage of the petitioner's vessels is more than the capacity mentioned in Clause (d) of the Tender Notice as illegal, arbitrary and violative of Article 14 of the Constitution of India and consequently direct the Food Corporation of India to consider the petitioner's financial bid along with other tenderers and finalise the same in accordance with law.

4. The 1st respondent-Food Corporation of India, has issued a tender notice dated 1-3-2002 inviting tenders from the intending transporters for transporting food grains and sugar from Visakhapatnam through sea to Andaman and Nicobar Islands (A&N; Islands) comprising Port Blair and 7 Public Distribution Centres in A & N Islands. The last date for receipt of tenders in the office of the F.C.I. was 15-3-2002 upto 12.00 hours. The tenders were scheduled to be opened at 14.00 hours on 15-3-2002. Clause (d) of the tender notice dated 1-3-2002 laid down that only those parties, which are financially sound and have the requisite experience of at least 3 years in shipment of food grains would be considered for appointment. It also says that the tenderers should have not less than two vessels with a size of 2000 to 4000 Dead Weight Tonnage (DWT) or the quantity assigned to transport from Visakhapatnam having mechanical means of opening and closing of hatches preferably. The clause further stipulates a condition that the age of the vessel should be less than 20 years, that the private shippers should be in a position to supply vessels at a short notice and that the minimum annual turnover of the company should be atleast Rs. 10 crores. Clause (c) of the tender conditions clearly lays down that the Food Corporation of India has the right to reject any or all tenders without assigning any reasons. According to Clause (f) of the tender conditions, the participants would have to make their offer in two parts each comprising technical bid and financial bid in separate sealed envelopes. As per the said clause, the technical bid would be evolved first for selection of suitable parties and the financial bid would be done subsequently from the selective suitable parties.

5. This apart, Clauses (1) and (VI) of the technical bid relating to the tender notice dated 1-3-2002 read thus:

(i) Private shippers i.e., vessel carriers with ownership of at least 2 ships with the size of 2000 to 4000 DWT or the quantity assigned for transportation fro Vizag as required by A & N Administration to various PDCs and the vessel must have mechanical means of opening and closing the hatches are eligible to participate in the tender and they should be in a position to supply vessels at a short notice. Minimum turn over should be at least Rs.10 crores. The vessel should be National Flag Vessel and should have permit to ply between inter islands with berthing facilities. The age of the vessel should be less than 20 years.

(VI) In case berthing facility is hot available in any or all the PDC Points, the vessel should be in a position to discharge at Anchorage Port and the food grains should be transhipped in barges and moved to the PDCs.

6. Pursuant to the tender notice dated 1-3-2002, the writ petitioner, and the 2nd respondent have submitted their tenders. The writ petitioner furnished particulars of fourvessels. The size of its first vessel is 2160 DWT and that of the second is, 4811 DWT. Out of the remaining two vessels, one is too small and the other is too big. The 2nd respondent in the writ petition has also submitted its tender. It gave the details of two vessels of the size between 2000 to 4000 DWT. This apart, two other tenders were also received but as those were incomplete, they were not considered. On 15-3-2002, as per the original schedule, the technical bids were opened. On the ground that one of the ships owned by the writ petitioner found to be 4811 tonnes, i.e., 811 tonnes more than the maximum size (4000 tonnes) as prescribed by the F.C.I., the technical bid of the petitioner was rejected whereas the technical bid of the 2nd respondent was accepted. The writ petitioner challenged the action of the Food Corporation of India in rejecting its technical bid on several grounds. It was contended by the writ petitioner that the stipulation of condition regarding the size of the vessel in the technical bid is vague, unnecessary and that it is not related to the purpose for which the tenders were issued. It was also contended that the stipulation of size of the vessel i.e., 2000 to 4000 DWT was not absolute as can be seen from the following words, occurring in Clause (I) of the Technical Bid, that immediately followed the said condition relating to prescription of size of the vessel, which reads:

Private Shippers i.e. Vessel Carriers with ownership of at least 2 ships with the size of 2000 to 4000 DWT or the quantity assigned for transportation from Vizag as required by A&N; Administration to various PDCs.

7. On the other hand, it was contended on behalf of the learned standing Counsel for the Food Corporation of India, 1st respondent in the writ petition that the scope of judicial review in the contractual matters is very limited and that the technical aspects involved in the tenders cannot constitute the subject matter of writ petition under Article 226 of the Constitution of India.

8. The 2nd respondent contended that stipulation of condition as to the size of ship has got a definite purpose to serve and it cannot be said to be unconnected with the contract relating to transport of food grains. It was also contended that having once accepted the tender conditions, it was not open to the petitioner to challenge the conditions of tender at the stage when the tenders reached finality.

9. Having heard the learned Counsel appearing on behalf of the writ petitioner, the Food Corporation of India and the second respondent and on a consideration of the material brought on record the learned single Judge observed as follows:

The only ground on which the petitioner was disqualified in the technical bid was that one of its ships exceeded the maximum limit by 811 tonnes. During the course of arguments, it was noticed that the figures as to DWT have no definite bearing on the quantity of food grains and sugar to be transhipped. The figure itself connotes the total weight of the cargo under transhipment, fuel and other ancillary items. It is said that if the voyage is longer, the quantity of the fuel will be relatively more and to that extent the quantity of the cargo has to be reduced. The DWT recorded at the starting point naturally stands reduced by the time the ship reaches the destination with the consumption of fuel, etc. These aspects are referred not with a view to totally brush aside the relevance of the DWT. The endeavour is to see how far the condition is essential in a contract of this nature, every condition cannot be said to be essential. It is only when a tenderer does not comply with the essential and vital conditions that his technical bid can be rejected. It is not difficult to discern the essential and vital conditions in the present tender. The tender did contemplate the fitness of the ships with reference to their ages, holding of valid licences by the tenderer, experience in the field with reference to a particular turnover, etc. These are certainly vital and essential conditions. But, the condition which has referred to above and which was found to be vague as well as unrelated to the main purpose cannot be said to be essential. Declaration of a condition as being vita or otherwise is different from setting aside the same as being vague. The contention raised by the 2nd respondent relates to the latter while the relief accorded to the petitioner is on the basis of the former. The petitioner cannot be said to have contemplated that the 1st respondent acted in such a hyper-technical manner in dealing with the tender. Therefore, mere submission of the tender does not estop him from challenging the interpretation placed by the 1st respondent.

It is not as if the acceptance of the technical bid of the petitioner is going to result in any devastating consequences. Even if the rates stipulated by the petitioner were more economical, that by itself does not become a ground to accept their tenders. The 1st respondent will be in a position to negotiate with the petitioner, in one hand, and the 2nd respondent, on the other. If the 1st respondent is able to enter into a contract for transporting the goods at a fairly reasonable price on account of the competition between the petitioner and the 2nd respondent, it will enure to the benefit of the ultimate consumer. The steps for efficiency in the matter of transport can certainly be evolved and made part of the contract, as long as the obligation to transport the food grains and sugar to the PDC points rested with the contractor, that too, at its own costs. On the other hand, elimination of the petitioner from the field would result in a situation where there does not-exist any competitor for the 2nd respondent.

In view of the above, the writ petition is allowed. The 1st respondent is directed to accept the technical bid of the petitioner for the contract in question and consider the same along with the financial bid of the 2nd respondent and to finalise the matter as early as possible, since the matter Involves transportation of food grains to an otherwise inaccessible area.

10. Challenging the above order of the learned single Judge, as already stated supra, the present appeals are filed.

Submissions;

11. Ms. Geeta Luthra, learned senior Counsel appearing on behalf of the 2nd respondent - appellant in WA No. 1165 of 2002 submits that the writ petitioner, so as to obtain a certificate from JNP consultants to the effect that their ship with capacity of more than 4000 DWT can berth at all the eight islands where the cargo has to be supplied has furnished incorrect data to them, i.e., without furnishing the LOA (length over all) only showed the LBP (length between perpendiculars) of the ship to the JNP consultants. She drew our attention to the letter addressed to the General Manager, Gati Coast to Coast Chennai, dated March 18, 2002 issued by the JNP Maritime Consultancy located at Nungambakkam Chennai, which reads:

Re: Your enquiry to ply M.V.Gati-I in Andaman inter island.

As a Master Mariner who have been sailing to these islands for the past 20 years right from Shipping Corporation of India passenger vessels sailing period. I have no hesitation to confirm that vessel of M.V.Gati (I) Size L X B X D: 84.p X 16.3 X 6.2 m will have no problem in berthing and departing from these ports: Port Blair, Carnicobar, Rangat, Mayabandar, Digilipur, Hut Bay, Campell Bay and Camorrta. Hope your doubts about manoeuvrability of above size vessel is cleared.

Capt J.N. Miranda'

12. She submitted that the writ petitioner, by producing this false and fabricated document demonstrated before the learned single Judge that it has complied with the requirement of having berthing capabilities of their ship and obtained the impugned judgment by playing fraud on the Court. She also submitted that the learned single Judge failed to appreciate the fact that for the purpose of assessing the berthing capabilities of a ship it is the Length Over All (LOA) that has to be taken into consideration and not the Length Between Perpendiculars (LBP).

13. She further submits that the observation of the learned single Judge to the effect that the condition as to the size of the ship was introduced for the first time during the year is not correct in view of the fact that it is for the first time that the contract was floated directly by the Food Corporation of India, that earlier, it was by the Ministry of Shipping and that at that time also the criteria of cargo quantity between 2000 to 3000 MT per shipment was in existence. In support of their contention, the learned senior Counsel placed before us a judgment of the Delhi High Court in WP No. 7490 of 2001 dismissing the writ petition filed by the appellant herein challenging the said contention.

14. The learned Counsel further submitted, pointing out from the counter-affidavit filed by the Food Corporation of India in the writ petition that the writ petitioner has furnished particulars of four vessels as detailed in the following table:

Sl. No.Name of VesselCapacityAgeRequiredcapacityRequirdage

1.N.V.Bhoruka Prabhu122924years2000-4000Below20 years2.N.V.Bhoruka Vikram216020years2000-4000Below20 years3.Gati I481118years2000-4000Below20 years4.Gati-ll937915years2000-4000Below20 years

15. According to her, among the four vessels detailed above, the vessels at serial numbers 3 and 4 are above 4000 DWT, the vessel at S.No. 1 is too small and though the vessel at serial number 2 i.e., N.V. Borukha Vikram is suitable, the requirement of the Food Corporation being two vessels as per the conditions of tender, rightly the technical bid of the writ petitioner was not considered.

16. She further submitted that the eligibility criteria and technical requirement as prescribed in the tender have been laid down by experts after considering all the relevant factors. According to her, the most essential criteria laid down is regarding the size of the ship which has been laid down keeping in view the berthing facilities of the ships in all the eight islands. According to the learned Counsel, except at Car Nicobar there are no facilities/infrastructure for discharging cargo at Anchorage in any of the above islands. All the ship owners trading in this area are aware that big vessels cannot berth in all these islands except at Port Blair, Hutbay. This is the reason why FCI required 2 vessels between 2000 to 4000 DWT with berthing facilities in these islands. The petitioner failed to either mention or understand that their vessels Gati-1 and Gati-2 cannot berth in Rangat and Diglipur, due to restrictions and thus do not fulfil the most important condition of the Technical Bid. She further submits that if there is no adherence to the condition regarding the size as prescribed in the tender and that if big sized ships are allowed to operate, there is every likelihood of damage to the harbour.

17. According to her, the observation of the learned single Judge that the Food Corporation of India acted in hyper technical mariner regarding the condition of the size of the ship is not correct and that it amounts to interference with the administrative sphere of the working of the technical body of competent authority. In this connection, she invited our attention to Lr.No. 1051/PMB/ 1813 dated 28.3.2002 of the Assistant Harbour Master, Port Management Board, Anadman and Nicobar Islands addressed to the F.C.I., Port Blair regarding transportation of food grains.

18. Relying on this letter, she submitted that the said letter gives a clear picture about the ships of the writ petitioner which cannot be able to sail in the places viz., Campbell Bay, Rangat and Diglipur.

19. In support of her contentions, the learned Counsel placed reliance on the judgments of the Apex Court in Tata Cellular v. Union of India, : AIR1996SC11 , Air India Ltd. v. Cochin International Airport Ltd. : [2000]1SCR505 , Centre For Public Interest Litigation v. Union of India, : (2000)8SCC606 , Asia Foundation and Construction Ltd. v. Trafalgar House Construction (1) Ltd., : (1997)1SCC738 , Continental Constructions Ltd. v. Tehri Hydro Development Corporation Ltd. : AIR2002SC3134 .

20. In M/s. Continental Construction Limited case (supra), the Hon'ble Supreme Court has been pleased to upheld the decision of the High Court of Delhi in not interfering in the matter of award of contract under Article 226 of the Constitution of India in the following words:

The clear stand of the respondents on the basis of these documents is that apart from general designing work they were also engaged in actual construction of the project. If upon the material made available to the 1st respondent by the 2nd respondent its pre-qualifications has been decided, the High Court is justified in not interfering under Article 226 of the Constitution. In the light of this position, we find no merit in this petition and the same stands dismissed.'

21. The learned senior Counsel Ms. Luthra, also relied upon a Division Bench of Kerala High Court in the case of Manual Thomas v. State, : AIR1987Ker262 , wherein the High Court of Kerala referring to and following the law declared by the Apex Court on the issue right from the case in K.N. Guruswamy v. State of Mysore, : [1955]1SCR305 , held thus:

The settled position on the basis of the Supreme Court decisions seems to be these. It is open to the Government, as it is to a private party, to enter into contracts with private individuals, firms or agencies. But this freedom of the Government is not uncanalised or urestrained: it is subject to the constitutional discipline under Article 14. The Government can lay down reasonable, rational, relevant and non-discriminatory norms and standards for entering into contracts with third parties. There is no violation of Article 14 simply because one person is chosen in preference to another for the choice is left to the Government and the Government is at liberty to reject any bid and is not bound to accept the highest bid. The choice of the person to whom the contract is granted has to be dictated 'public interest' and must be unreasoned or unprincipled.' The choice cannot be 'arbitrary or fanciful'. If the Government chooses to invite tenders, the tender qualifications and conditions control the choice to be made. The process of awarding a contract by inviting tenders can itself be altered by changes in policy. As long as the tender process is not terminated or abandoned, the tenders will have to be adjudged on their own intrinsic merits and one tenderer may be chosen in preference to another on considerations which render it reasonable and in public interest to do so.'

22. The learned Counsel would further submit that three eligibility criteria are laid down in Clause (d) of the tender dated 1.3.2002 viz., tenderer should be financially sound, should have requisite experience of at least three years in shipment of food grains and should have not less than two vessels with size of 2000 to 4000 Dead Weight Tonnage (DWT), for the purpose of appointment of Vessel Carriers for movement of food grains and sugar bags from load port Visakhapatnam to Port Blair and Seven PDCs in Andaman and Nicobar Islands. She would also point out that apart from the above three eligibility criteria, the tenderer should satisfy the essential requirements laid down in Clauses (1), (5) and (6) of the technical bid. It is the case of the appellant/second respondent that the writ petitioner neither had the requisite experience nor satisfied the requirements in the technical bid, that two vessels of the writ petitioner, viz., Gati-1 and Gati-11, which have six and seven metres of draft, cannot go alongside berths at Campbell Bay, Rangat and Diglipur and that writ petitioner did not file proof of ownerships of vessels. On the other hand, the appellant/second respondent enclosed a certificate along with the tender to the effect that its three vessels could berth in all the seven PDCs viz., Mayabunder, Diglipur Hutbay, Campell Bnay, Kamorta, Carnicobar and Rangat, whereas the certificate dated 18.3.2002 produced by the writ petitioner is after the technical bid and it was not filed along with the tender document.

23. The learned senior Counsel appearing on behalf of the appellant/second respondent would contend that merely because there is vagueness in the condition of size of vessel, viz., 2000-4000 DWT, it cannot be said that the condition is not so essential and that the Court cannot sit in appeal in deciding the technicalities of the conditions of the tender. She relied on the decision of the Supreme Court in M/s. Continental Constructions Ltd., (supra) for the proposition that if a tenderer does not satisfy the pre-qualification of the tender, then he is not entitled to be considered for the tender. She also relied on another decision of the Supreme Court in Asia Foundation and Construction Limited (supra) for the proposition that even if the person is lowest tenderer, he cannot claim an enforceable right to get the contract.

24. Finally, the learned Counsel for the appellant/second respondent would submit that the second respondent/writ petitioner had challenged the appointment of the appellant as Vessel Carrier last year in Delhi High Court, it was turned down by the said High Court.

25. Sri B. Anjaneyulu, learned Standing Counsel for Food Corporation of India appearing on behalf of the appellant in WA No. 1235 of 2002, while adopting the arguments advanced by the learned Counsel Ms. Luthra submitted that the technical bids relating to all the tenders have been opened in the presence of the representatives of tenderers. He further submitted that as regards the Technical Bid relating to the appellant in WA No. 1165 of 2002, the Committee, which is an expert body, has taken a correct decision, which the Supreme Court in Tata Cellular case has held to be beyond the scope of judicial review. According to the learned Counsel the excess weight of 811 MT as found in the case of ship of the writ petitioner cannot be brushed aside as being a minor variation as has been held by the learned single Judge.

He, therefore, submits that in view of the decision of the Apex Court in Tata Cellular case and all the subsequent decisions of the Apex Court on the subject, the impugned judgment passed by the learned single Judge requires to be set aside.

26. The learned Standing Counsel would further contend that the writ petitioner having accepted the terms and conditions of the tender now cannot say that the terms are bad in law and the writ petitioner did not question Clause (d) and the requirements of technical bid. He would submit that the second respondent satisfied all the requirements, the tonnage and the age of the vehicle and three years experience in transporting food grains whereas the second writ petitioner did not file proof as to experience and berthing facility. He relied upon the decision of the Supreme Court in M/s. Continental Constructions Ltd., for the proposition that once terms and conditions are accepted, the writ petitioner is estopped from questioning the subsequent stages of tender enquiry.

27. Lastly, he would contend that the direction of the learned single Judge to consider the technical bid of the second respondent/writ petitioner along with the financial bid of the appellant/second respondent cannot be acted upon since the Circular dated 6.1.1999 of the Food Corporation prohibits post tender negotiations and that since the financial bid is opened and rates have been declared, there is possibility of quoting low rates.

28. Sri E. Manohar, learned senior Counsel appearing for the writ petitioner supporting the order of the learned single Judge would contend that the three criteria contained in Clause (d) of the tender have to be read together and the writ petitioner satisfies all the three conditions. He would submit that it is specifically provided in one of the conditions that the tenderers should have two vessels with size of 2000 to 4000 DWT or the quantity assigned to transport and that in case berthing facility is not available, then the food grains should be transported in barges. The learned single Judge held that the criterion of the size of the vessel is not an essential one and that there is nothing illegal in the order of the learned single Judge, which warrants interference.

29. The learned Counsel relied on the decision of the Supreme Court in Poddar Steel Corporation v. Ganesh Engineering Works, : [1991]2SCR696 , the Apex Court in paragraph 8 of the judgment held:

'In the present case the certified cheque of the Union Bank of India drawn on its own branch must be treated as sufficient for the purpose of achieving the object of the condition and the Tender Committee took the abundant caution by a further verification from the bank. In this situation it is not correct to hold that the Diesel Locomotive Works had no authority to waive the technical literal compliance of Clause 6, specially when it was in its interest not to reject the said bid which was the highest. We, therefore, set aside the impugned judgment and dismiss the writ petition of the respondent No. 1 filed before the High Court The appeal is accordingly allowed with costs throughout.'

30. The learned Counsel also relied on the decision of the Supreme Court in Monarch Infrastructure Pvt. Ltd. v. Commissioner, Ulhasnagar Municipal Corporation, : AIR2000SC2272 , for the proposition that while interpreting the condition of the tender the Court should bear in mind the object sought to be achieved. The Apex Court in paragraph-11 of the judgment held as under:

'Broadly stated, the Courts would not interfere with the matter of administrative action or changes made therein, unless the Government action is arbitrary or discriminatory or the policy adopted has no nexus with the object it seeks to achieve or is mala fide'

31. He also relied on the decision of the Supreme Court in G.J. Fernandez v. State of Karnataka, : [1990]1SCR229 , for the proposition that public interest and difference in rates are two vital considerations in the matter of tenders. He relied on another decision of the Supreme Court in New Horizons Limited v. Union of India, : (1995)1SCC478 , for the very same proposition.

32. According to the learned Counsel, the conditions, non-compliance of which would entail rejection, are only mandatory and for the said purpose he relied on the decision of the Supreme Court in G.J. Fernandez (supra). Finally, he would submit that the writ petitioner had satisfied all the conditions and the order of the learned single Judge is proper.

Scope of judicial review of administrative actions in award of contracts:

33. Before we consider the issue involved herein, let us have a brief analysis of the concept relating to judicial review of administrative action in award of contracts and the principles laid down by the Apex Court in various decisions.

34. There is no dispute that judicial review of administrative action or inaction is permissible, but such review must be within the permissible limits and in public interest. The law on this aspect has been developed on the Wednesbury's principle of reasonableness enunciated in Associated Provincial Picture Houses Limited v. Wednesbury Corporation, (1948) 1 KB 223 = (1947) 2 All.ER 680. The principle reads thus:

A decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings where the Court concludes that the decision is that no authority properly directing itself on the relevant law and acting reasonably could have reached.

35. In order to reach the conclusion whether the authority has acted reasonably and properly, it is open to the Court to review the decision maker's evaluation of the facts. The Court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision-maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way cannot be upheld. A decision would be regarded as unreasonable if it is unfair and unequal in its operation as between different classes. Judicial review is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest.

36. The judicial function is limited to testing whether the administrative action has been fair and free from the taint of unreasonableness and has substantially complied with norms of procedure set for it by rules of public administration. Judicial review of administrative action depends upon the facts and circumstances of each case. Its dimension is never closed and must remain flexible. (See Fertilizer Corporation Kamgar Union v. Union of India, AIR 1981 SC 344; (1981) SCC 568).

37. In Chief Constable of the North Wales Police v. Evans, (1982) 3 All.ER 141, Lord Brightman said:

Judicial review, as the words imply, is not an appeal from a decision, but a review of the manner in which the decision was made.

Judicial Review is concerned, not with the decision, but with the decision making process. Unless that restriction the power of the Court is observed, the Court will, in my view, under the guise of preventing the abuse of power, be itself guilty of usurping power.

It is also apt to notice the observations of Lord Hailsham in the aforesaid case:

This remedy, vastly increased in the extent, and rendered, over a long period in recent years, of infinitely more convenient access than that provided by the old prerogative writs and actions for a declaration, is intended to protect the individual against the abuse of power by a wide range of authorities, judicial, quasi-judicial, and, as would originally have been though when I first practised at the Bar, administrative. It is not intended to take away from those authorities the powers and discretions properly vested in them by law and to substitute the Courts as the bodies making the decisions. It is intended to see that the relevant authorities exercise their powers in a proper manner.

We may also usefully notice the principles summarised by Lord Greene M.R. in R v. Tower Hamlets London Borugh Council, ex Chetnick Development Ltd., (1988) AC 858 at page 873.

The Court is entitled to investigate the action of the local authority with a view to seeing whether or not they have taken into account matters which they ought not to have taken into account, or conversely, have refused to take into account or neglected to take into account matter which they ought to take into account. Once that question is answered in favour of the local authority, it may still be possible to say that, although the local authority had kept within the four corners of the matters which they ought to consider, they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it. In such a case, again, I think the Court can interfere. The power of the Court to interfere in each case is not as an appellate authority to override a decision of the local authority, but as a judicial authority which is concerned, and concerned only, to see whether the local authority has contravened the law by acting in excess of the power which Parliament has confided in them.

38. The scope of judicial review of administrative action is very narrow where the decision-making process has nexus with technical expertise. At this stage, we may usefully refer to the observations of the Apex Court in Shri Sitaram Sugar Co. Ltd. v. Union of India, : [1990]1SCR909 .

The Court, in exercise of judicial review, is not concerned with the correctness of the findings of fact on the basis of which the orders are made so long as those findings are reasonable supported by evidence. The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The Court does not supplant the 'feel of the expert' by its own view. When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact, which are conclusive, provided such findings satisfy the test of reasonableness. In all such cases, judicial inquiry is confined to the question whether the findings of fact are reasonably based on evidence and whether such findings are consistent with the laws of the land.

39. Clive Lewis in his book Judicial Remedies in Public Law, 1992 Edition pages 294-95, observed as under:

The Courts now recognise that the impact on the administration is relevant in the exercise of their remedial jurisdiction. Quashing decisions may impose heavy administrative burdens on the administration, divert resources towards re-opening decisions, and lead to increased and unbudgeted expenditure. Earlier cases took the robust line that the law had to be observed, and the decision invalidated whatever the administrative inconvenience caused. The Courts nowadays recognise that such an approach is not always appropriate and may not be in the wider public interest. The effect on the administrative process is relevant to the Courts' remedial discretion and may prove decisive. This is particularly the case when the challenge is procedural rather than substantive, or if the Courts can be certain that the administrator would not reach a different decision even if the original decisions were quashed. Judges may differ in the importance they attach to the disruption that the quashing a decision will cause. They may also be influenced by the extent to which the illegality arises from the conduct of the administrative body itself, and their view of that conduct.

The current approach is best amplified by R. v. Monopolies and Mergers Commission, ex. p. Argyll Group, (1986) 1 WLR 763.'

40. In G.B. Mahajan v. Jalgaon Municipal Council, : AIR1991SC1153 , dealing with the concept of reasonableness in administrative law, Venkatachaliah, J., (as his Lordship then was) observed thus:

'It was urged that the basic concept of the manner of the development of the real estate and disposal of occupancy rights were vitiated by unreasonableness. It is a truism, doctrinally, that powers must be exercised reasonably. But as Prof. Wade points out:

'The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the Court must not usurp the discretion of the public authority which Parliament appointed to take the decision. Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free discretion. If it passes those bounds, it acts ultra vires. The Court must therefore resist the temptation to draw the bounds too tightly, merely according to its own opinion. It must strive to apply an objective standard, which leaves to the deciding authority the full range of choices, which the Legislature is presumed to have intended. Decisions which are extravagant or capricious cannot be legitimate. But if the decision is within the confines of reasonableness, it is no part of the Court's function to look further into its merits, 'With the question whether a particular policy is wise or foolish the Court is not concerned; it can only interfere if to pursue it is beyond the powers of the authority'.'

In the arguments there is some general misapprehension of the scope of the 'reasonableness' test in administrative law. By whose standards of reasonableness that a matter is to be decided? Some phrases which pass from one branch of law to another - as did the expressions 'void' and Voidable' from private law areas to public law situations - carry over with them meanings that may be inapposite in the changed context. Some such thing has happened to the word 'reasonable', 'reasonableness' etc. In Tiller v. Atlantic Coast Line Rail Road Company, 1942 (318) US 54, 68, Justice Frankfurter said :

'A phrase begins life as a literary expression; its felicity leads to its lazy repetition; and repetition soon establishes it as a legal formula, undiscriminatingly used to express different and sometimes contradictory ideas.'

Different contexts in which the operation of 'reasonableness' as test of validity operates must be kept distinguished. For instance as the arguments in the present case invoke, the administrative law test of 'reasonableness; as the touchstone of validity of the impugned resolutions is different from the test of the 'reasonable man' familiar to the law of torts, whom English law figuratively identifies as the 'man on the Clapham omnibus'. In the latter case the standards of the 'reasonable man', to the extent such a 'reasonable man' is Court's creation, is in a manner of saying, a mere transferred epithet. Lord Radcliffe observed (All ER p.160):

'By this time, it might seen that the parties themselves have become so far disembodied spirits that their actual persons should be allowed to rest in peace. In their place there rises the figure of the fair and reasonable man and the dot spokesman of the fair and reasonable man, who represents after all no more than the anthropomorphic conception of justice, is and must be, the Court itself........'

See Davis Contractors Ltd. v. Fareham U.D.C., (1956) 2 All ER 145, 160.

Yet another area of reasonableness which must be distinguished is the constitutional standards of 'reasonableness' of the restrictions on the fundamental rights of which the Court of judicial review is the arbiter.

The administrative law test of reasonableness is not by the standards of the 'reasonable man' of the torts law. Prof. Wade says :

'This is not therefore the standard of 'the man on the Clapham omnibus'. It is the standard indicated by a true construction of the Act which distinguishes between what the statutory authority may or may not be authorised to do. It distinguishes between proper use and improper abuse of power. It is often expressed by saying the decision is unlawful if it is one to which no reasonable authority could have come. This is the essence of what is now commonly called 'Wednesbury unreasonableness', after the new famous case in which Lord Greene, M. R. expounded it'.

41. In Sterling Computers Limited v. M. & N. Publications Limited, : AIR1996SC51 , this Court observed thus:

'......... In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognised by Courts while dealing with public property. It is not possible for Courts to question and adjudicate every decision taken by an authority, because many of the Government undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi-judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in 'bona fide' manner although not strictly following the norms laid down by the Courts, such decisions are upheld on the principle laid down by Justice Holmes, that Courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of 'play in the joints' to the executive.'

42. Tata Cellular v. Union of India (supra) is the first case wherein the Apex. Court has in ex tenso dealt with the aspect relating to award of contracts referring to some of the decisions referred to above. The Apex Court in this case has laid down certain broad guidelines as regards the scope of judicial review of administrative decisions and exercise of contractual powers by Government bodies and the scope of interference by the Courts under the guise of judicial review. It would be useful to quote the same.

The principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism, However, there are inherent limitations in exercise of that power of judicial review Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Art. 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. (Para 85)

Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matter whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Such unfairness is set right by judicial review. The judicial power of review is exercised to rein in any unbridled executive functioning. The restraint has two contemporary manifestations. One is the ambit of judicial intervention; the other covers the scope of the Court's ability to quash an administrative decision on its merits. These restraints bear the hallmarks of judicial control over administrative action. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself. (Paras 86, 89, 90)

The duty of the Court is to confine itself to the question of legality. Its concern should be:

1. Whether a decision-making authority exceeded its powers?

2. Committed an error of law;

3. Committed a breach of the rules of natural justice;

4. Reached a decision which no reasonable Tribunal would have reached; or

5. Abused its powers.

Therefore, it is not for the Court to determine whether particular policy of particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under

(i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it

(ii) Irrationality, namely, Wednesbury unreasonableness.

(iii) Procedural impropriety.

The above are only the broad grounds but it does not rule out addition of further grounds in course of time. (Paras 93, 94, 95)

The principles deducible relating to scope of judicial review of administrative decisions and exercise of contractual powers by government bodies are:

(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) 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 fairplay 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 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. (Para 113)

43. Prof. Bernard Schewartz in his celebrated book, 'Administrative Law' III Edition Little Brown Company, 1991, dealing with the present status of judicial review in American context, summarised as under:

If the scope of review is too broad, agencies are turned into little modern media for the transmission of cases to the Courts. That would destroy the follies of agencies, created to secure the benefit of special knowledge acquired through continuous administration in the complicated fields. At the same lime, Courts should not rubber-stamp the agencies; the cope of judicial enquiry must not be too restricted that it prevents full enquiry into the action if illegality. If that question cannot be properly explored by the Judge, right to review becomes meaningless..... in the final analysis, the scope of review depends on the individual judges estimate of the justice of the case.

44. At the cost of repetition, it is pertinent to note that Prof. Bernard Schewartz's observations which were quoted with approval by the Supreme Court in Tata Cellular case (supra) reads thus:

Observance of judicial restraint is currently the mood in England. The judicial power of review is exercise to rein in any unbridled executive functioning. , The restraint has two contemporary manifestations. One is the ambit of judicial intervention; the other covers the scope of the Court's ability to quash an administrative decision on its merits. These restraints bear the hallmarks of judicial control over administrative action' (para 89)

45. The law laid down by the Apex Court in Tata Cellular case has been followed by the Apex Court in number of cases subsequently. In Asia Foundation and Construction Limited case (supra), the Supreme Court after applying the principles laid down in Tata Cellular case held:

Therefore, though the principle of judicial review cannot be denied so far as exercise of contractual powers of government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest or if it is brought to the notice of the Court that in the matter of award of a contract power has been exercised for any collateral purpose. But on examining the facts and circumstances of the present case and on going through the records we are of the considered opinion that none of the criteria has been satisfied justifying Court's interference in the grant of contract in favour of the appellant. We are not entering into the controversy raised by Mr Parasaran, learned Senior Counsel that the High Court committed a factual error in coming to the conclusion that respondent 1 was the lowest bidder and the alleged mistake committed by the consultant in the matter of bid evaluation in not taking into account the customs duty and the contention of Mr. Sorabjee, learned senior Counsel that it has been conceded by all parties concerned before the High Court that on corrections being made respondent 1 was the lowest bidder. As in our view in the matter of a tender a lowest bidder may not claim an enforceable right to get the contract though ordinarily the authorities concerned should accept the lowest bid. Further we find from the letter dated 12/7/1996 that Paradip Port Trust itself has come to the following conclusion: 'THE technical capability of any of the three bidders to undertake the works is not in question. Two of the bids are very similar in price. If additional commercial information which has now been provided by bidders through Paradip Port Trust, had been available at the time of assessment, the outcome would appear to favour the award to AFCONS.'

THIS being the position, in our considered opinion, the High Court was not Justified in interfering with the award by going into different clauses of the bid document and then coming to the conclusion that the terms provided for modifications or corrections even after a specified date and further coming to the conclusion that respondent 1 being the lowest bidder there was no reason for the Port Trust to award the contract in favour of the appellant. We cannot lose sight of the fact of escalation of cost in such project on account of delay and the time involved and further in a coordinated project like this, if one component is not worked out the entire project gets delayed and the enormous cost on that score if rebidding is done. The High Court has totally lost sight of this fact while directing the rebidding'. hi our considered opinion, the direction of rebidding in the facts and circumstances of the present case instead of being in the public interest would be grossly detrimental to the public interest.

In Air India Limited case (supra), the Hon'ble Supreme Court considering the case law decided on the subject held thus:

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 of 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 is 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 bona 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.

12. In a commercial transaction of a complex nature what may appear to be better, on the face of it, may not be considered so when an overall view is taken. In such matters the Court cannot substitute it's decision for the decision of the party awarding the contract. On the basis of the material placed on record we find that CIAL bona fide believed that involving a public sector undertaking and a national carrier would, in the long run, prove to be more beneficial to CIAL. For all these reasons it is not possible to agree with the finding of the High Court that CIAL had acted arbitrarily and unreasonably and was also influenced by extraneous considerations during its decision making process.

46. At this stage, we may usefully refer to the decision of the Apex Court in Centre For Public Interest Litigation v. Union of India. This is a case where the government of India (GOI) took a policy decision to offer some of its discovered oil fields for development on a joint-venture basis. It was decided that medium sized oil fields would be offered for development under the joint venture with the participation of ONGC while the small sized oil fields will be offered for development without the participation of ONGC. This policy decision was taken as the country was facing acute shortage of foreign exchange. Government of India invited bids for maximum sized and small sized oil fields. After negotiations, the bids of respondents 3 to 5 therein were accepted. The same was challenged before the High Court on the ground that the contract was awarded arbitrarily for collateral consideration and is actuated by mala fides and sought for criminal investigation and follow-up criminal prosecution and to cancel the contract. One of the contentions raised was that selling of oil to the GOI at an administered price of $ 8 per barrel need not have been given on joint venture basis and if a comparative study were to be made, it would have been much more profitable to GOI than by giving these wells on a joint venture. It was also contended that certain concessions were given to the respondents 4 and 5 sacrificing the interest of the nation and that there was mala fide intention granting undue advantage to respondents 4 and 5. Dealing with those aspects the Apex Court held that where matter involved requires commercial or technical prudence Court cannot assess fairness or reasonableness of price fixation and the same can be assailed only on finding of mala fides or extraneous considerations. It was held:

19. As observed earlier, we will also have to bear in mind the fact that the contract in question involves the payment of consideration under different heads in one basket. The contents of this basket cannot be assessed individually nor can the Court say that the receipt from a particular item in the basket in arbitrarily low, because the take of the GOI in the contract is as a whole from the total receipt from the basket. At this juncture, we would like to notice the observations of this Court found in Kasturi Lal Lakshmi Reddy v. State of J&K;, : [1980]3SCR1338 , wherein this Court had held :

'....WE have referred to these considerations only illustratively, for there may be an infinite variety of considerations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the Court would have to decide whether the action of the Government is reasonable and in public interest.' (20) IT is clear from the above observations of this Court that it will be very difficult for the Courts to visualise the various factors like commercial/technical aspects of the contract, prevailing market conditions both national and international and immediate needs of the country etc. which will have to be taken note of while accepting the bid offer. In such a case, unless the Court is satisfied that the allegations levelled are unassailable and there could be no doubt as to the unreasonableness, mala fide, collateral considerations alleged, it will not be possible for the Courts to come to the conclusion that such a contract can be prima facie or otherwise hold to be vitiated so as to call for an independent investigation, as prayed for by the appellants. Therefore, the above contention of the appellants also fails.

47. Applying the principles laid down in Tata Cellular case, the Apex Court held that it would be difficult to come to the conclusion that the decision of Government of India in accepting the bid of respondents 4 and 5 on the advice of the Committee of Secretaries is so unreasonable as to accept the prayer of the appellants to grant the reliefs sought for in this appeal.

48. In Raunaq International Ltd v. I.V.R. Construction Ltd, : AIR1999SC393 , it was held:

When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the Court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the Court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by Court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the Court would ultimately effect in public money deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the Court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the Court should not intervene under Article 226 in disputes between two rival tenders.

Conclusions:

49. From the above decisions, it is clear that while examining legality of the action of the administrative authority, the Court must confine itself to the aspects -whether the decision making authority has exceeded its powers, committed an error of law or there is breach of principles of natural justice or abused its powers or reached decision which no reasonable Tribunal would have reached. The Court is not empowered to determine whether a particular policy is fair. An administrative action is subject to control by judicial review only in regard to illegality or irrationality, namely, wednesbury unreasonableness and procedural impropriety. The modern trend points to judicial restraint in administrative action. The Court is not empowered to interfere with the decision taken by an expert body and substitute its opinion to that of the body unless the decision is tainted with mala fides or for extraneous considerations. Where the matter involved required commercial or technical prudence and the decision reached is based on the opinion of a technical committee, the High Court in exercise of its jurisdiction under Article 226 of the Constitution cannot interfere with such decision unless the allegations regarding unreasonableness, mala fides and collateral considerations are unassailable or can be assailed on a finding of mala fides or extraneous considerations. The terms of the invitation to tender cannot be open to judicial scrutiny as the invitation to tender is in the realm of contract. Where the matter relates to commercial considerations, the State, its corporations, instrumentalities and agencies can choose its own method to arrive at a decision and it may not accept the offer even though it happens to be the highest or the lowest, subject, of course to the adherence to the norms, standards and procedure laid down by them. The Court can examine the decision making process and interfere only if it is found vitiated by mala fides, unreasonableness, favouritism and arbitrariness. 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 restraint and 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 whether any intervention is called for or not. Unless the decision making process is manifestly arbitrary or unreasonable or the authority committed any procedural impropriety, it cannot be called in question.

50. In the light of the principles enunciated by the Apex Court in regard judicial review of award of contracts noted hereinbefore, we may examine whether the learned single Judge has properly appreciated the same with reference to the factual aspects involved.

51. In response to the tender notification dated 1.3.2002 of the FCI inviting tender for appointment of vessel carriers for movement of food grains and sugar bags from load port Viskahapatnam to Port Blair and seven other Public Distribution Centres (PDCs) in Andaman and Nicobar Islands viz., Campbell Bay, Kamorta, Car Nicobar, Hutbay, Rangat, Mayabunder and Diglipur, four persons applied and on opening of tenders on 15.3.2002, a Committee of Officers found the following four sealed covers:

(a) TCI Seaways Limited marked as 1/4

(b) GATI Coast to Coast, marked as 2/4

(d) M's Fairmacs Shipping and Transport Services Ltd., marked as 4/4

Out of them the third cover contains insurance papers filed by TCI Seaways which are treated as supplementary documents to the original documents filed by them. The 4th cover does not contain any tender form or documents as required in the notification inviting tenders. Therefore the petitioner and the 2nd respondent TCI Seaways are only competing for the bid. Clause (d) of the tender notification provides that those parties who are financially sound and have the requisite experience of at least three years in shipments of food grains would be considered for appointment. Clause (d) of the notification provides that the tenders should have not less than two vessels with a size of 2000 to 4000 Dead Weight Tonnage (DWT) or the quantity assigned to transport from Vizag having mechanical means of opening and closing of hatches preferably and the age of the vessel should be less than 20 years. The private shippers should be in a position to supply vessel at a short notice and the minimum annual turnover of the company should be at least Rs.10 crores. According to the tender notification, the offer will have to be made in parts each comprising technical bid and financial bid in separate seated envelopes. The technical bid will be evolved first for selection of suitable parties and the financial bid from the selective suitable parties shall be done subsequently,

52. As already noticed earlier, Clause I of the technical bid provides that the private shippers i.e., Vessel carriers with ownership of at least two ships with the size of 2000 to 4000 DWT or the quantity assigned for transportation from Vizag as required by A & N Administration to various PDCs and those vessels which have mechanical means of opening and closing the hatches are only eligible to participate in the tenders and they should be in a position to supply vessels at a short notice. In case berthing facility is not available in any or all the PDC points, the vessel should be a in position to discharge at anchorage port and the food grains should be transhipped in barges and moved to the PDCs. It is the case of the FCI that except at Car Nicobar there are no facilities/infrastructure for discharging cargo at anchorage in any of the PDCS, It is their specific case that big vessels cannot berth in all these islands except at Port Blair, Hutbay and it is for this reason the FCI required two vessels between 2000 to 4000 DWT only with berthing facilities in the islands, it is also the case of the Corporation that Rangat and Diglipur have no berthing facilities to accommodate more than 4000 DWT. It is also the specific case of the FCI that the petitioner has not filed any certificates showing that they are having requisite experience of at least three years in shipment of food grains and the vessels are having berthing facilities.

53. The writ petitioner furnished particulars of four vessels as tabulated earlier. The 1st vessel N.B. Borukha Prabhu is having only 1229 DWT and the Vessel N.V. Borukha Vikram is having 2160 DWT while the other two vessels viz., Gati-I and Gati-II are having the capacity of 4811 DWT and '9379 DWT respectively. The 2nd respondent gave details of two vessels of the size between 2000 to 4000 DWT.

54. For the purpose of ascertaining the correct fact situation and to evaluate the rival contentions advanced on behalf of both the parties, we deem it useful to reproduce the minutes/observations of the meeting in verbatim. As regards the Technical Bid submitted by the appellant in WA No. 1165 of 2002 i.e., the 2nd respondent - in the writ petition i.e., M/s TCI Seaways Ltd. the Committee recorded its minutes/observations thus:

(1) M/s. TCS Seaways Ltd. have furnished all the relevant documents in the 'form of enclosure 2(a) to 12, which contain the details of the age of the ship, number of the ships owned, description of the vessels with DWT capacity etc., ownership of the vessels, turnover of the Company for the past 2 years, trading licence issued to the vessels for plying between the Mainland and A/N islands, certificate issued by the Harbour Master regarding the ability of the vessels for berthing at various PDCs etc.. their past experience in handling food grains and transportation to A/N islands for the past 3 years, the vessels' ability in operating the mechanical hatches, trading licence to ply the vessel between or in the East and West Coast of the A/N islands, authorisation authorising the person to sign the tender, Memorandum and Articles of Association of M/s TCS Seaways Ltd., copy of the Board of Directors' resolution etc., are also enclosed. E.M.D. Rs.65,000/-was paid through D.D. on S.B.I.

From the above, the Committee is of the opinion that M/s TCS Seaways Ltd., have fulfilled the minimum requirement as stipulated in the NIT and the documents produced therewith may be accepted at their face value.'

55. As against the above observations in respect of the bid submitted by the appellant, the Committee that dealt with the Technical Bid submitted by the writ petitioner and rejected the same. The Committee has recorded the following minutes/observations for their decision.

(2) M/s. GATI COAST TO COAST have filed their tender which is numbered as 2/4' and on verification of the technical bid filed by the Company, the following are noticed:

(a) The Firm is owning 4 vessels and as per the particulars furnished, one vessel viz., 'N. V. BORUKHA PRABHU' with DWT of 1229 tons is seem to be more than 22 years old as the same is built in the year 1978.

(b) Another vessel owner by the Company i.e., N. V. BORUKHA VIKARA M' built in the year 1982/83 with a DWT of 2160 tons.

(c) The 3 vessel 'GATI-I is built in the year 1984 with a DWT of 4811 and the 4th vessel 'GAT-II is built in the year 1987, with a DWT of 9379 tons.

(d) The Company has submitted general trading licence in respect of all the 4 vessels which are variously valid up to the year 2003 to 2006. Its clearance certificate for the year 1997-98 to 2000-01, duly attested, is furnished by the Finn.

(e) General Power of Attorney (Xerox copy only) is furnished, authorizing one Shri P. Ranganathan, Vice-President, to sign the tender form, Memorandum and Articles of Association of GATI LIMITED and also the Annual report for the year 2000-01 are also enclosed.

(f) The firm has not submitted any documents showing the ownership of the 4 vessels as was done by M/s TCS Seaways Limited, but in the light of the General Trading Licence issued by the Director General of Shipping, in favour of M/s GATI COAST TRO COAST, perhaps, this may not be a serious objection. Similarly on the point of age of the vessels and the tonnage of the vessel, only one vessel viz., N.V. BORUKHA VIKRAM, with a tonnage of 2160 tons, satisfies the stipulation laid down by FCI in the NIT. As to the remaining 3 vessels, one is an outdated vessel with more than 20 years life and the remaining two vessels, the DWT is much higher than the stipulated one. So to say, only one vessel can be conveniently made available for FCI's operations by the Firm i.e. 'N.V. BORUKHA VIKRAM' with 2160 DWT.

(g) As to the previous experience, the Firm has not submitted any proof thereof in handling food grains more particularly in the transportation front in the East coast of mainland to A/N islands, West and East Coast.

(h) Though a certification of sea-worthiness of the above vessel is furnished, no proof is submitted as to the vessel's ability in reaching berth at various PDCs nor is it made clear that any of these vessel can reach Port Blair, except, perhaps, 'N.V. BORUKHA VIKRAM. EMD is not furnished along with technical bid but party informed that same is enclosed with financial bid.

After recording the above observations in regard to the technical bids submitted by the petitioner and the appellant, the Committee came to the following conclusion:

'As proposed by the Committee, we may open the technical bid at 5 PM in respect of the party at'X.t.

56. From the above, it is clear that the rejection of the technical bid of the writ petitioner was based on an appreciation of the technical aspects involved and the material placed before the evaluation committee.

57. The learned senior Counsel Ms. Luthra, therefore, submits that the impugned judgment of the learned single Judge is contrary to law laid down by the Honourable Supreme Court. Out of the four vessels of the petitioner, only one vessel fulfils the conditions laid down in the technical bid. Since the FCI requires two vessels, the bid of the petitioner was rejected.

58. We have given our anxious consideration to the rival submissions of the parties as also to the entire material on record. From a careful perusal of the material, we do not find any illegality or irrationality or arbitrariness in the decision making process of the committee which is an expert committee dealing with technical aspects. The eligibility criteria have been laid down by the experts after taking into account all the relevant factors. The size of the ship has been laid down keeping in view the berthing facilities of the ships in all the eight islands. The committee taking into consideration their requirement and other technical aspects came to the conclusion that the bid offered by the writ petitioner do not fulfil the requirements and the 2nd respondent fulfilled the requirements. As noticed earlier the law is well settled that such a conclusion arrived at by the expert committee which had gone into the issue with technical prudence cannot be interfered with and this Court exercising the jurisdiction under Article 226 of the Constitution of India cannot substitute its opinion for that of the expert Committee. It is not the case of the petitioner that the decision is vitiated by mala fides. It is the specific case of the FCI that the vessels Gati-1 and Gati-2 cannot berth in Rangat and Digilipur due to restrictions and thus do not fulfil the most important condition of the technical bid. The petitioner has not filed any material to show that the two vessels fulfil the criteria laid down and as to the vessels ability in reaching berth at various PDCs apart from the fact that no proof has been filed showing the requisite experience of three years in transportation of food grains. In the absence of any material having been filed by the writ petitioner, the contention of the petitioner that he had satisfied all the requisite conditions cannot be accepted. We are of the view that the decision arrived at by the committee is neither unreasonable or unfair or unequal.

59. The contention of the petitioner is that the stipulation of condition regarding the size of the vessel in the technical bid is vague, unnecessary and is not related to the purpose for which the tenders were issued and that the stipulation of size of the vessel i.e., 2000 to 4000 DWT was not absolute in view of the words 'or the quantity assigned for transportation from Viag as required by A&N; Administration to various PDCs' occurring in the condition relating to prescription of size of the vessel which read:

Private Shippers i.e., Vessel Carriers with ownership of at least 2 ships with the size of 2000 to 4000 DWT or the quantity assigned for transportation from Vizag as required by A&N; Administration to various PDCs.

60. We are unable to subscribe to the aforesaid contention. Clause 1 of the Technical bid specifically provides that the size of the vessel should be of 2000 to 4000 DWT. If the intention of the authority is to have vessels of more than 4000 DWT, the condition would have specifically stated that the size of ships should be 2000 to 4000 DWT or above. There is some definite and specific purpose to serve in mentioning the required size in the technical bid because big vessels cannot berth in all the islands except at Port Blair and Hutbay and that some of the islands have no facilities for discharging cargo at anchorage and that heavy vessels cannot berth in Rangat and Diglipur. At this stage, we may refer to the letter addressed by the Assistant Harbour Master, Port Management Board, Andaman and Nicobar islands in Lr.No. 1051/PMB/ 1813 dated 28.3.2002 regarding transportation of food grains which reads thus:

With reference to cited letter I am to state that it is not advisable for M.V. Gati-1 with 6 meters and M.V.Gati - II with 7.4 Meters draft to go alongside berths at Campbell Bay, Rangat and Diglipur. The Maximum/ minimum depths available along side the berths are as follows.

Maximum (Mts.)Minimum (Mts.)

Campbell Bay5.74.4Rangat6.14.0Diglipur5.74.3

'The pilots, tug boats, mooring boats are not available in these ports. Hence considered unsafe and dangerous to port, ships and cargo.

61. The above letter supports the stand taken by the committee of experts. In this view of the matter, the observations of the learned single Judge that the FCI acted in hyper technical manner regarding the condition of the size ship is not correct when the clause in the technical bid is so specific, the question of hyper technicality does not arise. In such matters, the Court has no authority to interfere with the opinion of the expert body. Whether the excess tonnage of 881 MT in the case of Gati-1 is only a minor variation or a major one cannot be gone into in the writ petition. Whether it is a minor variation or major variation, it is for the technical body to examine. This Court cannot go into the merits or demerits of the opinion expressed by the technical body. There is some object sought to be achieved by the authority in mentioning that the size of the vessel should be of 2000 to 4000 DWT. Under the guise of the judicial review of the administrative decision, the Court cannot enter into the sphere of the terms and conditions of the tender notification and decide the validity of such terms and conditions as they are purely in the realm of contracts. Further, the petitioner having participated in the tender enquiry cannot be permitted to question the terms and conditions of tender notification. The petitioner has also not challenged the same in the writ petition and therefore, the learned single Judge is not right in interpreting the conditions of contract contrary to the intent and object sought to be achieved by the authority.

62. When the Food corporation of India on the basis of the material available decided on the basis of pre-qualification of the tender who fulfilled all the terms and conditions of the tender notification, this Court exercising the jurisdiction under Article 226 will not interfere as held by the Supreme Court in Continental Construction v. Tehri Hydro Devel Corporation (supra) wherein it was held:

63. When the Corporation basing on the previous experience fixed the terms and conditions of the tonnage, age and experience of transportation of food grains, the learned single Judge ought not to have interfered with the conditions as they are reasonable and necessary for proper execution of contractual obligation in transporting food grains safely to the destination. To show the previous experience, the corporation filed the allotment orders for the years 1999-2000, 2000-01 and 2001-02 in the select papers filed by them wherein the allotment of food grains are to the tune of 39000 Mts, 41640 Mts end 41640 Mts respectively per year and in no case it exceeded 3470 tonnes per month. Therefore, the fixation of 4000 DWT by the FC1 is reasonable and valid.

64. It was observed by the learned single Judge that the Corporation will be in a position to negotiate with the writ petitioner on one hand and 2nd respondent on the other for transportation of goods at a fairly reasonable price. This, in our view, does not arise in view of the ban imposed by the Central Vigilance Committee on post tender negotiations except with the lowest tenderer. In this case, when the technical bid has not been accepted, financial bid was returned to the petitioner and at the time of opening the tenders the rates quoted by TCI Seaways Ltd. were read out and there is every likelihood of changing the rates lower than that of the TCI Seaways Ltd.

65. So far as the 2nd respondent M/s TCI Seaways is concerned, they have furnished all the relevant documents including the details of age of the vessel, number of vessels, description of vessels with DWT capacity etc., along with trading licence, ownership of vessels and certificate of the Harbour Master regarding ability of vessels for berthing at various PDCs etc. and their past experience in handling food grains and transportation to Andaman and Nicobar Islands for the past three years as required in the tender notification. The technical bid accompanied by Earnest Money through Demand draft was also submitted. As the technical bid submitted by the 2nd respondent satisfied the requirements of the terms and conditions of the tender notification, the same was accepted.

66. It is argued by the learned Counsel for the 2nd respondent that the writ petitioner has come to this Court with unclean hands and placed on record before this Court fabricated documents to show compliance of the essential requirements viz., the requirement having berthing capabilities of their ships. Petitioner furnished incorrect data to obtain a certificate from JNP consultants showing that their ship with capacity of more than 4000 DWT can berth at all the 8 islands where the cargo has to be supplied. We are not inclined to go into the same. However, as rightly pointed out by Ms. Luthra, the learned single Judge has failed to appreciate that for the purpose of assessing the berthing capabilities of a ship it is Length Over All i.e. LOA that has to be taken into consideration and not Length Between Perpendiculars i.e., LBP. The learned single Judge has failed to notice that experts lay down the eligibility criteria and technical requirement after taking into consideration all the relevant- factors. As already observed earlier, the criteria for the size of the ship has been laid down keeping in view the berthing facilities of the ships in all the 8 islands. The learned single Judge, in our opinion, erred in holding that some criteria are essential while others are not. In doing so, the learned single Judge completely obliterated the technical requirements. The learned single Judge erred that the criteria relating to the size of the ship is hyper technical. The observation of the learned single Judge would amount to interfering with the administrative sphere of the working of the technical body or competent authority which the Apex Court in Tata Cellular case has held to be beyond the scope of judicial review. The further observation of the learned Judge that the writ petitioner was disqualified in the technical bid because out of the two ships, one of the ships exceeded the maximum limit by 811 MT by brushing aside the same as a minor variation. The said requirement could not be brushed aside as being a minor variation. That for every criterion once a condition is imposed by the authority a cut off has to be provided and any amelioration or alteration by the Court is not permissible in law. No cut off would be possible in case tenderers are allowed to come to the Court and ask for concessions in the terms of a tender.

67. The learned single Judge held that the stipulation of size of 2000-4000 DWT is not absolute. It is alternative for 'the quantity assigned' for transportation from vizag as required by A&N; administration' According to the learned single Judge the 2nd alternative is obviously an uncertain and indefinite condition and that the quantity stipulated therein can be ascertained only as and when it is assigned for transportation from Vizag to A&N; Islands. It was also held that this is obviously is a post-contract situation, that too, which varies from consignment to consignment and such a condition cannot, reasonably, form part of a condition in technical bid. It was further observed that the condition is vague and incapable of strict enforcement.

68. We are unable to appreciate or accept the above finding of the learned single Judge. Firstly, there is no foundation for arriving at such finding. The latter portion of the condition 'or the quantity assigned........ is merely explanatory to the extent that the said cargo quantity can be less than the maximum carrying capacity of any of the two ships between the size of 2000 to 4000 DWT. The learned single Judge failed to appreciate that where there is a specific mention of distinct category followed by general words then the general words are restricted and have capability of interpretation within the limits of the specific words. For that, the latter portion of the said condition 'or the quantity assigned..' is to the extent that the said cargo quantity can be less than maximum carrying capacity of any of the two ships between the size of 2000 to 4000 DWT, but freight will only be paid for cargo assigned by Andaman administration and this may be less than the optimum carrying capacity of any of the two ships between 2000 to 4000 DWT. Our interpretation is also borne out from the fact that one of the conditions was the requirement of berthing facilities in all the islands. Quantity assigned cannot be more than approximate 3700 MT for a vessel of 4000 DWT and berthing facilities would not be available in two of the islands for ships beyond 4000 DWT. The main contention of the Corporation that large ships cannot berth in the islands.

69. The finding of the learned single Judge that the paramount consideration in awarding the transport contract by the 1st respondent is to ensure proper and safe transportation of the goods to the destination at economical prices is also not satisfied as larger ships of respondent No. 2 without proper berthing facilities are likely to endanger the safety of the ports and hence safe supply of food grains. The said finding also amounts to an interference by this Court into factors evolving commercial and technical prudence which are beyond the scope to review. An example cited at the time of hearing by the learned Counsel for the 2nd respondent can be beneficially narrated herein. The example is that a big ship can lock the entrance of the Port by running around or damaging the jetty. This would result that no other ship can enter or leave the berth and all supplies will be cut off. This will have severe implications in safe and uninterrupted supply of food grains to the island which have no other means like airfields or road transport to supply the materials in case of emergency.

70. The learned single Judge found that 'the only ground on which the petitioner was disqualified in the technical bid was that one of its ships exceeded the maximum limit by 811 tonnes. During the course of hearing, it was noticed that the figures as to DWT have no definite bearing on the quantity of food grains and sugar to be transhipped. The figure itself connotes the total weight of the cargo under transhipment, fuel and other ancillary items. It is said that if the voyage is longer, the quantity of the fuel will be relatively more and to that extent the quantity of the cargo has to be reduced. The DWT recorded at the starting point naturally stands reduced by the time ship reaches the destination with the consumption of fuel etc. These aspects are referred not with a view to totally brush aside the relevance of the DWT. The endeavour is to see how far the condition is essential.' This finding of the learned single Judge is also contrary to the technical criteria pertaining to the size of the ship which is relevant to berthing capacity. As DWT is relevant to berthing capacity, the quantity of food grains and sugar is not the sole objective, even though the quantity of food grains and sugar is also proportional to DWT.

71. The condition imposed and the criteria based on DWT as laid down is clearly understood in shipping parlance and are important and essential criteria with regard to award of shipping contracts and the same cannot be brushed aside as vague and incapable of strict enforcement. On the contrary, the opening words of the clause technical' bid is the guiding factor for the later portion to the extent that the shipper would not be entitled to charge even if a lesser quantity is carried.

72. The submissions made by the learned Counsel for the respondents deserves acceptance. In our opinion the criteria and conditions laid down were neither arbitrary nor excessive. The mere fact that any other authority might have laid down different criteria is not a ground to call for interference by the learned single Judge.

73. The learned single Judge is also not correct in recording a finding that 'the condition as to the size of the ship was introduced for the first time during the year:' as it is for the first time that the contract was floated directly by FCI. The learned single Judge is also not correct in interpreting that it is the obligation of the shipper to unload the cargo from the ship and move the same to PDCs. The actual picture is that at Diglipur and Rangat the ships of the writ petitioner cannot berth, as these two ports do not have discharge facilities to unload the cargo from the ship to the port. There are only two ways - either to berth the ship and unload the cargo directly on the jetty or to do at anchorage and get the cargo delivered by the barges. Since both the facilities were unavailable to the ship of the writ petitioner, the writ petitioner may not be in a position to unload the cargo from its ship and move it to PDCs.

74. The learned single Judge is also not correct in disallowing the technical criteria as being non-essential and brushing aside the same while holding the general and erred in mixing the two criteria as both the criterion have equal significance in their own respect. In our view, the writ petitioner is estopped from challenging the conditions as he acquiesced to the conditions by participating in the tender. The finding of the learned single Judge that the ships are not built keeping in view the conditions that may be imposed by a consignor is not germane to the issue as ships are manufactured and size is measured according to Dead Weight Tonnage (DWT) which is the basis of shipping enquiries for award of contract and the authority awarding the contract are competent body to impose criterion as per their requirement. The criteria based on intelligible rationale cannot be set aside by way of judicial interference.

75. The learned single Judge failed to see that according to instructions of the Central Government (Central Vigilance Commission) vide their order No. 8(1)(h)/ 98(1) dated 28.11.1998 post tender negotiations are banned except with the lowest tenderer. Besides the very fact that the financial bid of TCI Seaways was opened and that of Gati was returned has diluted the sanctity of the tender as the rate of one party became open and the rate of other party that were quoted originally were not known. In a way the secrecy and sanctity of the tender has gone when Gati has filed the writ petition enclosing the rate. Therefore, the writ petitioner is not entitled to question the same, having failed to fulfil the terms and conditions of the tender.

76. When once the writ petitioner do not possess the prescribed experience, qualification as mentioned in the tender conditions, any judicial review at the instance of the party which does not fulfil the requisite criteria is misplaced and it is only a claim between two individuals and therefore no element of public interest involved and the petitioner is not entitled to any relief under Article 226 of the Constitution of India. Further if a review of the administrative decision is permitted it will amount to substituting its own decision without necessary expertise which itself may be fallible. As already noticed, the terms and conditions are prescribed basing on the past experience of the FCI and it is in the interest of reaching the food grains of various PDCs safely and such terms and conditions cannot be called either arbitrary or untenable or unreasonable as it is summarily a realm of the contract which does not warrant interference by way of judicial review. The direction issued by the learned single to accept the technical bid even though the writ petitioner has not fulfilled the other conditions of the tender is contrary to law and would amount to practically directing the authority to accept the bid without fulfilling the conditions. The decision of the authority in rejecting the technical bid of the writ petitioner for the reasons recorded by the committee in their minutes, in our view, does not call for interference by this Court in exercise of the extraordinary jurisdiction under Article 226 of the Constitution.

77. Though the learned single Judge has dealt with the scope of judicial review of the administrative action in award of contracts to some extent, the guidelines laid down by the Apex Court in Tata Cellular case have not been properly appreciated before recording the findings. There cannot be any dispute about the propositions referred to in the Judgment. Though a finding has been recorded as regards the condition relating to size of the ship to the effect that the condition is vague and incapable of strict enforcement, no foundation has been laid for such conclusion. Having regard to the nature of the contract and the technical aspects involved therein, the learned single Judge ought not to have interfered with the decision making process of the administrative authority. We are of the view that it is a fit case where judicial restraint should have been observed by the learned Judge.

78. The decisions relied upon by the learned Counsel for the writ petitioner have no application to the facts of the case on hand. In Monarch Infrastructure Pvt. Ltd. v. Commissioner, Ulhasnagar Municipal Corporation, the Apex Court held that the Courts would not interfere with the matter of administrative action or changes made therein, unless the Government action is arbitrary or discriminatory or the policy adopted has no nexus with the object it seeks to achieve or is mala fide. Nothing has been stated that the clause mentioned in the technical bid regarding the size of the ship has no nexus with the object sought to be achieved or is mala fide.

79. He also relied upon the decision in G.J. Fernandez v. State of Karnataka for the proposition that public interest and difference in rates are two vital considerations in the matter of tenders. There cannot be any dispute about the said proposition. There cannot be any dispute that the party issuing the tender has the right to punctiliously and rigidly enforce the conditions and stipulations. In the instant case, since we have come to the conclusion that the interpretation of the terms and conditions sought to be made by the learned single Judge as regards the size of the ship is not warranted, the question of public interest does not arise. This decision relates to pre-qualifications of tenderer. In our view, this decision has no application to the facts of the present case.

80. The next case relied upon by the learned Counsel for the petitioner is New Horizons Limited v. Uinioin of India, again, for the same proposition. In this case, the tender was rejected on the ground that NHL does not possess the required experience. The Tender Evaluation Committee has not taken into consideration the constituents of the appellant company i.e., Indian Group of companies and the foreign based company on an erroneous view that the said experience was not in the name of NHL and that NHL did not fulfil the conditions about the eligibility for the award of the contract. It was held that while corning to such conclusion the committee has misguided itself about the true legal position as well as the terms and conditions prescribed for submission of tenders contained in the notice for inviting tenders. It was held that the Court see through the corporate veil to ascertain the true nature of a company and the doctrine of lifting the veil has application. Here in the instant case, the tender of the petitioner was rejected on the non-fulfilment of the essential condition i.e., the tenderer should have not less than two vessels with size of 2000 to 4000 DWT which the petitioner does not possess. And the vessels should not have the tonnage of more than the tonnage prescribed in Clause (d) of the tender notification. The decision, in our view, has no application to the facts on hand.

81. There cannot also be any dispute about the position laid down in Poddar Steel Corporation v. Ganesh Engineering Works.

82. For the reasons aforesaid, we are of the view that the order of the learned single Judge impugned herein is liable to be set aside and the appeals deserves to be allowed.

83. In the result, both the appeals are allowed and the order of the learned single Judge is set aside. There shall be no order as to costs.

Subject	Contract;Commercial
Court	Andhra Pradesh High Court
Decided On	Nov-07-2002
Case Number	WA Nos. 1165 and 1235 of 2002
Judge	Ar. Lakshmanan, C.J. and ;V. Eswaraiah, J.
Reported in	2002(6)ALD685; 2002(6)ALT760
Acts	Constitution of India - Article 226
Appellant	Tci Seaways Limited
Respondent	Food Corporation of India, Regional Officer Haca and anr.
Appellant Advocate	Geetha Lujthra, Adv. for ;L. Ravi Chander, Adv. in WA No. 1165 of 2002 and ;B. Anjaneyulu, Adv. in WA No. 1235 of 2002
Respondent Advocate	B. Anjaneyulu, Adv. for Respondent No. 1 in WA No. 1165 of 2002, ;E. Manohar, Adv. for ;Vilas V. Afzulpurkar, Adv. for Respondent No. 2 in WA No. 1165 of 2002 and for Respondent No. 1 in WA No. 1235 o
Disposition	Appeals allowed

Tci Seaways Limited Vs. Food Corporation of India, Regional Officer Haca and anr. - Court Judgment