The State of Punjab Vs. V.K. Sood - Court Judgment

Excerpt:
- administrative law - government contract: [vijender jain, c.j., rajive bhalla & sury kant, jj] government contract rejection of highest bid challenge as to held, state has no dominus status to dictate unilateral terms and conditions when it enters into contract. its actions must be reasonable, fair and just in consonance with rule of law. as a necessary corollary thereto, state cannot refuse to confirm highest bid without assigning any valid reason and/or by giving erratic, irrational or irrelevant reasons. the state is free to enter into a contract just like any other individual and the contract shall not change its legal character merely because other party to contract is state. though no citizen possesses a legal right to compel state to enter into a contract, yet latter can neither pick and choose any person arbitrarily for entering into such agreement nor can it discriminate between persons similarly circumstanced. similarly, where breach of contract at hands of state violates fundamental rights of a citizen or its refusal to enter into a contract is contrary to statutory provisions or public duty, judicial review of such state action is inevitable. likewise, if state enters into a contract in consonance with article 299 rights of the parties shall be determined by terms of such contract irrespective of fact that one of the parties to it is a state or a statutory authority. for these precise reasons the equitable doctrine of promissory estoppel has been made applicable against the government, as against any other private individual, even in cases where no valid contract in terms of article 299 was entered into between the parties. hence, if government makes a representation or a promise and an individual alters his position by acting upon such promise, the government may be required to make good that promise and shall not be allowed to fall back upon the formal defect in the contract, though subject to well known limitations like larger public interest. the state, thus, has no dominus status to dictate unilateral terms and conditions when it enters into contract and its actions must be reasonable, fair and just and in consonance with rule of law. as a necessary corollary thereto state cannot refuse to confirm highest bid without assigning any valid reason and/or by giving erratic, irrational or irrelevant reasons. -- consumer protection act, 1986 [c.a. no. 68/1986]. articles 14 & 300a: government contract noon-acceptance of highest bid held, it does not result in taking away right to property of highest bidder highest bid, per se, unless it is accepted by competent authority, and consequential sale certificate is issued, does not grant the highest bidder right to property of type which is protected under article 300a right to property is limited to confer highest bidder the right to challenge action of appropriate authority in refusing to accept highest or other bids. [air 1984 p&h 282 (fb) explained] articles 14 & 226: government contract rejection of highest bid held, highest bidder has locus standi to maintain writ petition and assail action of state government or its authorities by contending that his bid has been turned down for arbitrary, illegal or perverse reasons however in such matters, heavy onus would like on petitioner bidder to establish his allegations as state action shall always be presumed to be in accordance with law - the award is not open to challenge on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate facts. 349. it was held that award of interest pendente lite is not a matter of substantive law, like interest for the period anterior to reference (pre-reference period). for doing complete justice between the parties, such power has always been inferred.amarjeet chaudhary, j.1. this judgment will dispose of f.a.o s' nos. 146, 147, 946, 947 and 115 to 119, all of 1989 filed by the scale of punjab for setting aside the judgment and decree of the additional senior sub-judge, ropar, dated 30- 11-1988 and the award given by the arbitrator on 31-5-1988, as common question of law and fact arise in all these appeals.2. for the purpose of judgment, facts have been taken from f.a.o no. 146 of 1989, state of punjab v. v. k. sood contractors and engineers.3. shorn of unnecessary details, the relevant facts are that a dispute having arisen between the contractor and the state of punjab, the matter was referred to the arbitrator by the contractor of his own the arbitrator gave the award on 31-5-1988. m/s. v.k. sood contractors made an application in the court of additional senior sub-judge, ropar for making the award a rule of the court. the state of punjab filed objections. however, the learned additional senior sub-judge, ropar, vide order, dated 3011-1988 made the award a rule of the court and in pursuance thereof, a decree was passed in favour of the contractor to the tune of rs. 78,52,198/- with interest at the rate of 12% per annum against the objector/state of punjab from the date of reference till the date of realisation. aggrieved against the same, the state of punjab has filed the present appeal.4. the award has been challenged inter alia on the ground that interest has been wrongly awarded for the pendente lite. the arbitrator has misconducted himself and the proceedings and has also misinterpreted the contract.5. respondents have put in appearance and have defended the judgment of the learn additional senior sub-judge, ropar6. i have considered the submission of the learned counsels.7. the matter is squarely covered by the judgments of the supreme court. in m/s. hindustan tea co. v. m/s. k. sashikant & co., a. i. r. 1987 s. c. 81. it was held that under the law, the arbitrator is made the final arbiter of the dispute between the parties. the award is not open to challenge on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate facts. in food corporation of india v. joginderpal mohinderpal, a. i. r. 1989 s. c. 1263. it was held that an arbitrator's award may be set aside for error of law appearing on the face of it though this jurisdiction is not to be lightly exercised. the award can also be set aside, if, inter alia, the arbitrator has misconducting himself or the proceedings...... it is not misconduct on the part of an arbitrator to come to an erroneous decision, whether his error is one of fact or law, and whether or not his findings of fact are supported by evidence. 8. in secretary, irrigation department, government of orissa v. g. c. roy, j. t. 1991 (6) s. c. 349. it was held that award of interest pendente lite is not a matter of substantive law, like interest for the period anterior to reference (pre-reference period). for doing complete justice between the parties, such power has always been inferred. it was further observed by the supreme court that having regard to the above considerations we think that the following is the correct principle which should be followed in this behalf: - 'where the agreement between the parties does not prohibit grant of interest and where a party claims interest and that dispute (alongwith the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite......'6. for the foregoing reasons, the award, the judgment and decree of the lower court are not liable to challenge. hence the appeal is without any merit and the same is dismissed as such the bank guarantee finished by the respondent is ordered to be released. no costs.