Cobra Instalaciones Y Servicios, S.A. Vs. Rajasthan Rajya Vidyut Prasaran Nigam Ltd. - Court Judgment

Prem Shanker Asopa, J.

1. By this writ petition, the petitioner Cobra Instalaciones Y Servicios, S.A. (in short 'the petitioner- company') is seeking an appropriate writ, order or direction to declare that the petitioner-company possesses the qualifying requirements and technical criteria laid down in Clause 3.00 of Part III of Specification under the caption 'special conditions of contract' and further to allow the petitioner-company to participate in the price bid, with a further direction to restrain the respondent from assigning any contract for 400 KV GSS at Bhilwara or Bikaner (TN 223 and TN 220) to any participant in the price bid for the said contract.

Pleadings of The Parties

2. Briefly stated, the relevant facts of the case, as averred by the petitioner-company in the writ petition and the rejoinder, are that the petitioner-company company is a multi-national company with its headquarters at Madrid (Spain) having annual turn over of Rs. 9,000 Crores and has executed comparable projects including seven 500 KV sub station in other countries. It is further averred in the writ petition that the petitioner- company has erected first 800 KV line in India measuring 562.5 Km. and has been awarded a similar order worth Rs. 118 Crores by the Rail Vikas Nigam Limited.

3. In mid of May, 2007, the respondent invited separate tenders for construction of 400 KV Grid Sub Station (GSS) at Bhilwara, Bikaner, Hindaun, Barmer and Jaisalmer out of which the present controversy relates to the disqualification of the petitioner-company for technical bid of Bikaner and Bhilwara. The other relevant dates are : on 5.12.2007 and 7.12.2007, the technical bids for GSS Bhilwara and Bikaner respectively were opened; on 5.12.2007, the respondent sent a letter pointing out alleged short coming and description regarding the bank guarantee and asked the petitioner-company to do to needful, compliance where of was made by the petitioner-company; on 18.12.2007, the respondent again sent two communications to the petitioner-company pointing out the alleged other short-comings/deviation in respect of technical nature said to have been covered by Part-III Clause 3.1(a) and Clause 3.2(h), (j), (k), (I) and (m) of the tender. The respondent also called upon the petitioner-company to make confirmation in respect of the Commercial Part and Technical/Financial Part No. shortcoming was pointed out nor any clarification was sought in respect of Clause 3.2(i), therefore, the petitioner-company presumed that it fulfilled the requirement of Clause 3.2(i); on 24.12.2007, the petitioner-company conveyed the requisite clarifica tion and documents as mentioned in the said communication dated 18.12.2007; on 31.12.2007, pursuant to the meeting held between the parties, the petitioner-company submitted further written confirmation in respect of various financial and technical aspects of the bid; till 15.1.2008, out of the ten bidders, only five bidders including the petitioner- company, had submitted relevant and necessary documents in respect of the tender. Yet the respondent called upon and permitted two tenders namely M/s. Tata Projects, Hyderabad and M/s. Techno-Electric and Engg. Co. Kolkata to submit documents relating to technical qualifications but the petitioner-company was not called to clarify and bona fide doubt in this regard; on 21.1.2008, upon learned that other bidders had been informed about the confirmation of price bids and had been requested to participate therein whereas the petitioner-company had not received any such information, the petitioner-company submitted a detailed representation; on 23.1.2008 the representative of the petitioner-company also met the concerned official including the Chief Engineer and in this meeting also, the respondent did not spell out any cogent reason for not considering the petitioner- company's bid except stating that the petitioner-company is a foreign company; on 25.1.2008, the financial bids of other bidders were considered by the respondent and the financial bid of the petitioner-company was not considered. Thus, the petitioner-company's financial bid for two projects at Bikaner and Bhilwara were not considered, the petitioner-company approached this Court by filing the present writ petition.

4. The respondent-government company has filed reply to the writ petition and admitted that the tenders were called under two part bidding system i.e. technical bid and price bid and as per Clause 3.2 (i) the petitioner-company does not have the qualification and experience of key personnel to carry out the work which includes experience of 15 years' in executing such contracts of comparable nature including not less than 5 years' experience as Manager, with the further averment that it is not admitted that the petitioner-company was not considered for price bid for the sole reason that its head office is outside India. The petitioner-company did not fulfil requirement of Clause 3.2(i) of the technical criteria which is an essential condition and could not be ignored, in reply to para Nos. 4 and 7 of the writ petition.

5. The petitioner-company filed rejoinder to the reply in which it was submitted that the petitioner-company fulfilled the eligibility condition under Clause 3.2(i) and in support of which the petitioner-company filed Annexure-11, which is part of tender document. In the rejoinder, the petitioner-company also submitted that. M/s. Tata Projects and M/s. Techno Electric and Engg. Co. were called to clarify the said eligibility condition but the petitioner-company has not been called, therefore, the petitioner-company has been treated differently.

Submissions of The Parties

6. Counsel for the petitioner-company submits that the petitioner-company fulfilled the requirement of Clause 3.2(i) and there was no reason to disqualify it. Even the reasons have not been communicated to the petitioner-company and further the same have been disclosed for the first time in the reply, therefore, the examination of the record is necessary. Even if the record is examined then the petitioner-company is qualified as per Clause 3.2(i). Counsel further submits that the respondent has called two tenders namely M/s. Tata Projects, Hyderabad and M/s. Techno Electric and Engg. Co. (Lead Partner), Kolkata for negotiations on the issue of qualification but the petitioner company has not been called therefore, the petitioner-company has been discriminated. Apart from above, reasonable, just and fair procedure has not been adopted by the respondent before disqualifying the petitioner-company from participating in the price bid. Therefore, the impugned action of the respondent is arbitrary and is also violative of Article 14 of the Constitution of India.

7. In support of his aforesaid submissions, counsel for the petitioner-company, referred and relied on the judgments titled as and report in - Ramana Dayaram Shetty v. International Airport Authority of India and Ors. : (1979)IILLJ217SC , Pavanendra Narayan Verma v. Sanjay Gandhi PGI of Medical Sciences and Anr. : (2002)ILLJ690SC , Mohinder Singh Gil and Anr. v. The Chief Election Commissioner, New Delhi and Ors. : [1978]2SCR272 (Para 8), M/s. Star Enterprises and Ors. v. CIDC of Maharashtra Ltd. and Ors. : [1990]2SCR826 , Mahabir Auto Stores and Ors. v. Indian Oil Corporation and Ors. : [1990]1SCR818 , Sterling Computers Ltd. v. M & N Publications Ltd. and Ors. : AIR1996SC51 , Tata Cellular v. Union of India (1994) 6 SCC 651 (Paras 74 and 75), LIC of India and Anr. v. Consumer Education and Research Centre and Ors. : AIR1995SC1811 Union of India and Anr. v. Dinesh Engineering Corporation and Anr. : AIR2001SC3887 , Subhash Projects and Marketing Ltd. v. WB Power Development Corporation Ltd. and Ors. : AIR2006SC116 , Association of Registration Plates v. Union of India and Ors. : AIR2005SC469 and B.S.N. Joshi and Sons Ltd. v. Nair Coal Services Ltd. and Ors. : AIR2007SC437 .

8. Mr. R.K. Agrawal, counsel for the respondent submits that the scope of judicial review in the matter of tender is limited and further review of the terms and conditions of the tender is not justifiable. The petitioner-company was rightly held not qualified under Clause 3.2 (i) and the ground taken by the petitioner-company at the first instance that it is a foreign company is not the sole basis. The said basis was referred and discussed for the reason that it is not possible for the respondent to make enquiry with regard to the foreign project executed by the petitioner-company. Mr. R.K. Agrawal further submitted that the respondent has adopted reasonable, just and fair process to remove the short comings but has not negotiated with any of the parties on the issue of Schedule of technical personnel for the reason that the same was the essential qualifying condition of the tender. He also submits that the reasons are not to be communicated and as stated above, the same are available on record.

9. In support of his aforesaid arguments, the counsel for the respondent referred and relied on the judgments titled as and reported in BSN Joshi and Sons Ltd. v. Nair Coal Service Ltd. and Ors. : AIR2007SC437 , Association of Registration Plates v. Union of India and Ors. : AIR2005SC469 , Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors. : AIR2004SC1962 .

10. There are other judgments on the issue of communication of the reasons of the reasons- Kumari Shrilekha Vidyarthi and Ors. v. State of U.P. and Ors. : AIR1991SC537 . Relevant portion of paras 13 and 15 of the aforesaid judgment are reproduced as under:

The expression 'without assigning any cause' means without communicating any cause to the appointee whose appointment is terminated and is not to be equated with 'without existence of any cause'. It merely means that the reason for which the termination is made need not to be assigned or communicated to the appointee, though the decision has to be communicated. The non-assigning of reasons or the non-communication thereof may be based on public policy, but termination of an appointment without the existence of any cogent reason in furtherance of the object for which the power is given would be arbitrary and, therefore, against public policy.

11. The same view has been taken by the Supreme Court in another judgment in Union of India and Ors. v. E.G. Nambudiri : (1991)IILLJ594SC . The relevant portion of paras 9 and 10 of the above decision is as under:

The decision, rejecting the representation does not adversely affect any vested right of the government servant nor does it visit him with any civil consequences. In many cases having regard to infinite variations of circumstances, it may not be possible to disclose reasons for the opinion formed about the work and conduct or character of the government servant. Therefore, in the absence of any statutory rule or statutory instructions requiring the competent authority to record reasons in rejecting a representation made by a government servant against the adverse entries the competent authority is not under any obligation to record reasons. But the competent authority has no licence to act arbitrarily, it must act in a fair and just manner. It is required to consider the questions raised by the government servant and examine the same, in the light of the comments made by the officer awarding the adverse entries and the officer countersigning the same. If the representation is rejected after its consideration in a fair and just manner, the order of rejection would not be rendered illegal merely on the ground of absence of reasons. It is always open to an administrative authority to produce evidence aliunde before the Court to justify its action.

12. In Radhakrishna Agarwal and Ors. v. State of Bihar and Ors. : [1977]3SCR249 , the contracts have been classified by the Supreme Court as 'statutory', 'non-statutory' and 'purely contractual'. For purely contractual contract, the rights and liabilities of the parties will be governed by the terms of the contract. Relevant portion of paras 12, 13, 14, 15, 17 and 19 of the aforesaid judgment reads as under:

The types of cases in which breaches of alleged obligation by the State or its agents can be set up are three:

(a) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where on assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of Article 229 of the Constitution.

Cases such as Union of India v. Anglo-Afgan Agencies : [1968]2SCR366 and Century Spinning and . v. Ulhasnagar Municipal Council : [1970]3SCR854 and Robertson v. Minister of Pensions (1949) 1 KB 227 belong to this category here it could be held that public bodies or the State are as much bound as private individuals are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities.

(b) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the part of the State.

Cases belonging to this category are : K.N. Guruswamy v. State of Mysore : [1955]1SCR305 ; D.F.O. South Kheri v. Ram Sanehi Singh : AIR1973SC205 and Shree Krishna Gyanoday Sugar Ltd. v. State of Bihar : AIR1975Pat123 .

Where the contract entered into between the State and the person aggrieved in non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State.

The present case falls under this category where questions of pure alleged breaches of contract are involved. No writ or order can issue under Article 226 of the Constitution in such cases 'to compel the authorities to remedy a breach of contract pure and simple.'

The proposition that whenever a State or its agents or officers deal with the citizen, either when making a transaction or, after making it, acting in exercise of powers under the terms of a contract between the parties, there is a dealing between the State and the citizen which involves performance of 'certain legal and public duties', is too wide to be accepted. The remedy of Article 226 is not open for such complaints.

13. From the pleadings of the parties, the following core questions are involved in the matter:

(1) Scope of the judicial review under Article 226 of the Constitution of India in respect of the tender to Award a contract.

(2) Whether in case the tender is in two parts-technical bid and financial bid, the unqualified tenderer for the price bid is entitled for a reasoned order during the pendency of tender proceeding?

(3) Whether the petitioner-company fulfilled the qualification of Clause 3.2(i) of Part III of special conditions of contract which is essential qualifying condition and for which no negotiations are permissible or simple qualifying condition as laid down in qualifying requirement Clause No. 3.0, 3.1 and 3.2.

(4) Even in case there was some short coming in the aforesaid Clause 3.2 (i) in respect of the petitioner-company and other tenders, when other two aforesaid tenders have been given opportunity to make good the deficiency with regard to Clause 3.2(i) and the petitioner-company has been denied which has resulted in discriminatory treatment.

(5) Whether the respondent has adopted reasonable, just and fair procedure in opening the technical bid as well as price bid and further initiated process to award the contract to M/s. Tata Projects, Hyderabad or. adopted unreasonable, unfair, arbitrary and unjust procedure which has resulted in disqualifying the petitioner-company to participate in the price bid and the same is violative of Article 14 of the Constitution of India.

(6) Whether the government autonomous body or public sector company is at freedom to select the qualifying tenderer out of the other qualified tenders in the interest of company or public interest and the said decision may not be ordinarily be interfered with.

14. I have gone through record of the writ petition as well as regard of the tender proceedings and further considered rival submission of counsel for the parties.

15. Before proceeding further, it would be worthwhile to mention certain conditions of the tender viz., Part III Special Conditions of contract Clause 3.0, 3.1(a) and 3.2 and Schedule of technical personnel of bidder (Annexure-11 filed by the petitioner company along with the rejoinder).

3.0 Qualifying requirements

Bider shall be financially sound and must not be anticipating any ownership change during the period from bid submission to two years after commercial operation defined as successful completion of commissioning and

acceptance by owner, Bidder shall submit audited financial reports for last 5 years preceding the date of bid submission.

Bidder shall have adequate sub station design infrastructure and erection facilities and capacity and procedures including quality control.

3.1 Technical Criteria

(a) The bidder must be a manufacturer of 400 KV or above class auto transformer or SF 6 circuit breaker, who must have designed, manufactured, type tested and supplied these equipment which must be in satisfactory operation for a period of at least 2 (two) years as on the date of bid opening and has been responsible for the erection of at least 2 (two) circuit breaker bays of 400 KV class which must be in satisfactory operation for at least one year as on the date of bid opening.

OR

The bidder must be a substation or switch yard erection contractor who must have successfully executed at least two (2) circuit breaker bays of 400 KV class or above which must be in satisfactory operation at least for a period of one year as on the date of bid opening provided the circuit breakers and other equipments being offered are from manufacturer(s), who have designed manufactured, type tested and supplied equipments of 400 KV or above class. The offered equipments must be in satisfactory operation for at least 2 (two) years as on date of bid opening having authorization of the manufacturer in favour of the bidder for full back up supply and support as per appended proforma.

(b) ...

3.2 To be qualified for award, bidders shall provide satisfactory evidence to the owner of their capability and adequacy of resources to carry out the contract effectively. Bids shall include the following information:

(a) Copies of original documents defining the constitution or legal status, place of registration and principal place of business, written power of attorney of the signatory of the bid to commit the bidder.

(b) Total annual turnover of supply of materials and equipment of similar nature over the last 5 years.

(c) Reports on the financial standing of the bidder including profit and loss statements, balance sheets and auditors reports of the past 5 years and an estimated financial projection for the next two years.

(d) Evidence of access to lines of credit and availability of other financial resources.

(e) Performance as prime contractor for the supply of materials and equipment of similar nature over the last 5 years and details of other works in hand and contractual commitments.

(f) Details in support to have adequate bays deign infrastructure and experienced qualified engineers and staff associated with design, procurement and progress monitoring work.

(g) Details to have all infrastructure, tools and tackles, testing equipment, experienced project manager and sufficient qualified and experienced erection engineers and staff etc. to undertake the job at site along with quality control measurements etc. and complete the same within prescribed time schedule.

(h) Description of the plan for carrying out the work.

(i) The qualification and experience of key personnel proposed for carrying out the work. The Project Manager shall have at least 15 years of experience in executing such contract of comparable nature including not less than 5 years as Manager.

(j) Proposal for sub contracting elements for the supply of materials amounting to more than 10% of the Bid price for each element.

(k) Authority to seek reference from the Bidder's Banks.

(l) Information regarding any current litigation in which the bidder is involved, the parties concerned and disputed amount.

(m) Proposal of manufacturing methods and schedule in sufficient detail to demonstrate the adequacy of the bidder's proposals to meet the technical specification and the completion schedule.

'Annexure-11- Schedule of technical personnel of bidder'

filed by the petitioner along with the rejoinder.

Schedule of Technical Personnel of Bidder

(To be Filled in and Signed by the Bidder)

Purchasers specification No. RVPN/EHV/TN/223

Name of Bidder Cobra Instalaciones Y Servicios S.A.

Name of Sub-station Bhilwara

S.No. Description Name Length Quali- Professional Remarksof fication experienceservice & details ofin the workfirm carried out._____________________________________________________________________________1 2 3 4 5 6 7_____________________________________________________________________________1. GM Rail Mr. Suresh Pal 6 B.E. 19 yearsProject Saini2. Constructi- Mr. 1 Dip. 12 yearson Manager Satyanarayana Engg.3. Site Engr. Mr. Deedar 9 yrs. Dip. 9 yearsSingh Engg.4. Technical Mr. P.P. - BE 20 years Retd. Exe.Consultant Bhatnagar Engr. RSEB5. Site Engr. Mr. K.B. Singh 7 BE 18 years6. Technical Mr. A.S. Kapur - BE 20 years Retired Dy.Consultant C.E. RSEB7. Tech. Site Mr. R.P. Sharma - Dip. 20 years RetiredEnggr RSEBPlace New Delhi

Signature sd/-

Name- Sanjeev Tognatta

Status General Manager

Business Development

Whether authorised attorney ofthe Bidding Company YesName of the Bidding Company Cobra InstalactionesyServices S.A.Relevant Extracts of the Minutes of the Meeting of the Whole Time Directors of Rvpn Held On 16.1.2008.

1. The Chief Engineer (PPM&R;), RVPN, Jaipur apprised the WTDs about the techno-commercial Analysis Note circulated vide U.O. Note No. 138 dated 15.1.08 for TN-220 as under:

(i) The following firms have participated in the bids against TN-220:

Sl. No. Name of Firm1. M/s. BHEL, New Delhi2. M/s. Areva, Noida3. M/s. Cobra, New Delhi4. M/s. L & T, Chennai5. M/s. Tata, Hyderabad6. M/s. Techno Elec. & Engg. Co.Kolkata (Lead Partner)(ii) The following firms are meeting the technical as well as financial qualifying criteria of the specification:

Sl. No. Name of Firm1. M/s. BHEL, New Delhi2. M/s. Areva, Noida3. M/s. L&T;, Chennai4. M/s. Jyoti Structures, Mumbai(iii) M/s. Cobra is deficient in respect of the following aspects:

(a) Performance certificate furnished by M/s. Cobra, New Delhi is of the 400 KV works executed by them outside India and they have not executed 400 KV sub station/bay work in India as yet.

(b) M/s. Cobra is having its Corporate Office at Madrid (Spain) i.e. outside India. It has got no branch/registered office in India but having an address in New Delhi for communication only.

Hence, it seems to be a tender from outside of India whereas, the Bid Enquiry is not a Global enquiry. As such, in case of any legal matters the same has to be dealt with their corporate office situated at Madrid (Spain), which in turn will create complications.

(c) Moreover, M/s. Cobra is not a manufacturer of 400 KV class equipments and is an erection contractor which requires a competent team of technical personnel to execute the contract. The qualification and experience of key personnel (proposed for carrying out the work) mentioned in the Schedule of Technical Personnel of bidders (Annexure-G) are seemingly not having any experience in respect of execution of 400 KV sub station works.

(iv) M/s. Tata Projects Ltd. Hyderabad and M/s. Techno- electric, Kolkata have not furnished valid Performance Certificate against executed 400 KV sub station/bay works by them.

2. After detailed deliberations, WTDs decided to:

(i) Open the price bids of the following four firms on 25.1.2008 for further evaluation:

Sl. No. Name of Firm1. M/s. BHEL, New Delhi2. M/s. Areva, Noida3. M/s. L & T, Chennai4. M/s. Jyoti Structures, Mumbai(ii) Issue notice to M/s. Tata Projects and M/s. Techno- electric (Lead Partner) to furnish valid satisfactory performance certificates in fulfilment of the technical criteria of qualifying requirement as per the specification before the time and scheduled date of price bid opening i.e. 25.1.08. In case, required certificate (s) is furnished by the aforesaid bidder(s) within the stipulated time and if the same is found in order, the price bid(s) may also be opened accordingly on 25.1.08.

(iii) Looking to the fact that the tender under reference is not a global tender whereas, the bid of M/s. Cobra appears to be a global one as they are not having any registered office in India, are not having any qualified and experienced team of technical personnel to execute and supervise 400 KV sub station/bay works and have not submitted performance certificate for 400 KV sub station/bay works executed by them in India. Hence, the price bid of M/s. Cobra, New Delhi be ignored.

Consideration and Discussion on citation of both the parties.

16. In Ramana Dayaram Shetty v. International Airport Authority of India and Ors. : (1979)IILLJ217SC (supra), in para 12 it has been observed by the Supreme Court as under:

12. We agree with the observations of Mathew, 1., in V. Punnan Thomas v. State of Kerala (1) that:

The Government is not and should not be as free as an individual in selecting the recepients for its largess. Whatever its activity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal.

The same point was made by this Court in Erusian Equipment and Chemicals Ltd. v. State of West Bengal (2) where the question was whether black-listing of a person without giving him an opportunity to be heard was bad? Ray, C.J., speaking on behalf of himself and his colleagues on the Bench pointed out that black-listing on a person not only affects his reputation which is in Poundian terms an interest both of personality and substance, but also denies him equality in the matter of entering into contract with the Government and it cannot, therefore, be supported without fair hearing. It was argued for the Government that no person has a right to enter into contractual relationship with the Government and the Government, like any other private individual, has the absolute right to enter into contract with any one it pleases. But the Court, speaking through the learned Chief Justice, responded that the Government is not like a private individual who can pick and choose the person with whom it will deal, but the Government is still a Government when it enters into contract or when it is administering largess and it cannot, without adequate reason, exclude any person from dealing with it or take away largess arbitrarily. The learned Chief Justice said that when the Government is trading with the public, the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions. The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure.' This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law the where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotes or licenses or granting other forms of largess, 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 standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc., must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.

17. On the strength of the aforesaid judgment, Mr. Mahendra Singh, counsel for the petitioner-company, submits that although the scope of judicial review has been narrowed down by the Supreme Court in the matter of tender but still the respondent cannot be allowed to follow irrational, unreasonable or discriminatory process. In the present case, the respondent has acted irrationally, unreasonably, discriminatorily and arbitrarily in not allowing an opportunity to the petitioner- company to clarify the Schedule of technical personnel which is Annexure-11 on record to the rejoinder to decide the eligibility under Clause 3.2(i). In support of the aforesaid contention, the counsel for the petitioner has also cited the following judgments:

18. In Pavanendra Narayan Verma v. Sanjay Gandhi PGI of Medical Sciences and Anr. : (2002)ILLJ690SC (supra) (Para 34) it has been held as under:

34. That an affidavit cannot be relied on to improve or supplement an order has been held by a Constitution Bench in Mohinder Singh Gill v. Chief Election Commr. New Delhi 15.When a statutory functionary makes an order base on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise.

19. In Mohinder Singh Gil and Anr. v. The Chief Election Commissioner, New Delhi and Ors. : [1978]2SCR272 (supra), (Para 8), the Supreme Court has held as under:

8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be urged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. In Gordhandas Bhanji : [1952]1SCR135 :

Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.

20. In M/s. Star Enterprises and Ors. v. CIDC of Maharashtra Ltd. and Ors. : [1990]2SCR826 (supra), (Paras 9 and 10) it has been held by the Supreme Court as under:

9. The question which still remains to be answered is as to whether when the highest offer in response to an invitation is rejected would not the public authority be required to provide reasons for such action? Mr. Dwivedi has not asked us to look for a reasoned decision but has submitted that it is in the interest of the public authority itself, the State and every one in the society at large that reasons for State action are placed on record and are even communicated to the persons from whom the offers came so that the dealings remain above board; the interest of the public authority is adequately protected and a citizen knows where the stands with reference to his offer. What this Court said in State of U.P. v. Raj Narain ande Ors. : [1975]3SCR333 may be usefully recalled here:

In a government of responsibility like ours, where all the agents of the public must be responsible for their conduct, there can be but few secrets. The people of this country have a right to know every public act, everything that is done in a public way, by their public functionaries. They are entitled to know the particulars of every public transaction in all its bearing. The right to know, which is derived from the concept of freedom of speech, though not absolute, is a factor which should make one wary, when secrecy is claimed for transactions which can, at any rate, have no repercussion on public security. To cover with veil of secrecy, the common routine business, is not in the interest of the public.

10. In recent times, judicial review of administrative action has become expansive and is becoming wider day by day. The traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded. Slate activity too is becoming fast pervasive. As the State has descended into the commercial field and giant public sector undertakings have grown up, the stake of the public exchequer is also large justifying larger social audit, judicial control and review by opening of the public gaze; these necessitate recording of reasons for executive actions including cases of rejection of highest offers. That very often involves long stakes and availability of reasons for action on the record assures credibility to the action; disciplines public conduct and improves the culture of accountability. Looking for reasons in support of such action provides an opportunity for an objective review in appropriate cases both by the administrative superior and by the judicial process. The submission of Mr. Dwivedi, therefore, commends itself to our acceptance, namely, that when highest offers of the type in question are rejected reasons sufficient to indicate the stand of the appropriate authority should be made available and ordinarily the same should be communicated to the concerned parties unless there be any specific justification not to do so.

21. In Mahabir Auto Stores and Ors. v. Indian Oil Corporation and Ors. : [1990]1SCR818 (supra), (Para 12) it has been held as under by the Supreme Court:

12. It is well settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. Reliance, in this connection may be placed on the observations of this Court in M/s. Radha Krishna Agarwal and Ors. v. State of Bihar and Ors. : [1977]3SCR249 . It appears to us, at the outset, that in the facts and circumstances of the case, the respondent-company IOC is an organ of the State or an instrumentality of the State as contemplated under Article 12 of the Constitution; The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercises of power. Therefore, the action of State organ under Article 14 can be checked. See M/s. Radha Krishna Agarwal v. State of Bihar, (supra) at P. 462, but Article 14 of the Constitution cannot and has, not been construed as a charter for judicial review of State action after the contract has been entered into, to call upon the State to account for its actions in its manifold activities by stating reasons for such actions. In a situation of this nature certain activities of the respondent company which constituted State under Article 12 of the Constitution may be in certain circumstances subject to Article 14 of the Constitution in entering or not entering into contracts and must be reasonable and taken only upon lawful and relevant consideration, it depends upon facts and circumstances of a particular transaction whether heating is necessary and reasons have to be stated. In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi-monopoly dealings, it should meet the test of Article 14 of the Constitution. If a Government action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. In this connection reference may be made to E.P. Royappa v. State of Constable of the North Wales Police v. Evans (supra), the Courts can certainly examine whether 'decision making process' was reasonable, rational not arbitrary and violative of Article 14 of the Constitution.

19. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after ah objective consideration of different options available taking into account the interest of the State and the public, then Court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering Into such contract. But, once the procedure adopted by an authority for purpose of entering into a contract is held to be against the mandate of Article 14 of the Constitution, the Courts cannot ignore such action saying that the authorities concerned must have some latitude or liberty in contractual matters and any interference by court amounts to encroachment on the exclusive right of the executive to take such decision.

22. In Tata Cellular v. Union of India (1994) 6 SCC 651 (supra), (Paras 74 and 75), it has been observed as under:

74. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself.

75. In Chief Constable of the North Wales Police v. Evans Lord Brightman said:

Judicial review, as the words imply, is hot an appeal from a decision, but a review of the manner in which the decision was made. Judicial review is concerned, not with the decision, but with the decision making process. Unless that restriction on the power of the Court is observed, the court will in my view, under the guise of preventing the abuse of power, be itself guilty of usurping power.In the same case Lord Hailsham commented on the purpose of the remedy by way Of judicial review under RSC, Ord. 53 in the following terms:

This remedy, vastly increased in extent, and rendered, over a Jong period in recent years, of infinitely more convenient access than that provided by the old prerogative writs and actions for a declaration, is intended to protect the individual against the abuse of power by a wide range of authorities judicial, quasi-judicial, and, as would originally have been thought when first practiced at the Bar, administrative. It is not intended to take away from those authorities the powers and 22 1986 AC 240, 251 : (1986) 1 All ER 199 23 (1982) 3 All ER 141, 154, 677 discretions properly vested in them by law and to substitute the courts as the bodies making the decisions. It is intended to see that the relevant authorities use their powers in a proper manner (P. 1160). In R. v. Panel on Takeovers and Mergers, exp Datafin plc 24, Sir John Donaldson, M.R. Commented:

An application for judicial review is not an appeal.In Lonrho plc v. Secretary of State for Trade and Industry 25, Lord Keith said:

Judicial review is a protection and not a weapon. It is thus different from an appeal. When hearing an appeal the Court is concerned with the merits of the decision under appeal. In Amin, Re 26, Lord Fraser observed that:Judicial review is concerned not with the merits of a decision but with the manner in which the decision was made.... Judicial review is entirely different from an ordinary appeal. It is made effective by the Court quashing the administrative decision without substituting its own decision, and is to be contrasted with an appeal where the appellate tribunal substitutes its own decision on the merits for that of the administrative officer.

23. In LIC of India and Anr. v. Consumer Education and Research Centre and Ors. : AIR1995SC1811 (supra), in para 27, it has been held as under:

27. In the sphere of contractual relations the State, its instrumentality, public authorities or those whose acts bear insignia of public element, action to public duty or obligation are enjoined to act in a manner i.e. fair, just and equitable, after taking objectively all the relevant options into consideration and in a manner that is reasonable, relevant and germane to effectuate the purpose for public good and in general public interest and it must not take any irrelevant or irrational factors into consideration or appear arbitrary in its decision. Duty to act fairly is part of fair procedure envisaged under Articles 14 and 21. Every activity of the public authority or those under public duty or obligation must be informed by reason and guided by the public interest.

24. In Union of India and Anr. v. Dinesh Engineering Corporation and Anr. : AIR2001SC3887 (supra), it has been held as under:

15. Coming to the second question involved in these appeals, namely, the rejection of the tender of the writ petitioner, it was argued on behalf of the appellants that the Railways under Clause 16 of the Guidelines was entitled to reject any tender offer without assigning any reasons and it also has the power to accept or not to accept the lowest offer. We do not dispute this power provided the same is exercised within the realm of the object for which this clause is incorporated. This does not give an arbitrary power to the Railways to reject the bid offered by a party merely because it has that power. This is a power which can be exercised oh the existence of certain conditions which in the opinion of the Railways are not in the interest of the Railways to accept the offer. No such ground has been taken when the writ petitioner's, tender was rejected. Therefore, we agree with the High Court that it is not open to the Railways to rely upon this clause in the Guidelines to reject any or every offer that may be made by the writ petitioner while responding to a tender that may be called for supply of spare parts by the Railways. Mr. Iyer, learned senior counsel appearing for the EDC, drew our attention to a judgment of this Court in Sterling Computers Ltd. etc. v. M & N Publications Ltd. and Ors. : AIR1996SC51 which has held:

Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts while judging the constitutional validity of executive decisions must grant certain measure Of freedom of 'play in the joints' to the executive.

25. In Subhash Projects and Marketing Ltd. v. WB Power Development Corporation Ltd. and Ors. : AIR2006SC116 (supra), in para 9 it has been held as under:

9. Even as regards Subhash Projects, it was given an opportunity to make a firm offer which, in fact, it was bound to do on the terms of the notice inviting tenders and it was also given an opportunity to reduce its price even from the one subsequently quoted by it as its firm offer, before the award of the contract to it. Therefore, this was a case where in any event, all the tenderers should have been invited and given an opportunity to reduce their bids before accepting the most competitive of them in public interest and in the interest of the project. The learned single Judge has, in fact, stated:

'A revised bid also became necessary in view of the changed situation, namely, alterations, amendments and clarification in the schedules and the drawings, resulting in alternations and amendments both in respect of Part-A i.e. supply of materials and Part-B i.e. service.' The said finding could not be successfully assailed by Sub-hash Projects or by the Union of India, in their appeals.

26. In Association of Registration Plates v. Union of India and Ors. : AIR2005SC469 (supra) in Para 43 it has been held as under:

43. Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work, Article 14 of the Constitution prohibits the government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim fundamental right to carry on business with the government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated to the detriment of public interest. Undisputeldy, the legal position which has been firmly established from various decisions of this Court, cited at the Bar (supra) is that government contracts are highly valuable assets and the court should be prepared to enforce standards of fairness on government in its dealings with tenders and contractors.

27. In Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors. (supra), cited by Mr. R.K. Agrawal, counsel for the respondent, in paras 9 and 12 of the judgment, the Supreme Court has held as under:

9. It is well settled now that the courts can scrutinise the award of the contracts by the government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular v. Union of India 1994 (6) SCC 651. After examining the entire case law the following principles have been deduced.

94. 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 decision 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 ex-perts.

(5) The Government must have freedom of contract. In other words, a fair play 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 Waynesburg principle of reasonableness (including its other facts pointed out above) 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.

12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere.

The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.

28. In Air India Ltd. v. Kochin International Airport Ltd. (2002) 2 SCC 617 it has been held in para 7 as under:

7. 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 criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness.

29. The law on the question has been summarised by the Supreme Court in a recent judgment reported in B.S.N. Joshi and Sons Ltd. (supra). Para 66 of the aforesaid judgment is as under:

66. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarized as under:

(i) If there are essential conditions, the same must be adhered to;

(ii) If there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully;

(iii) If, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing;

(iv) The parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction.

(v) When a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purpose and object for which essential conditions were laid down, the same may not ordinarily be interfered with.

(vi) The contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority;

(vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restraint.

30. The principles deduced from the above decision so far as made application in the present case are as follows:

1. The modern trend points out to the judicial restraint in administrative action' and the Court does not sit as a Court of appeal but merely review the manner in which the decision was taken.

2. In the matter of contract and administrative matter, 'without assigning, any cause'. Simply because no order has been communicated, action of the respondent would not be arbitrary as the reasons have been disclosed in the writ petition as well as record produced before this Court which has already been reproduced here-in-above, Non-disclosure of the reasons in the order, if any, will not render it illegal. The said principles have been referred in Kumari Srilekha Vidyarthi and other & E.G. Nambudiri (supra).

3. The Government or Corporation or the Government company have freedom of contract but a reasonable, just and fair procedure is to be adopted. The said principles have been referred in Ramanna Dayaram Shetty (1979) 3 SCC 489, Tata Cellular (1994) 6 SCC 651 and Directorate of Education and Ors. (2004) 4 SCC. 19.

4. The Court would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias.

5. The qualifications referred in the tender, which is usually of two parts, are essential as well as desirable. For essential condition, no negotiation is permissible as observed in BSN Joshi (supra). However, the authorities concerned may negotiate in respect to desirable condition.

6. Where the decision has been taken purely in public interest, the Court ordinarily should exercise the judicial restraint.

31. Having deduced the principles from the above decisions, now 1 proceed to examine the questions, involved in the present case, in the light of the aforesaid decisions.

(1) Scope of the judicial review under Article 226 of the Constitution of India in respect of the tender to Award a contract.

32. As regards the, first question, there is no dispute between both the counsel for the parties and both have agreed that the scope of judicial review is limited as laid down by the Supreme Court in various judgments. This question is covered by Conclusion No. 1 and the same is answered accordingly.

(2) Whether in case the tender is in two parts- technical bid and financial bid, the unqualified tenderer for the price bid is entitled for a reasoned order during the pendency of the tender proceeding?

33. In the contractual matter which includes tenders also, there is no requirement of any Act or Rule or even administrative guidelines to communicate the unqualified tenderer the reasons in support thereof. Still, the Supreme Court, as discussed hereinabove, has held that in case the reasons are not supplied/disclosed in the reply filed before the Court or reasons do not exist in record, then the action of the Government, public sector undertaking or autonomous body would be arbitrary and the same is violative of Article 14 of the Constitution of India. In addition to the above, it has also been held that reasonable, just and fair procedure is to be adopted and non-disclosure of the reasons would be violative of the same. The Supreme Court in Kumari Shrilekha Vidyarthi and Ors. v. State of U.P. and Ors. : AIR1991SC537 has held that there is difference between 'without assigning any cause' and 'without existing any reason'. Mere mention of the words 'without existing any reason' means that reason is not to be assigned or communicated but 'without existence of any reason' will render the impugned action illegal because it is always open to the administrative authority to produce evidence aliunde before the Court to justify their action. The relevant portion of paras 13 and 15 of the aforesaid judgment are reproduced as under:

The expression 'without assigning any cause' means without communicating any cause to the appointee whose appointment is terminated and is not to be equated with 'without existence of any cause.' It merely means that the reason for which the termination is made need not to be assigned or communicated to the appointee, though the decision has to be communicated. The non-assigning of reasons or the non-communication thereof may be based on public policy, but termination of an appointment without the existence of any cogent reason in furtherance of the object for which the power is given would be arbitrary and, therefore, against public policy.

34. The same view has been taken by the Supreme Court in another judgment in Union of India and Ors. v. E.G. Nambudiri : (1991)IILLJ594SC . The relevant portion of paras 9 and 10 of the above decision is as under;

The decision, rejecting the representation does not adversely affect any vested right of the government servant nor does it visit him with any civil consequences. In many cases having regard to infinite variations of circumstances, it may not be possible to disclose reasons for the opinion formed about the work and conduct or character of the government servant. Therefore, in the absence of any statutory rule or statutory instructions requiring the competent authority to record reasons in rejecting a representation made by a government servant against the adverse entries the competent authority is not under any obligation to record reasons. But the competent authority has no licence to act arbitrarily, it must act in a fair and just manner. It is required to consider the questions raised by the government servant and examine the same, in the light of the comments made by the officer awarding the adverse entries and the officer countersigning the same. If the representation is rejected after its consideration in a fair and just manner, the order of rejection would not be rendered illegal merely on the ground of absence of reasons.... It is always open to an administrative authority to produce evidence aliunde before the court to justify its action.

35. Even if there is no requirement of any law to pass a reasoned order, then also, the Constitutional Bench judgment of the Supreme Court in Maneka Gandhi v. Union of India : [1978]2SCR621 while dealing with Articles 14 and 21 of the Constitution of India with reference to the compliance of principles of natural justice in a case relating to curtailment of personal liberty by impounding the passport has held that the reasons are required to be given but the said judgment is not applicable in contractual matters where Article 21 of the Constitution of India has no application and the principle of reasonableness, just and fairness would apply in decision making process and not the decision itself. Paras 7 and 13 of the aforesaid judgment are quoted as under:

7. Now, the question immediately arises as to what is the requirement of Article 14: what is the content and reach of the great equalising principle enunciated in this article There can be no doubt that it is a founding faith of the Constitution. It is indeed the pillar on which rests securely the foundation of our democratic republic. And, therefore, it must not be subjected to a narrow, pedantic or lexicographic approach. No attempt should be made to truncate its all embracing scope and meaning for, to do so would be to violate its activist magnitude; Equality is a dynamic concept with many aspects and dimensions and it cannot be imprisoned within traditional and doctrinaire limits. We must reiterate here what' was pointed out by the majority in E.P. Royappa v. State of Tamil Nadu and Anr. (1) namely, that 'from a positivistic point of view, equality is antithetic to arbitrariness. In fact equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic, while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary, it is implicit in it that it is unequal both according to political logic and constitutional law and is therefore violative of Article 14.' Article 14 strikes, at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non-arbitrariness pervades Article 14 like a brooding omnipresence and the procedure contemplated by Article 21 must answer the best of reasonableness in order to be in conformity with Article 14. It must be 'right and just and fair' and not arbitrary, fanciful or oppressive; otherwise, it would be no procedure at all and the requirement of Article 21 would not be satisfied.

13. Now, here, the power conferred on the Passport Authority is to impound a passport and the consequence of impounding a passport would be to impair the constitutional right of the holder of the passport to go abroad during the time that the passport is impounded. The passport can be impounded only on certain specified grounds set out in Section 10(3) and the Passport Authority would have to apply its mind to the facts and circumstances of a given case and decide whether any of the specified grounds exists which would Justify impounding of the passport. The authority is also required by Section 10(5) to record in writing a brief statement of the reasons for making the order impounding a passport and save in certain exceptional situations, the authority is obliged to furnish a copy of the statement of reasons to the holder of the passport. Where the Passport Authority which has impounded a passport is other than the Central Government a right of appeal against the order impounding the passport is given by Section 11. Thus, the power conferred on the Passport Authority to impound a passport is a quasi judicial power. The rules of natural justice would in the circumstances be applicable in the exercise of the power of impounding a passport even on the orthodox view which prevailed prior to A.K. Kraipak's case. The same result must follow in view of the decision in A.K. Kraipak's case, even if the power to impound a passport were regarded as administrative in character, because it seriously interferes with the constitutional right of the holder of the passport to go abroad and entails adverse civil consequences.

36. Law on the issue of communication of the reasons is fairly well settled as also on the issue of contract/fundamental rights under the Constitution of India and the same can be classified as--

(a) in case of quasi judicial orders passed under the Act and the Rules made thereunder wherein the rights of the parties were determined and the same are subject matter of appeal, reasoned order is necessary.

(b)(i) In case of administrative order wherein also rights of the parties are to be determined after hearing them and the same are subject matter of appeal and there is also requirement of law or the principles of natural justice to give a reasoned order.

(ii) Wherever the fundamental rights under Article 21 of the Constitution of India are violated then reasoned order is necessary as held in Maneka Gandhi (supra).

37. In Radhakrishna Agarwal and Ors. v. State of Bihar and Ors. (supra) the Supreme Court has held that the contracts can be classified as 'statutory', 'non-statutory' and 'purely contractual'.

38. The case of 'statutory' contract would be governed by the provisions of the statute and in case there is non compliance of any mandatory statutory provision and there is provision of appeal and further against the rejection of the contract or acceptance of the same appeal is provided then, the reasons are necessary.

39. In case of 'non-statutory' contract/purely contractual matter, the government/public sector company/autonomous bodies are free to deal in accordance with the terms and conditions of the N.I.T. or terms and conditions of the contract still, their action is to be judged on the basis whether just, fair and reasonable procedure has been adopted or not and in case the said procedure is not adopted, then the proceeding/order will suffer from the vice of arbitrariness; In these type of cases also, the communication of the reasons is not necessary as has been held in the decisions of the Supreme Court rendered in Srilekha Vidhyarthi and E.G. Nambudiri (supra).

40. The present case is purely a contractual matter for which NIT was issued, therefore, the terms and conditions of the, NIT are the determining factor to examine the issue of arbitrariness, discrimination, unfairness and unreasonableness. In these purely contractual matters, usually there is a clause-in the present case, it is 'Clause 40.0 Owners right to accept any bid and to reject any or all bids' without assigning any reason but that does not mean that the Government/public sector undertaking/autonomous bodies have a right to act arbitrarily, hence, the term 'without assigning any reason' cannot be equated with the term 'without existing any reason'. Non-assigning of the reason, therefore, will not make the order arbitrary and the validity of the reasons can be tested on the touchstone of Article 14 of the Constitution of India.

41. In the present case, the decision of Mohinder Singh Gil and Anr. (supra) will not apply as the present case is not of judging the validity of public/statutory order on the basis of the reasons supplemented by filing of the affidavit. In other words, the order which was initially bad cannot be proved to be valid by supplementing the reasons in contractual matters.

42. Adverting to the facts of the present case; it is clear that there is no statute' governing the fender proceeding therefore, it is not a 'statutory contract' and the same is a 'purely contractual' and that too, in two parts i.e. technical bid and financial bid and the petitioner company has been disqualified for which the reasons exist and the discussion on the same is in the subsequent paragraphs.

43. The process of tender, which was in two parts-technical bid and financial bid, was going on and when the technical bids were opened the petitioner company was found to be unqualified, therefore, it was not called for the price bid on 25.1.2008 and on 25.1.2008, interim order was passed by this Court, so when the process of tender was going on, there was no need to communicate any other in writing supported by reasons. In these type of cases, there is no necessity to communicate the reasons for disqualification on account of not fulfilment of the essential qualification during the process of tender.

44. Thus, the impugned action of the respondent of holding the petitioner unqualified for the price bid does not suffer from any arbitrariness and once the Court reaches to the said conclusion, then it is only to be seen whether from the reasons mentioned in the record of the tender proceedings, which has already been reproduced hereinabove, the petitioner fulfilled the essential qualifying condition mentioned in Clause No. 3.2(i).

(3) whether the petitioner fulfilled the qualification of Clause 3.2(i) of Part III of special conditions of contract which is essential qualifying condition and for which no negotiations are permissible.

45. This question is based on facts as well as law. As regards facts are concerned, Part-III of the tender document -special conditions of contract Clause 3.2(i) refers to the essential qualifying requirements and Clause 3.2 refers that the bidder shall provide satisfactory evidence to the owner of their capability and adequacy of resources to carry out contract effectively and further condition No. 3.2(i) refers to the fact of 15 years' experience of Project Manager and five years' experience as Manager of such contract effectively and further condition No. 3.2(i) refers to the fact of 15 years' experience of Project Manager and five years' experience as Manager of such contract of comparable nature and in case the same is read with technical criteria under Clause 3.1 then the case of the petitioner was under alternative Clause 3.1(a) which refers to the erection contractor and a bare perusal of Annexure-11 of the rejoinder would reveal that three of the persons mentioned in the said document were in the employment of the company nor the petitioner company furnished satisfactory evidence of its capability and adequacy of resources to carry out the contract effectively as an erection contractor. A conjoint reading of the 'Schedule of Technical Personnel of Bidder' filed by the petitioner company as Annexure-11 along with the rejoinder and Clause 3.2 (i) would further reveal that none of the personnel mentioned therein by the petitioner company was having 15 years' experience of Project Manager in executing such contract and five years' experience as Manager of such contract of comparable nature. Therefore, further affidavits filed by the petitioner of Mr. A.S. Kapur of the period when he was in employment in the erstwhile R.S.E.B. is neither of erection contractor nor having any experience of executing such contract of comparable nature and supervision of construction of sub station by Contractor does not amount to execution of contract as Project Manager which also includes arrangement of resources, labour, experts and timely completion of work, therefore, are of no significance so far as Condition No. 3.2(i) which is essential condition and the same is not fulfilled by the petitioner. Being essential condition, no negotiation of this condition was permissible. The name of Mr. P.S. Sharma does not figure in the technical Schedule, therefore, the same is wholly irrelevant for the purpose of this issue. This issue is answered in the manner that condition under Clause 3.2(i) is essential condition for which no negotiation is permissible.

(4) Even in case there was some short coming in the aforesaid Clause 3.2(i) in respect of the petitioner and other tenders, when other tenderers have been, given opportunity to make good the deficiency and the petitioner has been denied which has resulted in discriminatory treatment.

46. There is nothing available on record that the other two tenders M/s. Tata Projects Hyderabad and M/s. Techno-electric and Engg. Co. (Lead Partner), Kolkata were called to satisfy the requirement of essential condition No. 3.2(i). The respondent has submitted that it has not entered into negotiations with regard to the schedule of technical personnel in any other case as the Condition No. 3.2(i) was the essential condition therefore, answer of question No. 3 is covered by the judgment of the Supreme Court in BSN Joshi (supra).

(5) Whether the respondent has adopted reasonable, just and fair procedure in opening the technical bid as well as price bid and further initiated process to award the contract to M/s. Tata, Hydera bad and M/s. Techno Electric and Engg. Co. Kolkata or adopted unreasonable, unfair, arbitrary and unjust procedure which has resulted in disqualifying the petitioner to participate in disqualifying the petitioner to participate in the price bid and the same is violative of Article 14 of the Constitution of India.

47. It is an admitted case of the petitioner company that they were called to remove the short comings and the same were removed but they have not been called to negotiate on Clause 3.2(i) as the negotiations were carried put in case of M/s. Tata Projects, Hyderabad and M/s. fechno-Eletric and Engg. Co. Kolkata in respect of the same clause. The case of the respondent-government company is that Clause 3.2(i) was an essential condition, therefore, the negotiations were not permissible and the respondent has also not negotiated with M/s Tata Projects, Hyderabad and M/s. Techno-Electric and Engg. Co. Kolkata on this Clause 3.2(i). the Supreme Court in the case of BSN Joshi (supra) has held that no negotiation for essential condition is permissible, therefore, the respondent has not acted arbitrarily or discriminatorily or in unjust and unfair manner while not calling the petitioner company to negotiate on Clause No. 3.2(i).

(6) Whether the government autonomous body or public sector company is at freedom to select the qualifying tenderer out of the other qualified tenderers in the interest of company or public Interest and the said decision may not be ordinarily be interfered with.

48. In the interest of company or in public interest, the autonomous bodies/public sector company/government have freedom to select the tenderer out of the qualifying tenders. Although the petitioner has not qualified but still his submission of lower bid is not the decisive factor for the Award of the contract. The respondent while actin in just and fair manner is free to select any contractor who is qualified and is found suitable for execution of the contract. This question is also covered by the judgments in Directorate of Education and others and B.S.N. Joshi (supra).

49. In view of the above, the petitioner company has not fulfilled the essential condition as per Clause 3.2(i) and therefore, has been rightly disqualified for the price bid. Accordingly, the writ petition fails and the same is hereby dismissed.