ORDER
Bhawani Singh, C.J.
1. These Letters Patent Appeals (L.P.A. No. 173 of 2001, Kanhaiyalal Agarwal v. Union of India and Ors., L.P.A. No. 198 of 2001, Hukumchand Constructions v. Union of India and Ors., and L.P.A. No. 211 of 2001, Union of India and Ors. v. Hukumchand Constructions and Anr.) are proposed to be decided by this judgment since they arise out of judgment of learned Single Judge dated 8-8-2001 passed in W.P. No. 2171 of 2001.
2. Railways invited tenders for supply, delivery and stacking of 75,000 Cu.M. Machine crushed track ballast as per specifications at Naurozabad Depot in Bilaspur Division from outside the Railway Land and loading into railway wagons. Supply period was 24 months and probable amount of supplies was Rs. 2,57,25,000.00. The opening date of tender was 1-3-2001. The petitioner Hukumchand Constructions submitted his tender at Shahdol. It was opened at the same place. Clause (2) of the Conditions in the tender required the tenderer to state his rate in words as well as in figures against each item of work as per Schedule attached. Clause (3) stipulated that the tenders submitted with any omissions or alteration of the tender document were liable to be rejected. Permissible corrections were required to be attached and countersigned by the tenderers. Clause (6) required that the tender should hold the offer open till such date as may be specified in the tender which under Clause (16) was for minimum period of 90 days from the date of opening of the lender and contravention of the conditions would automatically result in forfeiture of security deposit. Under Clause (13), tender is liable to be rejected for non-compliance of any of the conditions in the tender form.
3. Five tenders were received. Petitioner quoted lowest rate as compared to others, therefore, he deserved acceptance of tender and allotment of work against Item 4. Grievance of petitioner is that Kanhaiyalal Agarwal moved application before Divisional Manager (Engg.) S.E. Railways, Bilaspur (Chhattisgarh) on 1-3-2001 mentioning that in case the contract was given to him within 45 days, 60 days and 75 days, he would extend rebate of 5%, 3% and 2% respectively. The petitioner represented on 5-3-2001 and 26-3-2001 (Annexures P-4 and P-5) that in the event of his tender being accepted within 30 days and 45 days, tender rate may be reduced by 1.25% and 1% respectively. As against the lowest rate quoted by the petitioner, the tender of Kanhaiyalal Agarwal was accepted. The allegation is that authorities in total violation of the terms and conditions of the tender and with motive to give undue advantage and benefit to Kanhaiyalal Agarwal awarded the tender in his favour by considering the rebate offered by him by way of additional document. This document is not a part of the tender, therefore, such an offer could not have been considered ex parte to the prejudice of the petitioner who had quoted the lowest rates. Hence, conditions of tender were violated by the authorities.
4. Respondents submit that the petitioner could not reduce the offer after the tender was opened. Learned Single Judge found from submissions of respective parties that-
'...... I find submission of Mr. Paliwal is acceptable inasmuch as the notice inviting tender is gloriously silent with regard to an offer pertaining rebate and to make an offer after opening of the tender is of no consequence inasmuch as, in case at hand offering of rebate along with the tender was not a requirement in N.I.T. and such a mode can not be introduced by the Railway Administration and no offeree can take recourse to such a mode which may be a clever one but unacceptable in law. If a particular tenderer gives the rebate, it is likely to get benefit of being the lowest tenderer to enter into negotiation to arrive at a plausible and acceptable price to gain benefit so that an offeree is not put to loss for no rhyme or reason but unfortunately, such a mode has been given a go by and the rebate submitted by the respondent No. 5 has been accepted. In my considered opinion, the action taken by the railway administration is totally vitiated and suffers from vice of arbitrariness which can not be countenanced in law.'
After coming to the conclusion that Kanhaiyalal Agarwal gained benefit from the said supply, learned Single Judge said-
'.... As far as the rest is concerned, the railway administration shall have negotiation with the petitioner as well as the respondent No. 5 to submit their offers in a scaled cover, so that it can be appreciated by the competent authority in proper perspective and the lowest offer amongst the two would be taken into consideration (as there is no other allegations against the petitioner or the respondent No. 5). The same shall be accepted and the tender shall be allowed in favour of such a person having lower offer. After receiving the sealed tenders it will be open to the railway administration to call separately the petitioner as well as the respondent No. 5. It is open to the railway administration to keep in view with regard to the offer given by either of the offeree is workable keeping in view the upset price and the price of the workability considering the situation. Needless to emphasize, the railway administration shall also take into consideration the safety and this aspect shall also be discussed by the railway administration with the petitioner as well as the respondent No. 5 during negotiation. It is hereby made clear that a person is not entitled to a contract because of the lower price offered by him and the same will be dependent upon various factors which are to be kept in view by the railway administration and are germane to the issue.'
This decision has been challenged through these Letters Patent Appeals by Kanhaiyalal Agarwal, Hukumchand Constructions and Union of India.
5. Shri R.K. Gupta, learned Counsel appearing for Railways contended that this Court has no jurisdiction to entertain the writ petition because no cause of action arose within the State of M.P. Reliance is placed on Union of India v. Adani Exports Limited [2002(1) SCC 567]. Learned Counsel contended that question as to jurisdiction is different from other questions which may not have been raised earlier. With regard to former, objection can be raised at any stage since it goes to the root of the matter while in other cases, it may not be permitted to be raised. Shri Naman Nagrath, learned Counsel for Hukumchand Constructions strongly opposed the submission and advanced two alternative submissions, namely, it was not taken before the learned Single Judge, therefore, this objection can not be raised before the Appellate Court. In such a case, remedy of review was available and placed reliance on Daman Singh v. State of Punjab (AIR 1985 SC 973) in which the Apex Court held in Paragraph 13 that-
'13. The final submission of Shri Ramamurthi was that several other questions were raised in the writ petition before the High Court but they were not considered. We attach no significance to this submission. It is not unusual for parties and Counsel to raise innumerable grounds in the petitions and memorandum of appeal etc., but, later confined themselves, in the course of argument to a few only of those grounds, obviously because the rest of the grounds are considered even by them to be untenable. No party or Counsel is thereafter entitled to make a grievance that the grounds not argued were not considered. If indeed any ground which was argued was not considered, it should be open to the party aggrieved to draw the attention of the Court making the order to it by filing a proper application for review or clarification. The time of the Superior Courts is not to be wasted in inquiring into the question whether a certain ground to which no reference is found in the judgment of the Subordinate Court was argued before that Court or not ?'
Therefore learned Counsel contended that this objection should not be entertained. Otherwise, having failed to arrest the same before learned Single Judge, it is taken to have been relinquished. It is a case where they have left it, otherwise they could go to the learned Single Judge for review and filing of appeals against the impugned orders by other parties would not debar him from doing so as the grievance being raised squarely pertains to Railways since this objection has not been taken by other respondents.
6. Prior to the insertion of Clause (1-A) to Article 226 Constitution of India [re-numbered Clause (2) by the Constitution (42nd Amendment) Act, 1976], it was held that the writs do not run beyond the territories in relation to which each High Court exercises jurisdiction. Writs or order could not be issued under Article 226 unless the person, authority or Government against whom it was sought was resident of or located within the territorial jurisdiction of the High Court Khajoor Singh v. Union of India (AIR 1961 SC 532). After the Constitution (42nd Amendment) Act, 1976, Clause (2) of Article 226 Constitution of India, if the cause of action arises, wholly or in part, within the territorial jurisdiction of the High Court, it may issue a writ against a person or authority within the jurisdiction of another High Court. The expression 'cause of action' is neither defined in the Constitution nor in the Civil Procedure Code. However, it means bundle of facts which the petitioner must prove, if traversed, to entitle him to a judgment in his favour by the Court. Therefore, for determination of objection of lack of territorial jurisdiction, all facts pleaded in support of the cause of action have to be taken into consideration without embarking upon an enquiry as to the correctness or otherwise of the said facts. Averments in the petition/plaint and documents annexed form part of pleadings out of which cause of action for determination of jurisdiction has to be ascertained. In Navinchandra N. Majithia v. State of Maharashtra (AIR 2000 SC 2966), K.T. Thomas, J., speaking for himself on Article 226(2) in the context of 'cause of action, wholly or in part arises' said in Paragraphs 5 to 11 thus :--
'Para 5: But a Constitution Bench of this Court has held in Election Commission, India v. Saka Venkata Subba Rao, 1953 SCR 1144 : (AIR 1953 SC 210) thus 'The power of the High Court to issue writs under Article 226 of the Constitution is subject to the two fold limitation that such writs can not run beyond the territories subject to its jurisdiction and the person or authority to whom the High Court is empowered to issue writs must be amenable to the jurisdiction of the High Court either by residence or location within the territories subject to its jurisdiction.
6. It was the said decision of the Constitution Bench which necessitated the Parliament to bring the Fifteenth Amendment to the Constitution by which Clause (1-A) was added to Article 226. That clause was subsequently re-numbered as Clause (2) by the Constitution Forty Second Amendment. Now Clause (2) of Article 226 reads as under:--
'The power conferred by Clause (1) to issue directions, orders or writs to any Government Authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action wholly or in part arises for the exercise of such power, notwithstanding that the seat of such Government or authority or residence of such person is not within those territories.' 7. The object of the amendment by inserting Clause (2) in the Article was to supersede the decision of the Supreme Court in Election Commission v. Saka Venkata Subba Rao (supra) and to restore the view held by the High Courts in the decisions cited above. Thus, the power conferred on the High Court under Article 226 could as well be exercised by any High Court exercising jurisdiction in relation to the territories within which 'the cause of action, wholly or in part arises' and it is no matter that the seat of the authority concerned is outside the territorial limits of the jurisdiction of that High Court. The amendment is thus aimed at widening the width of the area for reaching the writs issued by the different High Courts.
8. 'Cause of action' is a phenomenon well understood in legal practice. Mohapatra, J., has well delineated the import of the said expression by referring to the celebrated lexicographies. The collocation of the words 'cause of action wholly or in part arises' seems to have been lifted from Section 20 of the Code of Civil Procedure, which section also deals with the jurisdictional aspects of the Courts. As per that section the suit could be instituted in a Court within the legal limits of whose jurisdiction the 'cause of action wholly or in part arises'. Judicial pronouncements have accorded almost a uniform interpretation to the said compendious expression even prior to the Fifteenth Amendment of the Constitution as to mean 'bundle of facts which it would be necessary for the plaintiffs to prove if traversed, in order to support of his right to the judgment of the Court'.
9. In Read v. Brown, (1888) 2 QBD 128, Lord Esher, M.R., Adopted the definition for the phrase 'cause of action' that it meant 'every fact which it would be necessary for the plaintiff to prove if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved'.
10. The Privy Council has noted in Mohammad Khalil Khan v. Mahbub Ali Miam, AIR 1949 PC 78, that the aforesaid definition adopted by Lord Esher M.R. had been followed in India. Even thereafter, the Courts in India have consistently followed the said interpretation without exception for understanding the scope of the expression 'cause of action'.
11. Even in the context of Article 226(2) of the Constitution, this Court adopted the same interpretation to the expression 'cause of action wholly or in part arises' vide State of Rajasthan v. Swaika Properties [1985 (3) SCC 217 : AIR 1985 SC 1289]. A three-Judge Bench of this Court in Oil and Natural Gas Commission v. Utpal Kumar Basu [(1994) 4 SCC 711 :1994 AIR SCW 3287] observed that it is well settled that the expression 'cause of action' means that bundle of facts which the petitioner must prove, if traversed to entitle him to a judgment in his favour. Having given such a wide interpretation to the expression, Ahmadi J. (as the learned Chief Justice then was) speaking for M.N. Venkatachalliah, C.J. and B.P. Jeevan Reddy, J. utilised the opportunity to caution the High Courts against transgressing into the jurisdiction of the other High Courts merely on the ground of some insignificant event connected with the cause of action taking place within the territorial limits of the High Court to which the litigant approaches at his own choice or convenience. The following are such observations (1994 AIR SCW 3287, at p. 3296) :--
'If an impression gains ground that even in cases which fall outside the territorial jurisdiction of the Court, certain members of the Court would be willing to exercise jurisdiction on the plea that some event, however, trivial and unconnected with the cause of action had occurred within the jurisdiction of the said Court, litigants would seek to abuse the process by carrying the cause before such members given rise to voidable suspicion. That would lower the dignity of the institution and put the entire system to ridicule. We are greatly pained to say so but if we do not strongly deprecate the growing tendency we will, we are afraid, be failing in our duty to the institution and the system of administration of justice. We do hope that we will not have another occasion to deal with a situation.'
Then, D.P. Mohapatra, J., speaking for himself in the same judgment said in Paragraphs 33 to 37 that-
'33. From the provision in Clause (2) of Article 226 it is clear that the maintainability or otherwise of the writ petition in the High Court depends on whether the cause of action for filing the same arose, wholly or in part, within the territorial jurisdiction of that Court.
34. In legal parlance the expression 'cause of action' is generally understood to mean a situation or state of facts that entitles a party to maintain an action in a Court or a Tribunal; a group of operative facts giving rise to one or more basis for suing; a factual situation that entitles one person to obtain a remedy in Court from another person (Black's Law Dictionary).
35. In Stroud's Judicial Dictionary, a 'cause of action' is stated to be the entire set of facts that gives rise to an enforceable claim; the phrase compromises every fact which if traversed, the plaintiff must prove in order to obtain judgment.
36. In 'words and phrases' (fourth edition) the meaning attributed to the phrase 'cause of action' in common legal parlance is existence of those facts which give a party a right to judicial interference on his behalf.
37. A Bench of three learned Judges of this Court in the case of Oil and Natural Gas Commission v. Utpal Kumar Basu (supra), considered at length the question of territorial jurisdiction under Article 226(2) of the Constitution of India. Some of the relevant observations made in the judgment are extracted hereunder (Paragraphs 5 and 6, AIR SCW) :--
'Clause (1) of Article 226 begins with a non-obstante clause -notwithstanding anything in Article 32 and provides that every High Court shall have power 'throughout the territories in relation to which it exercises jurisdiction', to issue to any person or authority, including the appropriate cases, any Government, 'within those territories' directions, orders or writs, for the enforcement of any of the rights conferred by Part III or for any other purpose. Under Clause (2) of Article 226 the High Court may exercise its power conferred by Clause (1) if the cause of action, wholly or in part, had arisen within the territory over which it exercises jurisdiction, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. On a plain reading of the aforesaid two clauses of Article 226 of the Constitution it becomes clear that a High Court can exercise the power to issue directions, orders or writs for the enforcement of any of the fundamental rights conferred by Part III of the Constitution or for any other purpose if the cause of action, wholly or in part, had arisen within the territories in relation to which it exercises jurisdiction, notwithstanding that the seat of the Government or authority or the residence of the person against whom the direction, order or writ is issued is not within the said territories. In order to confer jurisdiction on the High Court of Calcutta, NICCO must show that atleast a part of the cause of action had arisen within the territorial jurisdiction of this Court. That is at the best its case in the writ petition.
It is well settled that the expression 'cause of action' means that bundle of facts which the petitioner must prove, if traversed, to entitle him to a judgment in his favour by the Court. In Chand Kour v. Pratab Singh, Lord Watson said :
'..... the cause of action has no relation whatever to the defence which may be set up by the defendant, nor does it depend upon the character of the relief prayed for by the plaintiff. It refers entirely to the ground set forth in the plaint as the cause of action, or, in other words, to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour.' Therefore, in determining the objection of lack of territorial jurisdiction, the Court must take all the facts pleaded in support of cause ofaction into consideration albeit without embarking upon an enquiryas to the correctness or otherwise of the said facts. In other words thequestion whether the High Court has territorial jurisdiction to entertain a writ petition must be answered on the basis of averments madein the petition, the truth or otherwise whereof being immaterial. Toput it differently, the question of territorial jurisdiction must be decidedon the facts pleaded in the petition. Therefore, the question whetherin the instant case, the Calcutta High Court had jurisdiction toentertain and decide the writ petition in question even on the factsalleged must depend upon whether the averments made in Paragraphs 5, 7, 18, 22, 26 and 43 are sufficient in law to establish that apart of the cause of action had arisen within the jurisdiction of theCalcutta High Court.
In Union of India and Ors. v. Adani Exports Ltd. and Anr. [2002(1) SCC 567], again the Apex Court had occasion to consider the question of territorial jurisdiction in the context of Article 226(2) of the Constitution. In Paragraphs 16 and 17, the Court said:
'16. It is clear from the above Constitutional provision that a High Court can exercise the jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises. This provision in the Constitution has come up for consideration in a number of cases before this Court. In this regard, it would suffice for us to refer to the observations of this Court in the case of Oil and Natural Gas Commission v. Utpal Kumar Basu (SCC at page 713) wherein it was held :--
'Under Article 226(2) a High Court can exercise the power to issue directions, orders or writs for the enforcement of any of the fundamental rights conferred by Part III of the Constitution or for any other purpose if the cause of action wholly or in part, had arisen within the territories in relation to which it exercises jurisdiction, notwithstanding that the seat of the Government or authority or the residence of the person against whom the direction, order or writ is issued is not within the said territories. The expression 'cause of action' means that bundle of facts which the petitioner must prove, if traversed, to entitle him to a judgment in his favour by the Court. Therefore, in determining the objection of lack of territorial jurisdiction the Court must take all the facts pleaded in support of the cause of action into consideration albeit without embarking upon an enquiry as to the correctness or otherwise of the said facts. Thus the question of territorial jurisdiction must be decided on the facts pleaded in the petition, the truth or otherwise of the averments made in the petition being immaterial.'
17. It is seen from the above that in order to confer jurisdiction on a High Court to entertain a writ petition or a special civil application as in this case, the High Court must be satisfied from the entire facts pleaded in support of the cause of action that those facts do constitute a cause so as to empower the Court to decide a dispute which has come up atleast in part, arisen within its jurisdiction. It is clear from the above judgment that each and every fact pleaded by the respondents in their application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the Court's territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the Court concerned. If we apply this principle then we see that none of the facts pleaded in Paragraph 16 of the petition, in our opinion, falls into the category of bundle of facts which would constitute a cause of action giving rise to a dispute which could confer territorial jurisdiction on the Court at Ahmedabad.'
7. Before Appellate or Revisional Court can entertain an objection as to territorial jurisdiction, necessary conditions to be fulfilled are that the objection was taken in the First Court; it was taken at the earliest opportunity and trial sought thereof and the trial in the wrong Court has occasioned in the failure of justice. Therefore, even though objection has been raised at the earliest opportunity and wrongly disallowed, the judgment will not be disturbed unless the trial in the wrong Court has led to 'failure of justice'. In order to ascertain whether there has been a failure of justice, the Appellate Court must go into the merits of the case and form an opinion upon the justness or otherwise of the decision of the First Court. An objection as to the local jurisdiction of a Court can be waived and this principle has been given statutory recognition by Section 21 of the Code of Civil Procedure. When a respondent has raised an objection as to the place of suing but has not pressed it for decision and participated in the trial taking the chance of obtaining favourable verdict, he can not be heard to say that he was prejudiced or that there was failure of justice.
8. Adverting to the facts of the case, perusal of tender notice plainly demonstrates that the Railways issued the same with regard to five items. Tender forms for Item Nos. 1 to 3 could be obtained from the office of theSenior Divisional Engineer (Co-ord)/Bilaspur and from AEM/Raigarh AEN/Shahdol for Item Nos. 4 and 5, GM (Engg.)/Garden Reach, Calcutta for Item No. 4 from 15-2-2001 up to 12.00 hrs. on 1-3-2001 (This dispute pertains to Item No. 4). It is also submitted that tender box would be kept ready on and from 10.00 hours of 23-2-2001 to 15.30 hours of 1-3-2001 on working days in the office of the Senior Divisional Engineer (Co-ord.)/Bilaspur and in the office of AEN/Raigarh for Item Nos. 1 to 3, AEN/Shahdol for Item Nos. 4 and 5, GM (Engg.)/Garden Reach, Calcutta for Item No. 4 for dropping of the tender. Tender box would be closed at 15.30 hrs. and opened at 16.00 hrs. on the same day at Bilaspur, Raigarh, Shahdol and Garden Reach, Calcutta simultaneously. Endorsement against Item (v) mentions that AEN/Raigarh, AEN/Shahdol to keep a tender box ready at his office for the dropping of tenders and arrange sealing and opening at exact timing as given above.
9. Conjoint reading of relevant parts of Tender Notice No. W/A/T/ 140/2000-2001, dated 1-3-2001 with regard to Item No. 4 clearly demonstrates that tender forms could be obtained from AEN/Shahdol and GM (Engg.)/Gar-den Reach, Calcutta. They could be dropped in the tender box at these two places and opened simultaneously at these two places and no other place. Therefore, Kanhaiyalal Agarwal could not drop his tender at Bilaspur. Having failed to drop the tender at AEN, Shahdol/GM (Engg.), Garden Reach, Calcutta, his tender could not be opened and considered nor could the work contract be allotted. This tender is for supply of material Naurozabad (M.P.). Tender Box is kept at Shahdol (M.P.). It was opened at Shahdol (M.P.) with respect to Item No. 4. Therefore, cause of action arises in State of M.P. Here it would not be relevant to refer to Calcutta since there is not tenderer in this case from this place.
10. From aforesaid discussion, it can be held that the Railways may have taken objection as to jurisdiction but it did not press for decision thereon. Therefore, it had waived the same, otherwise it could seek review of decision from learned Single Judge. Having failed to take this recourse, objection is belated and by way of an after thought. Above all, no prejudice has been established. In the alternative, it is found that cause of action arises in the State of M.P., therefore, this Court has jurisdiction to decide the matter. In Oil & Natural Gas Commission v. Utpal Kumar Basu (supra), the Apex Court said in Paragraphs 5 and 6 that-
'5. Clause (1) of Article 226 begins with a non-obstante clause notwithstanding anything in Article 32 and provides that every High Court shall have power 'throughout the territories in relation to which it exercises jurisdiction', to issue to any person or authority, including the appropriate cases, any Government, 'within those territories' directions, orders or writs, for the enforcement of any of the rights conferred by Part III or for any other purpose. Under Clause (2) of Article 226 the High Court may exercise its power conferred by Clause (1) if the cause of action, wholly or in part, had arisen within the territory over which it exercises jurisdiction, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. On a plain reading of the aforesaid two clauses of Article 226 of the Constitution it becomes clear that a High Court can exercise the power to issue directions, orders or writs for the enforcement of any of the fundamental rights conferred by Part III of the Constitution or for any other purpose if the cause of action, wholly or in part, had arisen within the territories in relation to which it exercises jurisdiction, notwithstanding that the seat of the Government or authority or the residence of the person against whom the direction, order or writ is issued is not within the said territories. In order to confer jurisdiction on the High Court of Calcutta, NICCO must show that atleast a part of the cause of action had arisen within the territorial jurisdiction of this Court. That is at the best its case in the writ petition.
6. It is well settled that the expression 'cause of action' means that bundle of facts which the petitioner must prove, if traversed, to entitle him to a judgment in his favour by the Court. In Chand Kour v. Pratab Singh, Lord Watson said:
'..... the cause of action has also relation whatever to the defence which may be set up by the defendant, nor does it depend upon the character of the relief prayed for by the plaintiff. It refers entirely to the ground set forth in the plaint as the cause of action, or, in other words, to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour.'
Therefore, in determining the objection of lack of territorial jurisdiction, the Court must take all the facts pleaded in support of cause of action into consideration albeit without embarking upon an enquiry as to the correctness or otherwise of the said facts. In other words the question whether the High Court has territorial jurisdiction to entertain a writ petition must be answered on the basis of averments made in the petition, the truth or otherwise whereof being immaterial. To put it differently, the question of territorial jurisdiction must be decided on the facts pleaded in the petition. Therefore, the question whether in the instant case, the Calcutta High Court had jurisdiction to entertain and decide the writ petition in question even on the facts alleged must depend upon whether the averments made in Paragraphs 5, 7, 18, 22, 26 and 43 are sufficient in law to establish that a part of the cause of action had arisen within the jurisdiction of the Calcutta High Court.'
11. Although it is found that Kanhaiyalal Agarwal could not drop the tender at Bilaspur, therefore, his case could not be considered for allotment of work, we proceed to examine the case on merits as well. Shri Naman Nagrath, learned Counsel for Hukumchand Constructions contended that learned Single Judge having come to the conclusion that tender of Kanhaiyalal Agarwal could not be accepted, committed error by directing Railways to negotiable the matter with the petitioner and Kanhaiyalal Agarwal. Tender of Kanhaiyalal Agarwal merited rejection since he could not attach conditionalities with it and otherwise, his rate was higher as compared to the petitioner and the Railways should have been directed to allot the work to the petitioner, Kanhaiyalal Agarwal being out of the race.
12. Shri R.N. Singh, learned Senior Counsel for Kanhaiyalal Agarwal and Shri R.K. Gupta, learned Senior Counsel for Railways contended that there was no prohibition in the tender notice against submission of rebate and in the absence of such rebate from the petitioner on 1-3-2001, best available tender of Kanhaiyalal Agarwal was accepted and the rebate offered by Hukumchand Constructions on 5-3-2001 could not be considered since the tender was opened on 1-3-2001 and he became wiser after the event. Shri R.N. Singh also submitted that by this time, the petitioner has supplied 60% of the material, therefore, the transaction may not be invalidated particularly when substantial public interest for doing so is not involved. Learned Counsel for parties drew our attention to certain decisions of Apex Court in support of their submissions.
13. In Tata Cellular v. Union of India, 1995 A.T.L.R. 1 (SC) : [(1994) 6 SCC 651], the Apex Court said in Paragraph 77 that-
'77. 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 a particular policy or 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. As a matter of fact, in R. v. Secretary of State for the Home Department, Ex Brind, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases, the test to be adopted is that the Court should, 'consider whether something has gone wrong of a nature and degree which requires its intervention.'
Further, in Para 81, the Apex Court said that-
'81. Two other facets of irrationality may be mentioned.
(1) 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 of other way, can not be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment [1980 (41) P & CR 255], the Secretary of State referred to a number of factors which led him to the conclusion that a non-resident's bar in a hotel was operated in such a way that the bar was not an incident of the hotel use for planning purposes, but constituted a separate use. The Divisional Court analysed the factors which led the Secretary of Slate to that conclusion and, having done so, set it aside. Donaldson, L. J. said that he could not see on that basis the Secretary of State had reached his conclusion.
(2) A decision would be regarded as unreasonable if it is impartial and unequal in its operation as between different classes. On this basis in R. v. Barnet London Borough Council, Ex.P. Johnson [1989 (88) LGR 73] the condition imposed by a local authority prohibiting participation by those affiliated with political parties at events to be held in the authority's parks was struck down.'
In Raunaq International Ltd. v. I.V.R. Construction Ltd. 1999 Arb.W.L.J. 215 : (1999) 1 SCC 492, the Apex Court said in Paragraph 11 :
'11. 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 offers 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 for more than any saving which the Court would ultimately effect in public money by 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 malafide, the Court should not intervene under Article 226 in disputes between two rival tenderers.'
Then, in Paragraphs 15 and 19, it has been held that-
'15. Where the decision making process has been structured and the tender conditions set out the requirements, the Court is entitled to examine whether these requirements have been considered. However, if any relaxation is granted for bonafide reasons, the tender conditions permit such relaxation and the decision is arrived at for legitimate reasons after a fair consideration of all offers, the Court should hesitate to intervene.'
'19. A somewhat different approach may be required in the cases of award of a contract by the Government for the purchase of items for its use. Judicial review would be permissible only on the established grounds for such review including malafides, arbitrariness or unreasonableness of the Wednesbury variety. Balance of convenience would play a major role in moulding interim relief.'
From Paragraph 27 of the judgment, it is clear that Court interfered after it found that relaxation under the terms of the tender was permissible, therefore, looking to the expertise of the tenderer and past experience, the relaxation granted to M/s Raunaq International Limited was on valid principles though it did not exactly tally with the prescribed criteria as compared to the challenger who did not fulfil the requisite criteria with highest offer and stopping the performance of contract so awarded, tended in major detriment to the public because the construction of the two Thermal Power Units each of 210 MW was held up on account of the dispute, shortage of power had become notorious,
14. In Centre for Public Interest Litigation and Anr. v. Union of India and Ors. [(2000) 8 SCC 606], it has been said in Paragraph 20 that-
'20. It is clear from the above observations of this Court 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, malafide, collateral conclusion that such a contract can be prima fade or otherwise held 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.' [See : 1986(4) SCC 566, State of M.P. v. Nandlal Jaiswal]
In Air India Limited v. Cochin International Airport Limited and Anr. [(2000) 2 SCC 617], the Apex Court said in Paragraph 7 that-
'7. The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in Ramana Dayaram Shelly v. International Airport Authority of India, Fertiliser Corporation Kamgar Union (Registered) v. Union of India, CCE v. Dunlop India Limited, Tata Cellular v. Union of India, Ramniklal N. Bhutta v. State of Maharashtra and Raunaq International Limited v. I.V.R. Construction Limited. The award of a contract whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that 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 criterian for awarding a contract. It is free to grant any relaxation, for bonafide reasons, if the tender conditions permit such a relaxation, for bonafide 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 lai down by them and can not depart from them arbitrarily. Though said 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 the intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference,the Court should intervene.'
In Dutta Associates Pvt. Ltd. v. Indo Merchantiles Pvt. Ltd. and Ors. [(1997) 1 SCC 53], the Apex Court said in Paragraphs 4, 5 and 7 that-
'4. After hearing the parties, we are of the opinion that entire process relating to the acceptance of the appellant's tender is vitiated by more than one illegality. Firstly, the tender notice did not specify the 'viability range' nor did it say that only the tenderers coming within the viability range will be considered. More significantly, the tender notice did not even say that after receiving the tenders, the Commissioner/Government would first determine the 'viability range' and would then call upon the lowest eligible tenderer to make a counter offer. The exercise of determining the viability range and calling upon Dutta Associates to make a counteroffer on the alleged ground that he was the lowest tenderer among the eligible tenderers is outside the tender-notice. Fairness demanded that the authority should have notified in the tender notice itself the procedure which they proposed to adopt while accepting the tender. They did nothing of that sort. Secondly, we have not been able to understand the very concept of 'viability range' though Shri Kapil Sibal, learned counsel for the appellant and the learned counsel for the State of Assam tried to explain it to us. The learned counsel stated that because of the control of molasses, the price of rectified spirit fluctuates from time to time in the market and that, therefore, the viability range was determined keeping in view (1) distillery cost price; (2) export pass fees; (3) Central Sales Tax; (4) transportation charges; (5) transit wastage @ 1%; and (6) ware house operational wastage @ 1-1/2% vide the counter affidavit filed by the Secretary to Excise Department, Government of Assam pursuant to this Court's orders. Shri Sibal further explained that because of the possibility of the fluctuation, the tender notice contains Clause (16) which reserves to the Government the power to reduce or increase the contract rate depending upon the escalation or deceleration of the market price in the exporting States. We are still not able to understand. Clause (16) deals with post contract situation, i.e., the situation during the currency of contract and not with a situation at the inception of the contract. The tenderers are all hard headed businessmen. They know their interest better. If they are prepared to supply rectified spirit at Rs. 11.14 per LPL or so, it is inexplicable why should the Government think that they would not be able to do so and still prescribe a fair higher viability range. Not only the rate obtaining during the period when the tenders were called was Rs. 11.05 per LPL, the more significant feature is that during the period of about more than two years pending the writ petition and writ appeal, the appellant has been supplying rectified spirit @ Rs. 9.20 per LPL. If it was not possible for anyone to supply rectified spirit at the rate lower than Rs. 14.72 (the lower figure of the viability range), how could the appellant have been supplying the same at such a low rate as Rs. 9.20 for such a long period. It may be relevant to note at this stage the circumstances in which the appellant volunteered to supply at the said rate. Indo Merchantiles, the respondent herein, filed the writ petition and asked for an interim order. The learned Single Judge directed (vide order dated 2-6-1994) that while Dutta Associates (appellant herein) shall not be given the contract, he 'shall be allowed to execute the contract at the lowest quoted rate which is slated to be Rs. 9.20 by the writ petitioner. Respondent No. 3 (Dutta Associates) states that the lowest quoted rate is Rs. 11.14. If the lowest quoted rate is Rs. 9.20, it is that rate at which the contract shall be given to respondent No. 3'. It is pursuant to the said order that the appellant Dutta Associates has been supplying rectifying spirit @ Rs. 9.20 per LPL since June, 1994 till October, 1996. The said order did not compel the appellant (respondent No. 3 in the writ petition) to supply at the rate of Rs. 9.20 p. If that rate was not feasible or economic, he could well have said 'sorry'. He did not say so that agreed to and has been supplying at that rate, till October, 1996. It is equally significant to note that pursuant to the interim orders of this Court (which directed the Government to implement the orders of the Guwahati High Court with respect to interim arrangement) negotiations were held with both the appellant and the first respondent herein; both offered to supply at Rs. 9.20 p. The Commissioner, of course, chose the first respondent, Indo Merchantiles, over the appellant, for reasons given by him in his order dated 14-10-1996. The rate, however, remains Rs. 9.20 p. and the appellant's counsel has been making a grievance of the Commissioner not accepting the appellant's offer. All these facts make the so called 'viability range' and the very concept of 'viability range' looks rather ridiculous - and we are not very far from the end of the three years period for which the tenders were called for. Neither the interlocutory order of the learned Single Judge dated 2-6-1994 aforesaid nor does the order of Commissioner dated 14-10-1996 passed pursuant to the interim orders of this Court provide for any fluctuation in the rate of supply depending upon the fluctuation in the market rate in the exporting States, as provided by Clause (16) of the Tender Conditions, which too appears rather unusual. The order of learned Single Judge aforesaid does not also say that the rate specified therein is tentative and that it shall be subject to revision at the final hearing of the writ petition. As a matter of fact, no such revision was made either by the learned Single Judge or by the Division Bench. It is in these circumstances that, we said, we have not been able to understand or appreciate the concept of 'viability range', its necessity and/or its real purpose. Thirdly, the Division Bench states repeatedly in its judgment that having determined the 'viability range', the Government called upon only the appellant Dutta Associates (third respondent in the writ petition/writ appeal) to make a counter offer to come within the Viability range' and that his revised offer at the higher limit of the Viability range' (Rs. 15.71) was accepted. The Division Bench has stressed that no such opportunity to make a counter offer was given to any other tenderer including the first respondent. As the Division Bench has rightly pointed out, that is equally a vitiating factor.
5. It is thus clear that the entire procedure followed by the Commissioner and the Government of Assam in accepting the tender of Dutta Associates (appellant herein) is unfair and opposed to the norms which the Government should follow in such matters, viz., openness, transparency and fair dealing. The Grounds 1 and 2, which we have indicated hereinabove, are more fundamental than the third ground upon which the High Court has allowed the writ appeal.'
'7. In the circumstances, we affirm the judgment of the Division Bench in writ appeal on the grounds stated above and direct that fresh tenders may be floated in the light of the observations made in this judgment. We reiterate that whatever procedure the Government proposes to follow in accepting the tender must be clearly stated in the tender notice. The consideration of the tenders received and the procedure to be followed in the matter of acceptance of a tender should be transparent, fair and open. While a bonafide error or error of judgment would not certainly matter, any abuse of power for extraneous reasons, it is obvious, would expose the authorities concerned, whether it is the Minister for Excise or the Commissioner of Excise, to appropriate penalties at the hands of the Courts, following the law laid down by this Court in Shiv Sagar Tiwari v. Union of India (In re, CAPT Satish Sharma and Sheila Kaul).'
[See also Division Bench Judgments of this Court in Optel Telecommunications Limited v. Union of India and Ors., L.P.A. Nos. 209, 210 and 211 of 2000, dated August 25, 2000 and Pressure Sensitive System (India) Ltd. v. Aristocraft International Private Limited and Ors., L.P.A. Nos. 118, 124 and 127 of 2000, dated January 2, 2001 = 2001(5) M.P.H.T. 130 (DB)].
15. While examining the challenge with regard to acceptance of tender by the Government/Institution, facts of the case are relevant. Question to be seen is whether decision making process is punctuated by illegality, abuse of authority, violating principles of natural justice, abuse of power, irrationality of decision, partial and unequal in its operation being structured/tailor-made to benefit a party/group against the other. These factors may not be exhaustive, many other may be there from facts of each case.
16. Notice Inviting Tender (NIT) is absolutely clear what tenderer has to do. Condition (2) requires that the tenderer or tenderers shall quote his/ their rates in words as well as in figures against each item of work as per schedule attached. Condition (3) enjoins that tender containing omissions and alternations of the tender document are liable to be rejected while the conditions (6) and (16) provide for keeping the offer open till such date as may be specified in the tender, therefore, the conditionalities attached by Kanhaiyalal Agarwal have the effect of withdrawing the tender from consideration. The tender form has to be read with tender notice No. W/A/T/140/2000-2001 dated 13-2-2001 to make complete transaction. Nowhere in the tender notice and conditions of tender, there is scope/relaxation for submission/attachment of rebate/conditionalities. If the same could be attached, it could be specifically provided for. Otherwise, it is deemed to be excluded and it would amount to alteration in the tender document which is impermissible. The tender should be unconditional is a fundamental rule. Relaxation if necessary should have been notified to all the tenderers to enable them to change their rates. All the tenderers should have been treated equally and fairly. Therefore, offer of rebate submitted by Kanhaiyalal Agarwal was not requirement of the tender. Rather it was dehors the conditions of the lender notice. Hukumchand Constructions derived knowledge about this rebate by Kanhaiyalal Agarwal on 5-3-2001 and represented by offering rebate. The position is, in case tenders of parties are considered without rebate, tender of Hukumchand Constructions is at a lower rate, hence acceptable on this ground. Alternatively, in case they are counted in terms of the rebates, in that case also, the rate of Hukumchand Constructions is lower. Agreement was executed on 19-4-2001 and same day the work was allotted. Therefore, the Railways had time to consider the rebate of Hukumchand Constructions. Why this was not done is not understandable. However, the irresistible conclusion is that the Railways have not treated both the tenderers equally and fairly. One has been given unfair advantage over the other which is not within the parameters of conditions of the NIT. Therefore, the tender of Kanhaiyalal Agarwal is liable to be rejected for this reason also.
17. Having derived unfair advantage at the behest of Railways and supplied 60% of material in eight months, though duration of contract period is 24 months, it would result in miscarriage of justice if Railways are called upon to negotiate with Kanhaiyalal Agarwal and Hukumchand Constructions for the remaining part of the contract.
No other point was urged.
18. Consequently, order of learned Single Judge to the aforesaid extent is set aside. It is directed that supply of material by Kanhaiyalal Agarwal be stopped forthwith and balance material be taken from Hukumchand Constructions at the rate furnished by him in his tender.
Cost on parties.