M/S. SANTHI CONSTRUCTION, ENGINEERING CONTRACTORS v KERALA MINERALS AND METALS LTD; STATE OF KERALA

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **TUESDAY, THE 3RD DAY OF JUNE 2014/13TH JYAISHTA, 1936** ## **WP(C).NO. 5201 OF 2014 (A)** **--------------------------------------** **PETITIONER:** - **-------------------** **M/S.SANTHI CONSTRUCTION, ENGINEERING CONTRACTORS, SANKARAMANGALAM, CHAVARA P.O, KOLLAM, REPRESENTED BY ITS MANAGING PARTNER MR.AJITHKUMAR.** ## **BY ADV. SRI.C.UNNIKRISHNAN (KOLLAM).** **RESPONDENTS:** **-----------------------** **1. THE KERALA MINERALS AND METALS LTD., REPRESENTED BY ITS MANAGING DIRECTOR, SANKARAMANGALAM, CHAVARA, KOLLAM- 691 583.** **2. THE MANAGING DIRECTOR, KERALA MINERALS AND METALS LTD., CHAVARA, KOLLAM- 691 583.** **3. STATE OF KERALA, REPRESENTED BY IT'S SECRETARY TO GOVERNMENT, DEPARTMENT OF INDUSTRIES, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.** ## **R1 & R2 BY ADVS.SRI. B.S.KRISHNAN, S.C,** **SRI.E.K.MADHAVAN, SMT.P.VIJAYAMMA, SRI.V.KRISHNA MENON, SMT.UMA GOPINATH, SRI.U.K.DEVIDAS, SMT.J.SURYA, SRI.DINESH THANKAPPAN, R3 BY SR.GOVERNMENT PLEADER SMT. ANITHA RAVEENDRAN.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03-06-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Prv.** ## **W.P.(C).NO.5201/2014 - A:** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **EXHIBIT P1: COPY OF NOTICE INVITING TENDER NO.TP/MPLA/AMC/STR/IBP/ 2014-2016 DATED 30.08.2013.** - **EXHIBIT P2: COPY OF THE LETTER NO.F 8056 DATED 01.01.2014 BY THE DEPUTY GENERAL MANAGER (M).** - **EXHIBIT P3: COPY OF THE WRITTEN SUBMISSION DATED 08.01.2014 OF PRICE NEGOTIATION OF THE PETITIONER BEFORE THE DGM (M).** - **EXHIBIT P4: COPY OF THE INTIMATION DATED 22.01.14 ISSUED BY THE JOINT REGIONAL MANAGER (T).** - **EXHIBIT P5: COPY OF THE TENDER NO.TP/MPLA/AMC/STR/IBP/2014-2016 DATED 28.01.14.** - **EXHIBIT P6: COPY OF THE TENDER NOTICE DATED 15.07.13 WITH TENDER NO.KMML/MS/PROJ/CON.ROAD/01/2013-14 AND ITS FURTHER COMMUNICATIONS DATED 27.05.13 ISSUED BY THE RESPONDENTS.** - **EXHIBIT P7: COPY OF THE TENDER NOTICE NO.TP/MPLA/ARP/STR/2013 DATED 30.8.13 AND PETITIONERS TENDER SUBMISSION DETAILS.** - **EXHIBIT P8: COPY OF THE TENDER NOTICE NO.TP/MPLA/AMC/STR/PPP/2014-2016 DATED 30.8.13 AND TENDER SUBMISSION DETAILS OF THE PETITIONER.** **EXHIBIT P9: COPY OF THE INTIMATION OF TENDER CANCELLATION DATED 17.01.14.** - **EXHIBIT P10: COPY OF THE TENDER NO.TP/MPLA/AMC/STR/PPP/2014-2016 DATED 28.01.14.** - **EXHIBIT P11: COPY OF THE COMMUNICATION NO.F 8056 DATED 22.1.14 ISSUED BY DGM (M) OF KMML.** - **EXHIBIT P12: COPY OF THE REPLY LETTER DATED 28.1.14 TO EXT. P11 SUBMITTED BY THE PETITIONER TO THE KMML.** - **EXHIBIT P13: A TRUE COPY OF THE ANNEXURE-I ATTACHED TO EXT.P.1. TENDER.** ## **EXHIBIT P14: A TRUE COPY OF THE WORK ORDER FOR 2011 TENDER RELEVANT PAGE.** ## **RESPONDENTS' EXHIBITS & ANNEXURES:** - **EXT.R1.(A): A TRUE COPY OF THE APPROVAL NOTE DTD. 22/01/2014. EXT.R1.(B): A TRUE COPY OF THE CORRIGENDUM DTD. 22/01/2014.** - **EXT.R1.(C): A TRUE COPY OF THE CORRIGENDUM DTD. 18/02/2014.** **Prv.** ## **W.P.(C).NO.5201/2014 - A:** **EXT.R1.(D): A TRUE COPY OF THE CORRIGENDUM DTD. 18/02/2014. EXT.R1.(E): A TRUE COPY OF THE APPROVAL NOTE DTD. 17/03/2014. EXT.R1.(F): A TRUE COPY OF THE CORRIGENDUM DTD. 17/03/2014. EXT.R1.(G): A TRUE COPY OF THE OBJECTION RAISED BY THE MANAGER (IA) DTD. 04/11/2013. ANNEXURE A: TRUE COPY OF THE CORRIGENDUM DTD. 22/01/2014. ANNEXURE B: TRUE COPY OF THE CORRIGENDUM DTD. 18/02/2014. ANNEXURE C: TRUE COPY OF THE CORRIGENDUM DTD. 18/02/2014.** **//TRUE COPY//** **P.A. TO JUDGE.** **Prv.** ## **A.M.SHAFFIQUE, J** *** * * * * * * * * * * * *** W.P.C.No.5201 of 2014 ---------------------------------------- Dated this the 3[rd] day of June 2014 ## **J U D G M E N T** Petitioner challenges Exts.P4, P5, P9 and P10. Exts.P4 and P9 are intimations issued by the respondent company cancelling the tenders invited by them in terms of Exts.P1 and P8. Pursuant to Exts.P4 and P9, they called for fresh tenders. The reason stated in Exts.P4 and P9 for cancelling the tender was on account of “administrative reasons”. 2. The main contention urged by the petitioner is that Exts.P4 and P9 are clearly mala fide and no reasons had been stated other than administrative reasons. That apart, it is contended that there is an attempt to oust the petitioner from the tender. According to the petitioner, as far as Ext.P1 tender is concerned, he was the lowest and on negotiation, he had agreed to reduce Rs.10,00,000/- and still the contract was not awarded in his favour. As far as Ext.P8 tender is concerned, though he was the lowest tenderer, still it was W.P.C.No.5201/2014 2 cancelled. 3. Counter affidavit is filed by the respondent inter alia stating that as far as Ext.P1 tender is concerned, the rate quoted by the petitioner was so high, as a result of which, despite negotiation, it has to be cancelled. Ext.P4 is the intimation issued by the respondent since it is a normal procedure for the E-tendering system of the Government of Kerala to inform the tenderer about the cancellation of tender on account of administrative reasons. The only reason was high rate of the contract and therefore the respondent has to go for re-tender. As far as Ext.P8 tender is concerned, since the petitioner was the single tenderer, it was decided to initiate re-tender process. There was no malafides in cancelling the tender since the petitioner has been awarded with another work in the same company. Under these circumstances, it is submitted that the respondent is entitled to proceed with the re-tender process. W.P.C.No.5201/2014 3 4. Learned counsel for the petitioner relies upon the judgment of the Supreme Court in **Star Enterprises v. City & Industrial Dev.Corpn.Ltd** [1990(2) KT 37(SC)]. It is stated that necessary reasons should be shown for rejecting the highest bid. Another judgment relied upon is **Chandragiri Construction Co. V. State of Kerala** [2005 (1) KLT SN 65 (C.No.83) in which the learned Single Judge held that attempts to state additional reasons in the counter affidavit other than what is stated in the impugned order is impermissible in law. 5. On the other hand, learned counsel for the respondent relies upon the judgment of this Court dated 26/08/2013 in W.P.C.No.7529 of 2013 which approves the stand of the respondent authority in cancelling a single tender. 6. Having regard to these factual and legal issues involved in the matter, there is no dispute about the fact that the Court’s interference in the tender matters is very W.P.C.No.5201/2014 4 limited. The issue is covered by the judgment of the Supreme Court in **Tata Cellular v. Union of India** _[(1994) 6 SCC 651]_ in which the Supreme Court held at paragraphs 70, 74, 77 and 94 as under: _“_ _**70.** 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_ W.P.C.No.5201/2014 5 _purpose the exercise of that power will be struck down._ _**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._ _**77.** The duty of the court is to confine itself to the question of legality. Its concern should be:_ _1. Whether a decision-making authority exceeded its powers?_ _2. Committed an error of law,_ _3. committed a breach of the rules of natural justice,_ _4. reached a decision which no reasonable tribunal would have reached or,_ _5. abused its powers._ _Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can_ W.P.C.No.5201/2014 6 _be classified as under:_ _(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it._ _(ii) Irrationality, namely, Wednesbury unreasonableness._ _(iii) Procedural impropriety._ _**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_ W.P.C.No.5201/2014 7 _than not, such decisions are made qualitatively by experts._ _(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 Wednesbury 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."_ 7. Therefore, in the light of the aforesaid pronouncement, it may not be possible for this Court to interfere with the decision taken by the respondents for proceeding with re-tender. Court can interfere only in regard to the arbitrariness or illegality in the decision making process of the awarder of the work. No materials W.P.C.No.5201/2014 8 are produced to indicate that there are mala fides in the action of the respondent authorities. Reasons now stated by the respondent authority in the counter affidavit is justifiable. As far as intimation issued to the petitioner by way of Exts.P4 and P9 are concerned, it is only a communication by the E-tendering system and cannot be stated as a reason stated by the respondent company. 8. With reference to the judgment relied upon by the learned counsel for the petitioner in **Star Enterprises** case (supra), that was an instance in which the Supreme Court observed that when the highest offers of the “type in question” are rejected, the reasons sufficient to indicate the stand of the appropriate authority should be made available. Ordinarily the same should be communicated to the concerned parties unless there be any specific justification not to do so. Of course, in these cases, Exts.P4 and P9 were issued by the E-tendering System of Government of Kerala by stating that the tender is cancelled due to administrative W.P.C.No.5201/2014 9 reasons. Principle stated by the Supreme court depends upon the facts and circumstances of each case. This is an instance where the authority proceeded to re-tender the work. Supreme Court held that being a public authority, it is better to state reasons while rejecting the highest offer. As far as the facts of the present case is concerned, intimation was given but the actual reason was not stated. However, having regard to the fact that the statement now furnished by the respondent authority is justifiable, I do not think that the non-furnishing of the actual reason by itself cannot be a valid ground to challenge the tender process. 9. As far as the judgment of this Court in **Chandragiri Construction Co.** case (Supra), the same has no application to the facts of this case. The terms of the tender has to be verified as to under what circumstances the tender can be rejected. Only if there is violation of the said conditions, that a person who had given tender can complain about the process of tender. Therefore, the said W.P.C.No.5201/2014 10 judgment has no application to the facts of this case. Under these circumstances, taking into account the limited scope for interference in the issues related to tender, I do not think that the reasons stated by the respondents are justifiable to interfere with the tender process. Accordingly, this writ petition is dismissed. (sd/-) ## **(A.M.SHAFFIQUE, JUDGE)** jsr