Sri Shiva Shakthi Constructions (P) Ltd. and ors. Vs. the Superintending Engineer, Roads and Buildings and ors. - Court Judgment

Excerpt:
- - these are all technical matters and best left to the authorities to prescribe. however, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. there can be no question of infringement of article 14 if the government tries to get the best person or the best quotation. technological services limited case (9 supra) that the freedom of trade and business also extend to the right of purchaser to decide from whom to purchase subject to parameters laid down in tata cellular case (7 supra). it is now well settled that in the matter of entering into a contract, the state does not stand on the same footing as a private person who is free to enter into a contract with any person he likes. therefore, while dealing with the public, whether by way of giving jobs, or entering into contracts or issuing quotas or licences or granting other forms of largesse, the government cannot act arbitrarily at its sweet will and like a private individual, deal with any person it pleases, but its action must be in conformity with the standards or norms which are not arbitrary, irrational or irrelevant. for maintaining the effective transport system well planned and laid roads are very much essential.orderg. bikshapathy, j.1. since the common question of law are involved in these writ petitions, they are disposed of by a common order.2. the first respondent-superintending engineer, roads and buildings, national highway circle, hyderabad issued tender notifications (1) ctn.2/ 96-97, dt. 10-4-1996, (2) ctn.4/96-97, dt. 25-5-1996, (3) ctn. 7/96-97 dt. 17-6-1996. the tender condition no. 2 in ctn 4 and 7 are assailed in writ petition nos. 16642/96 and 14499/96 while tender condition no. 7 (ii) is challenged in writ petition no. 10360/96. in w.r. no. 16889/96 the first respondent refused to supply the tender schedule on the ground that it is not a recognised joint venture.3. the facts in nut-shell are that the ist respondent issued tender notifications in respect of certain works on the national highways. special conditions were imposed for issuing the tender schedules. special condition no. 2 is extracted below.'proof of ownership of machinery required for road work such as earth work machinery i.e. excavation, loader grader, dozer and vibrator rollers and hot mix machinery such as electronic paver, drums, mix plant with electronic control and trunk mounted bitumenous sprayer of hand is to be furnished along with application, duly attested by the officer not below the rank of executive engineer'.clause 7(2) of tender conditions in ctn.2/96-97 is extracted below:'proof of ownership of electronic hot plant having all attachment in its conforming to the ministry of surface transport specification no. 504, 3, 4 located within 70 k.ms. radius from the work spot and other ancillary machinery such as paver, vibrator role etc., the certificate issued by the executive engineer, n.h. division, hyderabad to this effect shall be furnished along with the application for tender schedules.'the petitioners submit that imposing such a condition of ownership even at the time of issuing the tender schedule is highly arbitrary and violative of articles 14 and 19(1)(g) of the constitution of india. it is also submitted by the petitioners that the condition of ownership is very onerous and the machinery that is to be purchased for the purpose of executing the work in some cases exceeds more than the value of work and therefore the condition has to be set aside. further the petitioners in w.p.no. 16642/96 also stated that he is possessing the necessary machinery. even otherwise permission should be granted to the successful tenderer to place the machinery at the work spot within the stipulated time either establishing ownership or by getting the machinery on lease/hire. it is also submitted by the petitioners that the ownership of such machinery is vesting with very few individuals. if the petitioners are not allowed to tender for such works, it would amount to monopolizing the work in the hands of few individuals and thereby creating a scope for abuse of situation.4. in the counter filed on behalf of the ist respondent, it is stated that the national highway road works are undertaken by the first respondent on behalf of the ministry of surface transport, government of india, who is the funding agency. the guidelines and the instructions issued by the ministry of surface transport in this regard are required to be implemented by the first respondent. it is also stated that the condition of owning machinery was made a pre-requisite for issuing tender in view of the guidelines issued by the government dt. 15-3-1995 superseding earlier instructions. the works notified under the tenders are specialised works and to be carried out with time bound schedule. the national highways are important for the smooth flow of traffic from one place to another and execution of work has to be necessarily of high quality. it is stated by the respondents that on earlier occasions, the tenders were accepted on the undertaking given by the tenderers that they shall produce the machinery after the tender is allotted in their favour. however, the authorities had faced bitter experience. the successful tenderers were not in a position to place the machinery as undertaken by them. therefore the works had to be cancelled and they had to be re-allocated to other tenderers resulting inordinate delay in allotting the tenders and execution of works. in view of that it was stressed by the central government to impose the condition of ownership of machinery before the tender schedules are issued in order to ensure that the work is completed within the time schedule. therefore in public interest such a condition has been issued. it is also stated in the counter that there would not be any monopoly in allotting the contracts inasmuch as the number of contractors are possessing the machinery for execution of work and therefore the apprehension of the petitioners that it would pave the way for the un-healthy completion (sic. competition) was only a misconception.5. counter-affidavit has also been filed on behalf of the central government. it is stated that the condition of ownership has been specifically directed to be incorporated in the tender notification as the experience in the past had created number of bottle-necks interrupting progress of the work at every stage. the works on national highway to be executed with precision so that there should be free flow of highway traffic avoiding all possible accidents. it also confirmed that the ministry of surface transport has directed the authorities to incorporate the ownership of machinery as a pre-condition for issuance of tender schedules and the same has been reiterated by the letter dt. 15-3-1995. during the proceeding the second respondent was impleaded. it is stated by him that he is one of the tenderers for the work and that he possessed all the machineries required by the tender notification. even though he submitted his tender, the same is not being finalised on account of the writ petition having been filed in this court. the 2nd respondent further submits that condition of owning machinery is necessary and there is no power vested with this court to relax such a condition. it is the satisfaction of the agency for whom the work is being executed and such conditions cannot be either modified or relaxed by the courts.6. sri m. narender reddy appeared for the petitioner while ist respondent was represented by the government pleader for p.w.d. sri t. ramulu appeared for the central government and sri subramanya reddy. the learned senior counsel appeared for the second respondent.7. the issue that arises for consideration is whether the condition of owning machinery at the time of issuing tender schedule is valid?8. the learned counsel for the petitioners submits that such a condition cannot be imposed. the ministry of surface transport by its letter dated 15-6-1994 issued guidelines with regard to the procedure to be adopted for pre-qualification of contractors for execution of roads and buildings works on the national highways and centrally financed schemes. with regard to the works costing less than rs. 4 crores, pre-qualification of contractor is not considered necessary for the works in this category. open bids may be invited from all the eligible contractors as per the prevalent system in the state p.w.d. in view of this the learned counsel submits that condition of owning machinery was never intended by the ministry of surface transport itself. he relies on the letter dt. 5-7-1994 issued by the ministry of surface transport, wherein it was stated that pre-condition laid down in the tender notices can also be relaxed in respect of the contractors, who can show proof that they will fulfil the pre-conditions by hiring/lending/sparing from the contractors who were already in possession of the same. this arrangement may help in curbing the premium and delay in execution. but the learned counsel for the government submits that these instructions were superseded by the later instructions as the practice of insisting on such an undertaking has caused delays and litigations. the learned counsel for the government submits that ministry of surface transport issued letter dt. 15-3-1995 with regard to the tender notification that the most have evolved standard data book for analysis of rates for adoption on national highways works and instructed all state p. w.ds. to make it operative from 1-10-1994. therefore keeping in view the instructions it was found inevitable to prescribe the condition of owning the machinery as a pre-requisite for tendering the works. the communication further stated that in the interest of timely and smooth completion of work and to avoid contractual obligations that may arise out of hiring/lending/sparing the machinery, the state p.w.d may prescribe the proof of ownership along with the requisite experience in similar works in the tender notices. the standard data book for analysis of the rates issued by the ministry of surface transport in page 61 stipulates the various machineries that should be owned and possessed by the contractor for bituminous constructions. the specifications for road and bridge works published by indian road congress in section 500 various requirements for base and surface courses (bituminous) are stipulated. under para 504. 3.4-preparation and transport of mix; bituminous macadam mix shall be prepared in a hot mix plant of adequate capacity and capable of yielding a mix of proper and uniform quality with thoroughly coated aggregates.hot mix plant shall be of suitable capacity preferably of batch mix type. total system for crushing of stone aggregates and feeding of aggregate fractions in required proportions to achieve the desired mix, deployed by the contractor must be capable of meeting the overall specification requirements under stringent quality control. the plant shall have the following essential features.a. general.....(c) belt conveyers below each bin should have variable speed drive motors. there should be electronic load sensor on the main conveyer for measuring the flow of aggregates.b. for batch type plant:...........c. for continuous type plant...........504.3.5, spreading: the mix transferred from the tipper at site to the paver shall be spread immediately by means of self-propelled mechanical paver with suitable screeds capable of spreading, tamping and finishing the mix true to the specified lines, grades and cross-sections. the paver finisher shall have the following essential features:a. loading hoppers and suitable distributing mechanismb. all drivers having hydrostatic drive/control.c. the machine shall have a hydraulically extendable for appropriate width requirement.d. the screed shall have tamping and vibrating arrangement for initial compaction to the layer as it is spread without rutting or otherwise marring the surface. it shall have adjustable amplitude and variable frequency.e. the paver shall be equipped with necessary control mechanism so as to ensure that the finished surface is free from surface blemishes.f. the paver shall be fitted with an electronic sensing device for automatic levelling and profile control within specified tolerance.g. the screed shall have the internal heating arrangement.h. the paver shall be capable of laying either 2.5 to 4.0 m width or 4.0 to 7.0 m width as stipulated in the contract.i. the paver shall be so designed as to eliminate skidding/slippage of the tyres during operation:it is thus seen that various precautions are required to be taken in construction of national highways and the guidelines and the instructions issued by the various authorities have to be kept in view. the learned counsel for the petitioners submit that though initially he produced the ownership certificate the same was not accepted and subsequently it was cancelled without notice. he submits that such cancellation without notice is highly arbitrary and violative of articles 14 and 19(1)(g) of constitution of india.9. in the counter affidavit filed on behalf of the respondent no. 1 it is stated that the petitioner never possessed the machinery requirement for execution of the work even though he produced the bills to establish that he purchased some machinery. but when inspected by the authorities it was not available. to make sure once again whether the petitioner possessed this machinery, the executive engineer of picket was directed to inspect the machinery but the petitioner has not produced the machinery at any point of time. in view of this it has to be held that the petitioner is not in possession of the required machinery. no valid certificate in the eye of law has been produced by the petitioner. but yet the point that remains for consideration is whether the condition of ownership of machinery at all can be imposed for issuing the tender schedules.10. the learned senior counsel for the 2nd respondent vehemently submits that such a condition is necessary in the interest of proper execution of the work and keeping in view the specified nature of the execution. he submits that such a condition was challenged before this court in m. sivaramaiah v. superintending engineer, w.p. no. 9500/92, dt.25-8-92 = : 1993(1)alt137 and learned single judge of this court was pleased to dismiss the said writ petition. against the said order a writ appeal was preferred by the contractor in m. sivaramaiah v. superintending engineer, w.a. no. 981/92 and the same was also dismissed. the learned counsel also relies on the judgment of this court in k. jagadishwar reddy v. the superintending engineer w.p.no. 11524/88,dt. 22-2-89,' aga constructions v. chief engineer, : air1982ap70 , syed moosa quadri v. the special officer, 1986 (2) alt 426 and also of the supreme court in new horizons limited and anr. v. union of india and ors., : (1995)1scc478 and tata cellular v. union of india, : air1996sc11 . in sivaramaih's case the very same condition was challenged. the works were also on the national highways . the learned judge dismissed the writ petition. while dismissing the writ appeal filed by the contractor the division bench observed:'we are not inclined to interfere with the impugned order for the following reasons. the tender was issued for works on the national highway no. 9 hyderabad-vijayawada high way cannot be gainsaid. prescribing condition of ownership of the plant and machinery required for carrying out the work as one of the conditions for eligibility to tender cannot be said to be arbitrary. the object of prescribing condition of ownership of machinery is to see that the applicant possesses the required machinery so as to complete the works within time fixed. in the counter, it was also specifically mentioned that in the past when such a condition was not imposed some of the applicants who got works could not complete the same due to non-availability of the machinery. consequently the works had to be completed departmentally. having regard to the past experience and also in view of the urgency and importance of the works on the national high-way conditions were incorporated while inviting tenders. these are all technical matters and best left to the authorities to prescribe. if the machinery is required for the purpose of executing the works, the condition imposing that the applicant should own the machinery is in the interest and speedy execution of the works and it is not for this court to go into the same. the allegation that the amendments were carried out to the conditions and the time was extended from time to time to enable the authorities to give the works to the men of their choice and to eliminate the petitioner and others is not borne out of the record. no details are given and the allegation is as vague as anything. it is clear from the above that the appellant is neither owning the required machinery nor having any undertaking from the owner of the machinery that he will lend his machinery to the appellant. m/s. b. seenaiah and co. who gave undertaking to lend its machinery to the applicant, went back on their stand and submitted a letter to the department withdrawing their undertaking.'in jagadishwar reddy's case (3 supra) also the condition of owning a hot mix plant for issuing tender schedule was upheld by the learned single judge of this court. in aga constructions case (4 supra) statutory provision in hyderabad municipal corporation act (section 129-a) which prescribes certain pre-qualifications in respect of works costing more than rs. 50 lakhs was challenged. the learned single judge held that the provision was eminently reasonable and in public interest.11. in syed moosa quadri case (5 supra) sri ramaswamy j. as he then was after copiously referring to the case law on the subject held:'section 129-a of the act and rule 3-a of the rules assure built in procedural fairness in scrutinizing the record to evaluate the pre-qualifications of the contractors or firms and intended to secure a competent person to cope up with the magnitude of the work with requisite experience backed by needed men and material to execute the proposed work with utmost promptitude and efficiency at most advantageous terms. there is therefore needed nexus between the restrictions imposed and the object sought to be achieved and the evil to be remedied and so restrictions are imposed in the public interest. it passes the test of reasonable restriction under article 19(6).'in g.j. fernandez v. state of karnataka, : [1990]1scr229 case the supreme court held that the sufficiency or otherwise of the certificates submitted by the tenderer has to be decided by the authority calling for the tenders and not by the courts. the court further held that the authority inviting tenders can deviate and relax the prescribed standards to the extent that they do not result in arbitrariness or discrimination, or cause substantial prejudice injustice to any of the parties involved or to public interest in general.in a.p. technological services private limited v. snigdha computers (p) ltd, : 1996(2)alt639 (d.b.). case the division bench of the court held that the court should exercise refrain and accept, as a rule, the freedom of trade and business is not confined to the right of a seller to seek the market, but will extend also to the right of the purchaser to decide from whom to purchase. the courts can interfere when it is found that the state has acted arbitrarily and eliminated any person who has the necessary qualifications for the supplying of goods or entering into a contract for work.14. in tata cellular v. union of india (7 supra) the supreme court elaborately dealt the extent of applicability of judicial review to contractual powers exercised by government bodies. it held thus:'it cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favouritism. however, it must be clearly stated that 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 article 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.judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters 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 a unfairness is set right by judicial review'.15. the court further held that judicial review is concerned with the reviewing not the merits of the decision in support of which the application of judicial review is made, but the decision making process itself. it held in para 93 as:'the duty of the court is to confine itself to the question of legality. its concern should be:1. whether decision making authority exceeded its powers ?2. committed an error of law.3. committed a breach of rules of natural justice.4. reached a decision which no reasonable tribunal would have reached or5. abused its powers.'finally the court after referring to the decisions in f.c.i. v. kamdhenu cattle feed industries : air1993sc1601 , sterling computers limited v. m & n publications limited : air1996sc51 and union of india v. hindustan development corporation : air1994sc988 carved out the following principles:'the principles deducible from the above 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 decission is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.4. the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. normally speaking the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. more often than not, such decisions are made qualitatively by experts.5. the government must have freedom of contract. in other words a 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 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'.16. the undisputed facts are that the ministry of surface transport, government of india (the third respondent herein) has the overall responsibility for the development and maintenance of national highways in the country. the public works departments of the state government/union territories carry out the works as agent of the third respondent. the funds are supplied by the third respondent. being executing authority, the first respondent is required to take all possible steps to ensure that the works are carried out in accordance with the direction and guidelines issued by the ministry of surface transport. the learned counsel for the petitioner submits that the pre-qualification of contractor is undertaken in large and complex works. he refers to the brochure issued by the government of india with caption-pre-qualification document for central sector roads and bridge projects (under local competitive bidding) and submits that prequalification of contractor is carried out in respect of works costing between rs. 200 lakhs to rs. 500 lakhs. in appendix of part i, list of essential plants and equipment is noted. however in part ii of the brochure (questionnaire forms) schedule 'e' refers to the plant and equipment proposed to be deployed for carrying out the work. in the schedule one column relates to the equipment to be procured through purchase/lease. from this the learned counsel submits that it is permissible for the contractor either to purchase the equipment or procure through lease. hence insisting on ownership certificate is unwarranted. i am unable to accept the contention. these brochures are only guidelines and they are not binding. they are subject to modifications depending upon given circumstances. moreover the brouchures were printed in 1994, whereas the latest instructions were issued in 1995. thus i hold that it is always open for the state to change the tender conditions with a view to achieve optimum results and in public interest. as rightly observed by the division bench in a.p. technological services limited case (9 supra) that the freedom of trade and business also extend to the right of purchaser to decide from whom to purchase subject to parameters laid down in tata cellular case (7 supra). it is now well settled that in the matter of entering into a contract, the state does not stand on the same footing as a private person who is free to enter into a contract with any person he likes. the state, in exercise of its various functions, is governed by the mandate of article 14 of the constitution which excludes arbitrariness in state action and requires the state to act fairly and reasonably. the action of the state in the matter of award of a contract has to satisfy this criterion. moreover a contract would either involve expenditure from the state exchequer or augmentation of public revenue and consequently the discretion in the matter of selection of the person for award of the contract has to be exercised keeping in view the public interest involved in such selection. therefore, while dealing with the public, whether by way of giving jobs, or entering into contracts or issuing quotas or licences or granting other forms of largesse, the government cannot act arbitrarily at its sweet will and like a private individual, deal with any person it pleases, but its action must be in conformity with the standards or norms which are not arbitrary, irrational or irrelevant. it is however, recognised that certain measure of 'free play in the joints' is necessary for an administrative body functioning in an administrative sphere'. in pre-qualification process, the capability of the firm/individual is judged with reference to the experience, deployment of personnel, plant and equipment, financial capacity. huge amounts of funds are spent for development and maintenance of national highways. therefore the authorities have been vested with the discretion to impose certain conditions for the timely execution of works and at the same time with the standard prescribed quality. for maintaining the effective transport system well planned and laid roads are very much essential. thus in these areas the principle of judicial review is pressed into service in a very limited way viz. the courts can interfere only when the action is per se, arbitrary or discriminatory. ownership of concerned machinery is very much essential for the execution of work. viewed from any angle i do not find any ground to inter fere with the condition of ownership of plant and machinery for issuing tender schedules and these requirements should be possessed by the contractor on the date of submitting application for the supply of tender schedules.writ petition no. 16889/96 is filed challenging the proceedings of the first respondent dt. 14-8-1996 wherein the tender schedules refused to be supplied to the petitioners on the ground that the department has not recognised them as joint venture. it is the case of the petitioners that both first and second petitioners entered into an agreement dt. 1-7-1996 and they intended to submit tenders for the works in c.t.a.4/1996-97. it was rejected on the ground that the joint venture has to be registered with the authorities and therefore the tender schedules were not supplied to the petitioner. it is submitted by the government pleader that the joint ventures are entitled to submit the tenders. but, however, the first and second petitioners are required to be registered as joint firm with the department as per the g.o.ms.no. 526, dt 10-12-1984. under clause 9(a) of the g.o. the contractor shall not apply for registration in his name and also in the name of the partnership which runs in his name in the same clause/category at a time. the joint venture came into existence on 1-7-1996 i.e. the day before making the application for the tender schedule. therefore the joint venture as such is not liable to seek tender schedule. mere registration as special class contractors in their name does not entitle them to file applications under joint venture. the first petitioner was registered as class (1) contractor in bituminous asphallic highway works only and he does not have experience in earth work and cannel lining. the second petitioner is only special contractor in earth work and cannel lining and does not have experience in bituminous asphallic highway work. therefore the petitioners cannot individually apply for the work as they do not have necessary qualifications. even jointly they cannot apply as joint venture has not been recognised by the department.admittedly in the instant case the petitioner has not registered with the department as joint venture which is necessary under g.o.ms. no. 521. in the absence of proper recognition by the department it would not be possible to recognise the petitioners as joint venture firm. under these circumstances i hold that the petitioner is not entitled for supply of tender schedule.for the reasons stated above there are no merits in the writ petitions and accordingly all the petitions are dismissed. no costs.

Judgment:
ORDER

G. Bikshapathy, J.

1. Since the common question of law are involved in these writ petitions, they are disposed of by a common order.

2. The first respondent-Superintending Engineer, Roads and Buildings, National Highway Circle, Hyderabad issued Tender Notifications (1) CTN.2/ 96-97, dt. 10-4-1996, (2) CTN.4/96-97, dt. 25-5-1996, (3) CTN. 7/96-97 dt. 17-6-1996. The tender condition No. 2 in CTN 4 and 7 are assailed in Writ Petition Nos. 16642/96 and 14499/96 while tender condition No. 7 (ii) is challenged in Writ Petition No. 10360/96. In W.R. No. 16889/96 the first respondent refused to supply the tender schedule on the ground that it is not a recognised joint venture.

3. The facts in nut-shell are that the Ist respondent issued tender notifications in respect of certain works on the national highways. Special conditions were imposed for issuing the tender schedules. Special condition No. 2 is extracted below.

'Proof of ownership of machinery required for road work such as earth work machinery i.e. excavation, loader grader, dozer and vibrator rollers and hot mix machinery such as electronic paver, drums, mix plant with electronic control and trunk mounted bitumenous sprayer of hand is to be furnished along with application, duly attested by the officer not below the rank of Executive Engineer'.

Clause 7(2) of tender conditions in CTN.2/96-97 is extracted below:

'Proof of ownership of electronic hot plant having all attachment in its conforming to the Ministry of Surface Transport specification No. 504, 3, 4 located within 70 K.Ms. radius from the work spot and other ancillary machinery such as paver, vibrator role etc., the certificate issued by the Executive Engineer, N.H. Division, Hyderabad to this effect shall be furnished along with the application for tender schedules.'

The petitioners submit that imposing such a condition of ownership even at the time of issuing the tender schedule is highly arbitrary and violative of Articles 14 and 19(1)(g) of the Constitution of India. It is also submitted by the petitioners that the condition of ownership is very onerous and the machinery that is to be purchased for the purpose of executing the work in some cases exceeds more than the value of work and therefore the condition has to be set aside. Further the petitioners in W.P.No. 16642/96 also stated that he is possessing the necessary machinery. Even otherwise permission should be granted to the successful tenderer to place the machinery at the work spot within the stipulated time either establishing ownership or by getting the machinery on lease/hire. It is also submitted by the petitioners that the ownership of such machinery is vesting with very few individuals. If the petitioners are not allowed to tender for such works, it would amount to monopolizing the work in the hands of few individuals and thereby creating a scope for abuse of situation.

4. In the counter filed on behalf of the Ist respondent, it is stated that the National Highway road works are undertaken by the first respondent on behalf of the Ministry of Surface Transport, Government of India, who is the funding agency. The guidelines and the instructions issued by the Ministry of Surface Transport in this regard are required to be implemented by the first respondent. It is also stated that the condition of owning machinery was made a pre-requisite for issuing tender in view of the guidelines issued by the Government dt. 15-3-1995 superseding earlier instructions. The works notified under the tenders are specialised works and to be carried out with time bound schedule. The National Highways are important for the smooth flow of traffic from one place to another and execution of work has to be necessarily of high quality. It is stated by the respondents that on earlier occasions, the tenders were accepted on the undertaking given by the tenderers that they shall produce the machinery after the tender is allotted in their favour. However, the authorities had faced bitter experience. The successful tenderers were not in a position to place the machinery as undertaken by them. Therefore the works had to be cancelled and they had to be re-allocated to other tenderers resulting inordinate delay in allotting the tenders and execution of works. In view of that it was stressed by the Central Government to impose the condition of ownership of machinery before the tender schedules are issued in order to ensure that the work is completed within the time schedule. Therefore in public interest such a condition has been issued. It is also stated in the counter that there would not be any monopoly in allotting the contracts inasmuch as the number of contractors are possessing the machinery for execution of work and therefore the apprehension of the petitioners that it would pave the way for the un-healthy completion (sic. competition) was only a misconception.

5. Counter-affidavit has also been filed on behalf of the Central Government. It is stated that the condition of ownership has been specifically directed to be incorporated in the tender notification as the experience in the past had created number of bottle-necks interrupting progress of the work at every stage. The works on national highway to be executed with precision so that there should be free flow of highway traffic avoiding all possible accidents. It also confirmed that the Ministry of Surface Transport has directed the authorities to incorporate the ownership of machinery as a pre-condition for issuance of tender schedules and the same has been reiterated by the letter dt. 15-3-1995. During the proceeding the second respondent was impleaded. It is stated by him that he is one of the tenderers for the work and that he possessed all the machineries required by the tender notification. Even though he submitted his tender, the same is not being finalised on account of the writ petition having been filed in this Court. The 2nd respondent further submits that condition of owning machinery is necessary and there is no power vested with this Court to relax such a condition. It is the satisfaction of the agency for whom the work is being executed and such conditions cannot be either modified or relaxed by the Courts.

6. Sri M. Narender Reddy appeared for the petitioner while Ist respondent was represented by the Government Pleader for P.W.D. Sri T. Ramulu appeared for the Central Government and Sri Subramanya Reddy. the learned Senior Counsel appeared for the second respondent.

7. The issue that arises for consideration is whether the condition of owning machinery at the time of issuing tender schedule is valid?

8. The learned counsel for the petitioners submits that such a condition cannot be imposed. The Ministry of Surface Transport by its letter dated 15-6-1994 issued guidelines with regard to the procedure to be adopted for pre-qualification of contractors for execution of roads and buildings works on the national highways and centrally financed schemes. With regard to the works costing less than Rs. 4 crores, pre-qualification of contractor is not considered necessary for the works in this category. Open bids may be invited from all the eligible contractors as per the prevalent system in the State P.W.D. In view of this the learned counsel submits that condition of owning machinery was never intended by the Ministry of Surface Transport itself. He relies on the letter dt. 5-7-1994 issued by the Ministry of Surface Transport, wherein it was stated that pre-condition laid down in the tender notices can also be relaxed in respect of the contractors, who can show proof that they will fulfil the pre-conditions by hiring/lending/sparing from the contractors who were already in possession of the same. This arrangement may help in curbing the premium and delay in execution. But the learned counsel for the Government submits that these instructions were superseded by the later instructions as the practice of insisting on such an undertaking has caused delays and litigations. The learned counsel for the Government submits that Ministry of Surface Transport issued letter dt. 15-3-1995 with regard to the tender notification that the Most have evolved standard data book for analysis of rates for adoption on national highways works and instructed all State P. W.Ds. to make it operative from 1-10-1994. Therefore keeping in view the instructions it was found inevitable to prescribe the condition of owning the machinery as a pre-requisite for tendering the works. The communication further stated that in the interest of timely and smooth completion of work and to avoid contractual obligations that may arise out of hiring/lending/sparing the machinery, the State P.W.D may prescribe the proof of ownership along with the requisite experience in similar works in the tender notices. The standard data book for analysis of the rates issued by the Ministry of Surface Transport in page 61 stipulates the various machineries that should be owned and possessed by the contractor for bituminous constructions. The specifications for road and bridge works published by Indian Road Congress in Section 500 various requirements for Base and Surface courses (Bituminous) are stipulated. Under para 504. 3.4-preparation and transport of mix; bituminous macadam mix shall be prepared in a hot mix plant of adequate capacity and capable of yielding a mix of proper and uniform quality with thoroughly coated aggregates.

Hot mix plant shall be of suitable capacity preferably of batch mix type. Total system for crushing of stone aggregates and feeding of aggregate fractions in required proportions to achieve the desired mix, deployed by the contractor must be capable of meeting the overall specification requirements under stringent quality control. The plant shall have the following essential features.

A. General.....

(c) Belt conveyers below each bin should have variable speed drive motors. There should be electronic load sensor on the main conveyer for measuring the flow of aggregates.

B. For batch type plant:...........

C. For continuous type plant...........

504.3.5, Spreading: The mix transferred from the tipper at site to the paver shall be spread immediately by means of self-propelled mechanical paver with suitable screeds capable of spreading, tamping and finishing the mix true to the specified lines, grades and cross-sections. The paver finisher shall have the following essential features:

a. Loading hoppers and suitable distributing mechanism

b. All drivers having hydrostatic drive/control.

c. The machine shall have a hydraulically extendable for appropriate width requirement.

d. The screed shall have tamping and vibrating arrangement for initial compaction to the layer as it is spread without rutting or otherwise marring the surface. It shall have adjustable amplitude and variable frequency.

e. The paver shall be equipped with necessary control mechanism so as to ensure that the finished surface is free from surface blemishes.

f. The paver shall be fitted with an electronic sensing device for automatic levelling and profile control within specified tolerance.

g. The screed shall have the internal heating arrangement.

h. The paver shall be capable of laying either 2.5 to 4.0 m width or 4.0 to 7.0 m width as stipulated in the contract.

i. The paver shall be so designed as to eliminate skidding/slippage of the tyres during operation:

It is thus seen that various precautions are required to be taken in construction of national highways and the guidelines and the instructions issued by the various authorities have to be kept in view. The learned counsel for the petitioners submit that though initially he produced the ownership certificate the same was not accepted and subsequently it was cancelled without notice. He submits that such cancellation without notice is highly arbitrary and violative of Articles 14 and 19(1)(g) of Constitution of India.

9. In the counter affidavit filed on behalf of the respondent No. 1 it is stated that the petitioner never possessed the machinery requirement for execution of the work even though he produced the bills to establish that he purchased some machinery. But when inspected by the authorities it was not available. To make sure once again whether the petitioner possessed this machinery, the Executive Engineer of Picket was directed to inspect the machinery but the petitioner has not produced the machinery at any point of time. In view of this it has to be held that the petitioner is not in possession of the required machinery. No valid certificate in the eye of law has been produced by the petitioner. But yet the point that remains for consideration is whether the condition of ownership of machinery at all can be imposed for issuing the tender schedules.

10. The learned senior counsel for the 2nd respondent vehemently submits that such a condition is necessary in the interest of proper execution of the work and keeping in view the specified nature of the execution. He submits that such a condition was challenged before this Court in M. Sivaramaiah v. Superintending Engineer, W.P. No. 9500/92, dt.25-8-92 = : 1993(1)ALT137 and learned single Judge of this Court was pleased to dismiss the said writ petition. Against the said order a writ appeal was preferred by the contractor in M. Sivaramaiah v. Superintending Engineer, W.A. No. 981/92 and the same was also dismissed. The learned counsel also relies on the judgment of this Court in K. Jagadishwar Reddy v. The Superintending Engineer W.P.No. 11524/88,dt. 22-2-89,' Aga Constructions v. Chief Engineer, : AIR1982AP70 , Syed Moosa Quadri v. The Special Officer, 1986 (2) ALT 426 and also of the Supreme Court in New Horizons Limited and Anr. v. Union of India and Ors., : (1995)1SCC478 and Tata Cellular v. Union of India, : AIR1996SC11 . In Sivaramaih's case the very same condition was challenged. The works were also on the national highways . The learned Judge dismissed the writ petition. While dismissing the writ appeal filed by the contractor the Division Bench observed:

'We are not inclined to interfere with the impugned order for the following reasons. The tender was issued for works on the national Highway No. 9 Hyderabad-Vijayawada high way cannot be gainsaid. Prescribing condition of ownership of the plant and machinery required for carrying out the work as one of the conditions for eligibility to tender cannot be said to be arbitrary. The object of prescribing condition of ownership of machinery is to see that the applicant possesses the required machinery so as to complete the works within time fixed. In the counter, it was also specifically mentioned that in the past when such a condition was not imposed some of the applicants who got works could not complete the same due to non-availability of the machinery. Consequently the works had to be completed departmentally. Having regard to the past experience and also in view of the urgency and importance of the works on the national high-way conditions were incorporated while inviting tenders. These are all technical matters and best left to the authorities to prescribe. If the machinery is required for the purpose of executing the works, the condition imposing that the applicant should own the machinery is in the interest and speedy execution of the works and it is not for this Court to go into the same. The allegation that the amendments were carried out to the conditions and the time was extended from time to time to enable the authorities to give the works to the men of their choice and to eliminate the petitioner and others is not borne out of the record. No details are given and the allegation is as vague as anything. It is clear from the above that the appellant is neither owning the required machinery nor having any undertaking from the owner of the machinery that he will lend his machinery to the appellant. M/s. B. Seenaiah and Co. who gave undertaking to lend its machinery to the applicant, went back on their stand and submitted a letter to the department withdrawing their undertaking.'

In Jagadishwar Reddy's case (3 supra) also the condition of owning a hot mix plant for issuing tender schedule was upheld by the learned single Judge of this Court. In Aga Constructions case (4 supra) statutory provision in Hyderabad Municipal Corporation Act (Section 129-A) which prescribes certain pre-qualifications in respect of works costing more than Rs. 50 lakhs was challenged. The learned Single Judge held that the provision was eminently reasonable and in public interest.

11. In Syed Moosa Quadri case (5 supra) Sri Ramaswamy J. as he then was after copiously referring to the case law on the subject held:

'Section 129-A of the Act and Rule 3-A of the Rules assure built in procedural fairness in scrutinizing the record to evaluate the pre-qualifications of the contractors or firms and intended to secure a competent person to cope up with the magnitude of the work with requisite experience backed by needed men and material to execute the proposed work with utmost promptitude and efficiency at most advantageous terms. There is therefore needed nexus between the restrictions imposed and the object sought to be achieved and the evil to be remedied and so restrictions are imposed in the public interest. It passes the test of reasonable restriction Under Article 19(6).'

In G.J. Fernandez v. State of Karnataka, : [1990]1SCR229 case the Supreme Court held that the sufficiency or otherwise of the certificates submitted by the tenderer has to be decided by the authority calling for the tenders and not by the Courts. The Court further held that the authority inviting tenders can deviate and relax the prescribed standards to the extent that they do not result in arbitrariness or discrimination, or cause substantial prejudice injustice to any of the parties involved or to public interest in general.

In A.P. Technological Services Private Limited v. Snigdha Computers (P) Ltd, : 1996(2)ALT639 (D.B.). case the Division Bench of the Court held that the Court should exercise refrain and accept, as a rule, the freedom of trade and business is not confined to the right of a seller to seek the market, but will extend also to the right of the purchaser to decide from whom to purchase. The Courts can interfere when it is found that the State has acted arbitrarily and eliminated any person who has the necessary qualifications for the supplying of goods or entering into a contract for work.

14. In Tata Cellular v. Union of India (7 supra) the Supreme Court elaborately dealt the extent of applicability of judicial review to contractual powers exercised by Government bodies. It held thus:

'It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that 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 Article 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.

Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters 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 a unfairness is set right by judicial review'.

15. The Court further held that judicial review is concerned with the reviewing not the merits of the decision in support of which the application of judicial review is made, but the decision making process itself. It held in para 93 as:

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

1. Whether decision making authority exceeded its powers ?

2. committed an error of law.

3. committed a breach of rules of natural justice.

4. reached a decision which no reasonable tribunal would have reached or

5. abused its powers.'

Finally the Court after referring to the decisions In F.C.I. v. Kamdhenu Cattle Feed Industries : AIR1993SC1601 , Sterling Computers Limited v. M & N Publications Limited : AIR1996SC51 and Union of India v. Hindustan Development Corporation : AIR1994SC988 carved out the following principles:

'The Principles deducible from the above 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 decission is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

4. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

5. The Government must have freedom of contract. In other words a 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 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'.

16. The undisputed facts are that the Ministry of Surface Transport, Government of India (the third respondent herein) has the overall responsibility for the development and maintenance of national highways in the country. The Public Works Departments of the State Government/Union Territories carry out the works as agent of the third respondent. The funds are supplied by the third respondent. Being executing authority, the first respondent is required to take all possible steps to ensure that the works are carried out in accordance with the direction and guidelines issued by the Ministry of Surface Transport. The learned Counsel for the petitioner submits that the pre-qualification of contractor is undertaken in large and complex works. He refers to the brochure issued by the Government of India with caption-pre-qualification document for central sector Roads and Bridge projects (under local competitive bidding) and submits that prequalification of contractor is carried out in respect of works costing between Rs. 200 lakhs to Rs. 500 lakhs. In Appendix of Part I, list of essential plants and equipment is noted. However in part II of the brochure (questionnaire forms) schedule 'E' refers to the plant and equipment proposed to be deployed for carrying out the work. In the schedule one column relates to the equipment to be procured through purchase/lease. From this the learned counsel submits that it is permissible for the contractor either to purchase the equipment or procure through lease. Hence insisting on ownership certificate is unwarranted. I am unable to accept the contention. These brochures are only guidelines and they are not binding. They are subject to modifications depending upon given circumstances. Moreover the brouchures were printed in 1994, whereas the latest instructions were issued in 1995. Thus I hold that it is always open for the State to change the tender conditions with a view to achieve optimum results and in public interest. As rightly observed by the Division Bench in A.P. Technological Services Limited case (9 supra) that the freedom of trade and business also extend to the right of purchaser to decide from whom to purchase subject to parameters laid down in Tata Cellular case (7 supra). It is now well settled that in the matter of entering into a contract, the State does not stand on the same footing as a private person who is free to enter into a contract with any person he likes. The State, in exercise of its various functions, is governed by the mandate of Article 14 of the Constitution which excludes arbitrariness in State action and requires the State to act fairly and reasonably. The action of the State in the matter of award of a contract has to satisfy this criterion. Moreover a contract would either involve expenditure from the State exchequer or augmentation of public revenue and consequently the discretion in the matter of selection of the person for award of the contract has to be exercised keeping in view the public interest involved in such selection. Therefore, while dealing with the public, whether by way of giving jobs, or entering into contracts or issuing quotas or licences or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and like a private individual, deal with any person it pleases, but its action must be in conformity with the standards or norms which are not arbitrary, irrational or irrelevant. It is however, recognised that certain measure of 'free play in the joints' is necessary for an administrative body functioning in an administrative sphere'. In pre-qualification process, the capability of the firm/individual is judged with reference to the experience, deployment of personnel, plant and equipment, financial capacity. Huge amounts of funds are spent for development and maintenance of national highways. Therefore the authorities have been vested with the discretion to impose certain conditions for the timely execution of works and at the same time with the standard prescribed quality. For maintaining the effective transport system well planned and laid roads are very much essential. Thus in these areas the principle of judicial review is pressed into service in a very limited way viz. the Courts can interfere only when the action is per se, arbitrary or discriminatory. Ownership of concerned machinery is very much essential for the execution of work. Viewed from any angle I do not find any ground to inter fere with the condition of ownership of plant and machinery for issuing tender schedules and these requirements should be possessed by the contractor on the date of submitting application for the supply of tender schedules.

Writ Petition No. 16889/96 is filed challenging the proceedings of the first respondent dt. 14-8-1996 wherein the tender schedules refused to be supplied to the petitioners on the ground that the department has not recognised them as joint venture. It is the case of the petitioners that both first and second petitioners entered into an agreement dt. 1-7-1996 and they intended to submit tenders for the works in C.T.A.4/1996-97. It was rejected on the ground that the joint venture has to be registered with the authorities and therefore the tender schedules were not supplied to the petitioner. It is submitted by the Government Pleader that the joint ventures are entitled to submit the tenders. But, however, the first and second petitioners are required to be registered as Joint Firm with the Department as per the G.O.Ms.No. 526, dt 10-12-1984. Under Clause 9(a) of the G.O. the contractor shall not apply for registration in his name and also in the name of the partnership which runs in his name in the same clause/category at a time. The joint venture came into existence on 1-7-1996 i.e. the day before making the application for the tender schedule. Therefore the joint venture as such is not liable to seek tender schedule. Mere registration as special class contractors in their name does not entitle them to file applications under joint venture. The first petitioner was registered as class (1) contractor in bituminous asphallic highway works only and he does not have experience in earth work and cannel lining. The second petitioner is only special contractor in earth work and cannel lining and does not have experience in Bituminous asphallic highway work. Therefore the petitioners cannot individually apply for the work as they do not have necessary qualifications. Even jointly they cannot apply as joint venture has not been recognised by the Department.

Admittedly in the instant case the petitioner has not registered with the Department as joint venture which is necessary under G.O.Ms. No. 521. In the absence of proper recognition by the Department it would not be possible to recognise the petitioners as joint venture firm. Under these circumstances I hold that the petitioner is not entitled for supply of tender schedule.

For the reasons stated above there are no merits in the writ petitions and accordingly all the petitions are dismissed. No costs.