Pasayat, J.
1. Petitioner, a small scale industrial unit, has called in question certain stipulations imposed by the Director of Medical Education & Training, Orissa in the tender call notice for supply of drugs and medicines for the year 1997-98. It basically questions stipulation about purchase of tender paper on payment of Rs. 500/-, exemption from payment of earnest money, security deposit and restriction of zone of consideration to the reputed firms. Its case is based on certain provisions under the Industrial Policy Resolution, 1996 (in short, 'IPR, 1996') more particularly clauses 20.5 and 20.6 thereof. So far as exemption from earnest money deposit and purchase of tender papers are concerned, it is accepted that without prejudice to the claims involved the petitioner has purchased tender paper and has deposited the earnest money. It is highlighted that the expression 'reputed firm' is a vague term and in any event for survival of the small scale industrial units, the restriction of zone of consideration to reputed firms will be against the very policy of the State Government intended to encourage the industrial growth in the State. In the Government Stores Purchase Programme initially started by Directorate General of Supplies and Disposals, the Union Minister of Supply laid down a procedure for purchase from Small Scale Industries. The role of National Small Industries Corporation (in short, 'NSIC') in securing them a large share of Government orders was spelt out. The eligible Small Scale Units are registered under the Single Point Registration of NSIC making them competent and eligible to execute Government orders. A provision has been made for extension of preferential purchase policy in respect of Small Scale Industries to all Central and State Government Departments and Public Sector Enterprises in terms of (i) purchases from small scale sector as per reservation; (ii) identification of new products made in the small scale sector for purchase and enlarging the number of suppliers; (iii) effective recognition of the Single Point Registration Scheme of NSIC, and exempting Units enlisted under the Scheme from payment of earnest money, fee for tender documents and security deposits, and (iv) prompt payment to small scale units.
2. According to the petitioner these objects have been given a go-by and the action of the Director of Medical Education and Training, Orissa (in short, 'DMET') (opp. party no. 2) has clearly violated all the promises held out to small scale industrial units.
3. In the counter affidavit filed by the State and the DMET it has been stated that the tender in question was not meant for SSIs alone and the petitioner cannot claim the benefit of exemption from payment of earnest money and cost of tender paper. The advertisement clearly stated that tenders are invited from reputed manufacturing firms/public sector undertaking firms. While there can be no impediment for the petitioner to apply as a small scale industry, unless the petitioner satisfied the criteria of being a reputed manufacturing firm/public sector undertaking firm, no relief could be granted to it. The firms involved in supplying medicines publish a current index of medical specialities and a monthly index medical specialities. In these indices, a list of reputed firms is published. As a matter of practice, tenders from only these reputed firms are accepted for certain items, construing them as reputed firms within the meaning of the advertisement. As per the Government decision, 225 items of drugs and medicines are to be procured for hospitals in the State under the Health and Family Welfare Department. Out of these 225 items, 32 items have been earmarked for procurement fromE.P.M. rate contract holding SSI Units. The rates fixed by the Director of E.P.M. are accepted so far as these items of medicines are concerned. 14 items are procured from E.P.M. rate contract holding S.S.I. Unit on fixed percentage of supply share. The rest of the items as well as the residuary percentage of supply share are procured from the reputed manufacturing firms/ public sector undertakings on competitive basis. The petitioner cannot come into the zone of consideration for the items meant for reputed manufacturing concerns. If the petitioner satisfies all the tests so far as the quality is concerned, even if it is not a reputed firm, the tender can be awarded in his favour if he has quoted the lowest. This will, however, be subject to supplies being tested at reputed laboratories in the country outside the State and subject to qualitative standard at par with the reputed firms. The terms and conditions for supply of drugs and medicines have been indicated in Annexure - A/1 and the provisions relating to quality testing have been indicated in Clauses 21 to 23 thereof.
4. By way of reply the learned counsel for petitioner stated that the tenderers were required to submit their tenders in separate covers marked 'Cover-A'. The tender form giving the rates for various drugs were required to be sent in separate cover in Cover-B. In clause 4 it has been stated that tenders will be open at the office of the Director, Medical Education and Training, Orissa, Bhubaneswar at 11 a.m. on 11-8-1997 in the presence of the tenderers/representatives who choose to be present. Cover-B will be opened only for those companies which satisfy the standard criteria laid down by the DMET, Orissa on the basis of the details furnished by the tenderer in Cover-A. It is stated that since the petitioner's Cover-B was opened it was to be construed that petitioner's tender was accepted to be in order.
5. At the threshold it has to be noted that the learned counsel for the petitioner fairly accepted that the petitioner cannot claim to be a reputed concern. The residual question is whether the decision of the State restricting the zone of consideration to reputed concerns/public sector undertakings has any rational basis.
6. The scope of judicial review in matters of administrative decision has been highlighted by the Courts in many cases. In recent times the distinction between administrative orders and judicial or quasi-judicial orders have practically ceased to exist in view of primacy of the rule of law. The point that falls for determination is the scope for judicial interference in matters of administrative decision. Administrative action is stated to be referable to broad area of Governmental activities in which the repositories of power may exercise every class of statutory function of executive, quasi-legislative and quasi-judicial nature. It is trite law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary. (See State of U.P. v. Renusagar Power Co., AIR 1988 SC 1737). At one time, the traditional view in England was that the executive was not answerable where its action was attributable to the exercise of prerogative power. Professor De Smith in his classical work 'Judicial Review of Administrative Action' 4th Edition at pages 285-287 states the legal position in his old terse language that the relevant principles formulated by the courts may be broadly summarised as follows. The authority in which a discretion is vested can be compelled to exercise that discretion, but not to exercise it in any particular manner. In general, a discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it; it must not act under the dictates of another body or disable itself from exercising a discretion in each individual cases. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what it has been authorised to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and just not arbitrarily or capriciously. There several principles can be conveniently grouped in two main categories; (i) failure to exercise a discretion; and (ii) excess or abuse of discretionary power. The two classes are not, however, actually exclusive. Thus, discretion may be improperly fettered because irrelevant considerations have been taken into account, and where an authority hands over its discretion to another body insets ultra vires.
The present trend of judicial opinion is to restrict the doctrine of immunity from judicial review to those class of cases which relate to deployment of troops entering into international treaties, etc. The distinctive features of some of these recent cases signify the willingness of the Courts to assert their power to scrutinise the factual bases upon which discretionary powers have been exercised. Judicial review has developed to a stage today when, without reiterating any analysis of the steps by which the development has come about. One can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground is 'illegality; the second 'irrationality' and the third 'procedural impropriety'. Those principles were highlighted by Lord Diplock in Council of Civil Service Union v. Minister of the Civil Services; (1984) 3 All ER 935. If the power has been exercised on a non-consideration or non-application of mind to relevant factor, the exercise of power will be regarded as manifestly erroneous. If a power (whether legislative of administrative, is exercised on the basis of facts which do not exist and which are patently erroneous such exercise of power will stand vitiated. (See Commr. of Income-tax v. Mahindra & Mahindra Ltd., AIR 1984 SC 1182). The effect of several decisions on the question of jurisdiction has been summed up by Grahme Aledous and John Aldar in their book 'Applications for Judicial Review, Law and Practice' thus :
'There is a general presumption against ousting the jurisdiction of the Courts, so that statutory provisions which purport to exclude judicial review are constructed restrictively. There are, however, certain areas of governmental activity, national security being the paradise, which the courts regard themselves as incompetent to investigate, beyond an initial decision as to whether the Government's claim is bona fide. In this kind of non-justiciable area judicial review is not entirely excluded, but very limited. It has also been said that powers conferred by the Royal Prerogative are inherently unreviewable but since the speeches of the House of Lords in Council of Civil Services Union v. Minister for the Civil Service this is doubtful. Lords Diplock, Scorman and Reskill appeared to agree that there is no general distinction between powers, based upon whether their source is statutory or prerogative but that judicial review can be limited by the subject-matter of a particular power, in that case national security. Many prerogative powers are in fact concerned with sensitive, non-justiciable areas for example foreign affairs, but some are reviewable in principle, including the prerogatives relating to the civil service where national security is not involved. Another non-justiciable power is the Attorney-General's prerogative to decide whether to institute legal proceedings on behalf of the public interest.'
(Also see Padfield v. Minister of Agriculture, Fisheries & Food, L.A. (1968) AC 997; and Council of Civil Service v. Minister for the Civil Service, (1984) 3 All ER 985 (HL). The Court must while adjudicating validity of an executive decision grant a certain measure of freedom of play in the joints to the executive. The problems of Government are practical ones and may justify, if they do not require, rough accommodations; illegal, it may be and unscientific. But even such critics should not be hastily expressed. What is best is not discernible, the wisdom of any choice may be disputed or commenced. Mere (sic) of Government are not subject to judicial review. It is only palpably arbitrary exercise which can be declared void. Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervene. While fair-play is an essential ingredient in accepting and in awarding a contract, similarly 'fair-play in the joints' is also a necessary concomitant for administrative body functioning in an administrative sphere or quasi-administrative sphere.
Discretion, Lord Mansfield stated in classic terms in John Wilke's case, (1970) 4 Hurr 2528, must be a sound one governed by law and guided by rule, not by humour. Lord Denning put it eloquently in Breen v. Amalgamated Engineering Union, (1971) 1 All EN 1148, that in a Government of Laws 'there is nothing like unfettered discretion immune from judicial reviewability'. Courts stand between the executive and the subject alert, to see that discretionary power is not exceeded or misused. Discretion is a science of understanding to discern between right or wrong, between shadow and substance, between equity and colourable glasses and pretences and not to do according to one's wills and private affections. Lord Brightman elegantly observed in the case of Chief Constable of North Wales Police v. Evans; (1982) 3 All ER 141 that:
'Judicial review, as the words imply is not an appeal from a decision, but a review of the matter in which the decision was made.'
In a recent decision of Tata Cellular v. Union of India, (1994) 6 SCC 651 : (AIR 1996 SC 11), the Apex Court classified the grounds of challenge as under:
'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 action of the State, the instrumentality, any public authority or person whose actions bear insignia or public law element or public character are amenable to judicial review and the validity of such action would be tested on the anvil of Article 14 of the Constitution. The classic passage from the judgment of Lord Greene M. K. in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation; (1984) 1 KB 223 eloquently states the position in law. The same reads as follows :
'It is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word 'unreasonable' in a rather comprehensive sense. It has frequently been used as a general description of the things that must not be done. For instance, a person entrusted with the discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said to be acting 'unreasonably'. Similarly there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority.'
These aspects have been highlighted by one of us (A. Pasayat, J.) in Geetanjali Patnaik v. State of Orissa, represented through its Secretary, Department of Health (1996) 81 Cut LT 540 : (AIR 1996 Orissa 157) and Sri Rama Ballav Rath v. State of Orissa, represented by the Secretary to Government, General Administration Department, (1996) 81 Cut LT 841. Keeping in view the limited scope of judicial review in administrative matters, it is to be seen how far the orders passed by the authorities can be maintained on the touchstone of sustainability.
7. The reasons which have weighed with the Suite Government for restricting the zone of consideration to reputed concerns cannot be said to be without any basis. As has been indicated in the counter affidavit and at the time of hearing, out of 225 items to be purchased, 32 items have been earmarked for procurement from E.P.M. rate contract holding S.S.I. Units. It is not that the S.S.I. Units have been totally left out of consideration. Depending on the type of medicines required, certainly the State has a right to restrict the purchase of certain items from reputed concerns. It is slated by the learned counsel for State that the items to be purchased from the reputed concerns, are life saving products or medicines. That being the position, the State can give stress on quality of medicines, and for that purpose restricting the Zone of consideration to reputed concerns. The basis indicated cannot be said to be irrational or without any plausible foundation. In that view of the matter, it is not necessary to go into the question whether the petitioner is entitled to the exception from payment of tender cost or deposit of earnest money.
The writ application fails and is dismissed. No costs.
P.C. Naik, J.
8. I agree.