UNITED UMBRELLA MART Vs. STATE OF KERALA

JUDGEMENT

(1.) SECOND respondent Plantation Corporation of Kerala Limited invited tenders for the supply of umbrellas for their workers. Ext. P2 is the tender notice. Ext. P3 is the tender conditions for the supply of materials. It is not disputed that second respondent is a government company and they cannot discriminate between persons. Petitioner responded to the tender notice and sealed tender was submitted. Though petitioner was the lowest in terms of the tender notice, they were not awarded the contract. Apart from that, the third respondent who did not participate in the tender proceedings at all, was awarded the contract. Third respondent did not submit a sealed tender as required in the tender notice within the time prescribed. It is stated as follows in the statement submitted by the second respondent:

(2.) IT is settled law that a Government corporation cannot act like a private corporation while making contracts and its actions are to be based on standards which are not arbitrary and capricious for the choice of person with whom it will deal. (See: Ramana Dayaram Shetty v. International Airport Authority of India (1979 (3) SCC 489), (para 12) and Erusian Equipment and Chemicals Ltd. v. State of West Bengal (AIR 1975 SC 266). It is true that for valid reasons State can necessarily reject the lower quotation. But, it cannot accept a quotation which was not given in time as fixed in the tender notice. If none of the samples given by the parties who responded to the tender were approved, it was perfectly free to call for fresh quotation. Court, in the process of judicial review, cannot act as appellate authority and weigh the pros and cons in a golden scale. Court cannot substitute its reasons in the matter of finalisation of contract; but it shall be done in a fair and balanced manner. The State need not enter into contract with anyone; but when it does so, it must do fairly without discriminating and without unfair procedure. State cannot act arbitrarily and grant any largesse violating the procedure and mandates of Art.14 of the Constitution of India. As held by the Apex Court in Shrilekha Vidyarthi Kaur v. State of UP (1991 (1) SCC 212), Non arbitrariness, being a necessary concomitant of the rule of law, it is imperative that all actions of every public functionary, in whatever sphere, must be gauged by reasonable fair procedure. Such action is open to judicial review in contractual matters also. But, as held in Style (Dress Land) v. Union Territory of Chandigarh and another (1999 (7) SCC 89), courts are concerned with decision making process and not the decision itself. Here, the procedure adopted was wholly discriminatory and unfair. Accepting a much higher quotation from a party who did not make a quotation in time, is unreasonable. As Lord Diplock held in Council of Civil Service Unions v. Minister for the Civil Service (1984 (3) ALL ER 935), 'procedural impropriety' is one of the ground for exercising judicial review apart from 'irrationality and illegality'. The famous case of Associated Provincial Picture Houses Limited v. Wednesbury Corporation (1947 (2) ALL ER 680), known as The Wednesbury Case', lays down the basic principles of judicial review. These principles are approved by the Apex Court in Union of India v. Ganayutham (1997 (7) SCC 463) and Indian Railway Construction Co. Ltd. v. Ajay Kumar (2003 (4) SCC 579). Apex Court repeatedly held that the test is to see whether there is any infirmity in the decision making procedure and not in the decision itself. Here, admittedly, procedure is violated by accepting a quotation which was not given at the stipulated time in the tender notice, that too, with 25% higher price than that was quoted by the petitioner. But, we note that period for the supply of umbrellas is over and third respondent has already supplied the materials. The petitioner had to undergo all these processes and to approach this court also and to spend expenses. Therefore, even though no relief is given on merit, second respondent is bound to compensate the petitioner and second respondent is directed to give Rs. 10,000/- as cost to the petitioner / appellant. The writ appeal is disposed of accordingly.