IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 25-02-2010 CORAM THE HONOURABLE MR.JUSTICE M.JAICHANDREN Writ Petition Nos.3844 and 3845 of 2010 and M.P.Nos.1 +1 and 2 +2 of 2010 Current Electricals Limited, A Limited Company, registered under The Indian Companies Act, 1956, represented by its Executive Director, Mr.M.Saravanan, 69, SIDCO Industrial Estate, Thirumudivakam, Chennai-600 044. .. Petitioner. Versus 1.The Chairman, Tamil Nadu Electricity Board, 800, Anna Salai, Chennai-600 018. 2.The Chief Engineer, Materials Management, Tamil Nadu Electricity Board, 4th Floor, Western Wing, N.P.K.R.R.Maaligai, 144, Anna Salai, Chennai-600 002. .. Respondents. Prayer in W.P.No.3844 of 2010: Petition filed seeking for a Writ of Certiorarified Mandamus, to call for the records of the second respondent in Tender No.M.48/2009-10, dated 10.2.2010, pertaining to 11 KV Metering sets with 3 Cts and one three Phase PT and quash the same and consequently direct the second respondent herein to consider the petitioner's Techno Price Bid (Part B) as per earlier Tender Specification No.M.32/2009-10, based on the satisfaction of the BQR conditions. Prayer in W.P.No.3845 of 2010: Petition filed seeking for a Writ of Certiorarified Mandamus, to call for the records of the second respondent in Tender No.M.49/2009-10, dated 10.2.2010, pertaining to 22 KV Metering sets with 3 Cts and one three Phase PT and quash the same and consequently direct the second respondent herein to consider the petitioner's Techno Price Bid (Part B) as per earlier https://hcservices.ecourts.gov.in/hcservices/ Tender Specification No.M.33/2009-10, based on the satisfaction of the BQR conditions. For Petitioner : Mr.R.Muthukumaraswamy Senior Counsel for Mr.R.Sivaraman For Respondents : Mr.A.Selvendran O R D E R Heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondents. 2. It has been stated that the petitioners are limited companies, registered under the provisions of the Indian Companies Act, 1956. They are engaged in the business of manufacturing and supplying of various transformers. The petitioner companies are small scale industrial units, at the SIDCO Industrial Estate, Thirumudivakkam. They have participated in several tenders conducted by the respondents, in the past, and they have been successful in completing the tender obligations. While so, the second respondent had published an Open Tender Notice, under a Two Part System for outdoor Type Metering Sets, with 3 Cts and one 3 Phase Pts, under Tender Specification No.M.32/2009-10, for the supply of 11 KV and Tender Specification No.M.33/2009-10, for the supply of 22 KV. The tender specifications had been published in certain Tamil and English newspapers, as well as in the Tamil Nadu Electricity Board website. The petitioner companies had applied for the said tender, on 2.12.2009. The due date for the opening of the tenders was fixed as 16.11.2009. Thereafter, it was postponed to 2.12.2009. Apart from the petitioner companies, several other tenderers had participated in the tenders and offers had been received from them, within the specified due date. 3. It has been further stated that the tenders were under a two part system i.e. Techno Commercial bid (Part A) and Price Bid (Part B). the petitioner companies, being small scale industrial units, registered in the State of Tamil Nadu, had been exempted from furnishing Earnest Money Deposit, as per Clause Nos.7 to 10 of Section 1 of the Tender specifications. The Techno Commercial bid had been opened to verify whether the tenderers had satisfied the Bid Qualification Requirements, as approved by the Board Level Tender Committee. The petitioner companies had satisfied all the necessary requirements and they had also quoted the most competitive rates for the tenders. Since, most of the other tenderers had not qualified, as per condition No.4 of the Bid Qualification Requirements, by furnishing the Type Test Certificates of the tendered items, as per the specifications of https://hcservices.ecourts.gov.in/hcservices/ the second respondent, their Techno Commercial Bids (Part A) had been rejected by the respondent Board, in the Board Level Tender committee meeting, held on 8.2.2010. 4. It has also been stated that the petitioner companies had satisfied all the Bid Qualification Requirements and they were confident that the respondent Board would proceed further in opening the Price Bid (Part B) of the contracts and that the contract relating to their respective bids would be awarded to them. The other tenderers, who had participated in the Techno Commercial Bid (Part A), had been disqualified for want of pre- requisite qualifications. However, the petitioner companies were shocked to see the impugned tender notification being published, on 10.2.2010, calling for re-tender, in respect of the same contracts. It has been noted that the second respondent had diluted the Bid Qualification Requirements, in order to enable the disqualified tenderers to participate in the tenders. Such an attempt by the second respondent is arbitrary and illegal, as it has been done, with an ulterior motive. The second respondent had issued the re- tender, on 10.2.2010, and it is due, on 25.2.2010. It has also been stated that the respondent Board is acting in a manner prejudicial to the interest of the petitioner companies, in order to favour certain other tenderers. It has been learnt that the earlier tenders, in Tender Specification No.M.32/2009-10 and Tender Specification No.M.33/2009-10, were lodged during the Board Level Tender Committee meeting, held on 8.2.2010. 5. Mr.R.Muthukumaraswamy, the learned Senior Counsel, appearing on behalf of the petitioner companies, had submitted that the act of the second respondent, calling for re-tender and the lodging of the earlier tenders, are against the principles of law, equity and fair play. Since, the Bid Qualification Requirements of the petitioner companies were in accordance with the conditions approved by the Board Level Tender Committee and as the Techno Commercial Bid (Part A) of the petitioner companies had been accepted, the respondent Board ought to have proceeded further in opening the Price Bid (Part B) of the contract and the contracts should have been awarded to the petitioners, if they were qualified for the same. Since, most of the other tenderers, who had participate in the Techno Commercial Bid (Part A) had been disqualified, for want of pre-requisite qualifications the petitioner companies had legitimate expectations of getting the contracts confirmed in their favour. 6. The learned Senior Counsel had further submitted that the diluting of the tender conditions, which are technical in https://hcservices.ecourts.gov.in/hcservices/ nature, cannot be said to be in public interest. Further, the tender conditions have been diluted, with the ulterior motive of favouring certain persons, who had been disqualified at the stage of the Techno Commercial Bids (Part A). The very purpose of prescribing stringent pre-qualifications is to ensure that only highly technically qualified tenderers enter the bid. The present impugned tender states that the Test Certificates for the tendered items could be given at the time of the placing of the purchase orders and not at the time of the submission of the tender documents, as it existed earlier. The issuing of re-tender by the second respondent is patently arbitrary. As such, the principles underlying the two part tender scheme had been lost. Since, the impugned re-tender notifications issued by the second respondent are highly irrational, they cannot be sustained in the eye of law. 7. Per contra, Mr.A.Selvendran, the learned counsel appearing on behalf of the respondent Tamil Nadu Electricity Board had pointed out that the instructions issued to the tenderers make it clear that the Tamil Nadu Electricity Board has the right to reject any or all the tenders or to cancel the same, without assigning any reasons therefor. He had also stated that the respondent Board has the right to relax, waive or amend any of the conditions stipulated in the tender specifications, wherever deemed necessary, in the best interest of the Board. Therefore, the contentions raised on behalf of the petitioner companies are devoid of merits. He had also submitted that it may not be appropriate for this Court to invoke its extraordinary jurisdiction, under Article 226 of the Constitution of India, in matters relating to contractual obligations, as in the present case. 8. In view of the submissions made by the learned counsels appearing for the parties concerned, and on a perusal of the records available, this Court is of the considered view that the reliefs sought for in the present writ petition, cannot be granted, by this Court, by invoking its extraordinary jurisdiction, under Article 226 of the Constitution of India. The petitioner companies have not been in a position to show that the issuing of the impugned re-tender notifications, by the second respondent, is prejudicial to public interest. Further, it is a settled position of law that this Court does not exercise its extraordinary jurisdiction, in respect of contractual obligations, as held in the following decisions: 8.1. In Har Shankar v. Dy.E & T. Commr. (AIR 1975 SC 1121), it has been held as follows: "21. ............Analysing the situation here, https://hcservices.ecourts.gov.in/hcservices/ a concluded contract must be held to have come into existence between the parties. The appellants have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching contractual obligations....... 22...... The writ jurisdiction of High Courts under Article 226 of the Constitution is not intended to facilitate avoidance of obligations voluntarily incurred. That, however will not estop the appellants from contending that the amended Rules are not applicable as their licences were renewed before the amendments were made." 8.2. In Radhakrishna Agarwal V. State of Bihar (AIR 1977 SC 1496), it has been held as follows: "It is true that Article 14 of the Constitution imports a limitation or imposes an obligation upon the State's executive power under Art. 298 of the Constitution. All constitutional powers carry corresponding obligations with them. This is the rule of law which regulates the operation of organs of Government functioning under a Constitution (para 9). At the very threshold or at the time of entry into the field of consideration of persons with whom the Government could contract at all, the State, no doubt, acts purely in its executive capacity and is bound by the obligations which dealings of the State with the individual citizens import into every transaction entered into in exercise of its constitutional powers. But, after the State or its agents have entered into the field of ordinary contract the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Article 14 or of any other constitutional provision when the State or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract. (para 10) Even in cases where the question is of choice or consideration of competing claims before an https://hcservices.ecourts.gov.in/hcservices/ entry into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article 226 of the Constitution (para 11) Where the State government leased out some forest land to appellants to collect and exploit sal seeds for 15 years on payment of royalty at a certain rate and when the State, under the terms of leases, revised the rate of royalty and thereafter cancelled the leases for breach of certain conditions, the petitioners-appellants challenged the orders of revision of rate and cancellation of leases as illegal by writ proceedings under Article 226: Held that (i) the contracts did not contain any statutory terms or obligations and no statutory power or obligation which could attract the application of Article 14 was involved. (para 11) (ii) It was the contract and not the executive power regulated by the Constitution, which governed the relations of the parties on the facts apparent in the instant cases. They involved questions of pure alleged breaches of contract. No writ or order could issue under Article 226 in such cases to compel the authorities to remedy a breach of contracts pure and simple. (paras 12, 15)." 8.3. In State of Gujarat V. Meghji Shah Charitable trust (1994 (3) SCC 552), it has been held as follows: "22. We are unable to see any substance in the argument that the termination of arrangement without observing the principle of natural justice (audi alteram partem) is void. The termination is not a quasi-judicial act by any stretch of imagination; hence it was not necessary to observe the principles of natural justice. It is not also an executive or administrative act to attract the duty to act fairly. It was as has been repeatedly urged by Shri Ramaswamy -- a matter governed by a contract/agreement between the parties. If the matter is governed by a contract, the writ petition is not maintainable since it is a public law remedy https://hcservices.ecourts.gov.in/hcservices/ and is not available in private law field e.g. where the matter is governed by a non-statutory contract. Be that as it may, in view of our opinion on the main question, it is not necessary to pursue this reasoning further." 8.4. In State of U.P. V. Bridge & Roof Co. (India) Ltd (1996 (6) SCC 22), it has been held as follows: "15. In our opinion, the very remedy adopted by the respondent is misconceived. It is not entitled to any relief in these proceedings i.e. in the writ petition filed by it. The High Court appears to be right in not pronouncing upon any of the several contentions raised in the writ petition by both the parties and in merely reiterating the effect of the order of the Deputy Commissioner made under the proviso to Section 8-D(1). 16. Firstly, the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or, may be, also by certain provisions of the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either for arbitration as provided by the contract or for the Civil Court, as the case may be. Whether any amount is due to the respondent from the appellant Government under the contract and, if so, how much and the further question whether retention or refusal to pay any amount by the Government is justified, or not, are all matters which cannot be agitated in or adjudicated upon in a writ petition. The prayer in the writ petition viz. to restrain the Government from deducting a particular amount from the writ petitioner's bill(s) was not a prayer which could be granted by the High Court under Article 226. Indeed, the High Court has not granted the said prayer." 8.5. In Union of India Vs. Sri Gayathri Agencies (2000(4) CTC 711), it has been held as follows: "9. We have heard the learned counsel for the respective parties and perused the materials on record. Though the matter could have been disposed of on the short ground, since the learned counsel https://hcservices.ecourts.gov.in/hcservices/ for the parties have argued the matter at length, without insisting upon to decide the main case, we have no other option but to mention their arguments in detail, as above. It is settled that if a right has been claimed in terms of the contract, such a right cannot enforced in writ petition. In other words the extraordinary remedy cannot be used for the enforcement of contractual obligations, since the same can be resorted on the basis of the agreement executed between the parties i.e., by way of arbitration clause, as in the present case, as per the agreement. It is also settled, that generally this Court does not interfere with the interlocutory orders passed by the Courts below, as the matter is still pending, and has not been finally decided. But from the facts culled out, and the arguments advanced by the learned counsel for the parties, and applying the case laws cited, it is crystal clear that the matter agitated before us pertains to questions of facts, which needs investigation and that is based on the contract, which is a non-statutory one and is also being safeguarded with the arbitration clause. A perusal of Section 8(1)(i) of the Arbitration Act reveals that a judicial authority, before which an action is brought, in a matter which is the subject of an arbitration agreement, shall refer the parties to arbitration." 8.6. In Kerala SEB V. Kurien E.Kalathil (2000(6) SCC 293), it has been held as follows: "10. We find that there is a merit in the first contention of Mr.Raval learned counsel has rightly questioned the maintainability of the writ petition. The interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract. If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observation of the High Court that since the https://hcservices.ecourts.gov.in/hcservices/ obligations imposed by the contract on the contracting parties come within the purview of the Contract Act, that would not make the contract statutory. Clearly, the High Court fell into an error in coming to the conclusion that the contract in question was statutory in nature. 11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In he present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could nto have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil Court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies." 8.7. In State of Bihar V. Jain Plastics and Chemicals Ltd. (2002(1) SCC 216), it has been held as follows: "A writ is not the remedy for enforcing contractual obligations. A writ petition under Article 226 is not the proper proceedings for adjudicating such disputes. Under the law, it was open to the respondent to approach the Court of competent jurisdiction for appropriate relief for breach of contract. When an alternative and equally efficacious remedy is open to the litigant, he https://hcservices.ecourts.gov.in/hcservices/ should be required to pursue that remedy and not invoke the writ jurisdiction of the High Court. Equally, the existence of alternative remedy does not affect the jurisdiction of the Court to issue writ, but ordinarily that would be a good ground in refusing the exercise the discretion under Article 226 (Para 3). In the present case many matters could be decided after referring to the contentions raised in the affidavits and counter-affidavits, but that would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. Whether the alleged non-supply of road permits by the appellants would justify breach of contract by the respondent would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition. Such seriously disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit rather than by a Court exercising prerogative of issuing writs. (para 7)" 8.8. In National Highways Authority of India V. Ganga Enterprises (2003 (7) SCC 410), it has been held as follows: "6. The respondent then filed a writ petition in the High Court for refund of the amount. On the pleadings before it, the High Court raised two questions viz. (a) Whether the forfeiture of security deposit is without authority of law and without any binding contract between the parties and also contrary to Section 5 of the Contract Act; and (b) whether the writ petition is maintainable in a claim arising out of a breach of contract. Question (b) should have been first answered as it would go to the root of the matter. The High Court instead considered Question (a) and then chose not to answer Question (b). In our view, the answer to Question (b) is clear. It is settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India. It has been so held in Kerala SEB V. Kurien E.Kalathil (2000(6) SCC 293), State of U.P. V. Bridge & Roof Co. (India) Ltd (1996(6) SCC 22) and Bareilly Development Authority V. Ajai Pal Singh (1989(2) SCC 116). This is settled law. The dispute in this https://hcservices.ecourts.gov.in/hcservices/ case was regarding the terms of offer. They were thus contractual disputes in respect of which a writ court was not the proper forum. Mr.Dave, however, relied upon Verigamto Naveen V. Govt. of A.P. (2001(8) SCC 344). and Harminder Singh Arora V. Union of India (1986(3) SCC 247). These, however, are cases where the writ court was enforcing a statutory right or duty. These case do not lay down that a writ Court can interfere in a matter of contract only. Thus, on the ground of maintainability the petition should have been dismissed." 8.9. In Siemons Public Communication Pvt. Ltd. V. Union of India (AIR 2009 SC 1204), it has been held as follows: "On examining the facts and circumstances of the present case, we are of the view that none of the criteria has been satisfied justifying Court's interference in the grant of contract in favour of the appellants. When the power of judicial review is invoked in the matters relating to tenders or award of contracts, certain special features have to be considered. A contract is a commercial transaction and evaluating tenders and awarding contracts are essentially commercial functions. In such cases principles of equity and natural justice stay at a distance. If the decision relating to award of contracts is bona fide and is in public interest, Courts will not exercise the power of judicial review and interfere even if it is accepted for the sake of argument that there is a