THE HON'BLE THE CHIEF JUSTICE SHRI NISAR AHMAD KAKRU and THE HON'BLE SHRI JUSTICE VILAS V. AFZULPURKAR Dated: 24-02-2011 WRIT APPEAL No. 24 OF 2011 AND WRIT PETITION No. 31999 OF 2010 Between: M/s. S.K. Enterprises, rep., by its Managing Partner, SK. Vali, S/o S. Abdul Sattar, Muslim, aged 54 years, Occ: Business, R/o. H.No. 20-434, Subhodayanagar, West Venkatapuram, Secunderabad ... APPELLANT/PETITIONER AND The Registrar, English & Foreign Languages University, (A Central University established by an Act of Parliament), Tarnaka Road, Near Osmania University Campus, Hyderabad – 500 007 and another …RESPONDENTS THE HON'BLE THE CHIEF JUSTICE SHRI NISAR AHMAD KAKRU and THE HON'BLE SHRI JUSTICE VILAS V. AFZULPURKAR WRIT APPEAL No. 24 OF 2011 AND WRIT PETITION No. 31999 OF 2010 COMMON JUDGMENT: (per the Hon’ble the Chief Justice Shri Nisar Ahmad Kakru) Allotment of a contract, favouring respondent No. 2 for providing manpower to the University - respondent No. 1, came to be questioned by medium of Writ Petition No. 31999 of 2010. Alongside, a petition for interim relief was filed which begot an interim direction of status quo on 21-12-2010. It was modified on 31-12-2010, permitting the respondent – University to complete the process of allotment subject to further orders of the writ Court. Being aggrieved, the writ petitioner questioned it through this writ appeal. By interim direction, this Court restored the order of status quo passed by the learned single Judge dated 21-12-2010. After hearing the learned counsel for the parties, the other day at some length, we directed the listing of the main writ petition for disposal with the consent of the learned counsel for the parties 2. The controversy in the writ petition has arisen in view of one of the conditions of tender which may be noticed: “ELIGIBILITY CRITERIA 1. Only registered, bonafide and reputed firms having an annual turnover of Rs.20 crores or above with at least one contract of the value of Rs.1.00 crore or above need apply. The firm should have requisite competence/capacity to handle jobs relating to Cleanliness and General Maintenance of Premises.” A glance at the condition aforementioned makes it very clear that among other requirements, a firm desirous of allotment of contract, must have an annual turnover of Rs.20 crores or above with at least one contract to its credit, of the value of Rs.1.00 crore or above. Admittedly, the writ petitioner does not fulfill the said condition, therefore, ineligible and same is true of respondent No.2 to whom contract is allotted. The University while admitting the fact of ineligibility of the contractor, attempted to justify the allotment on the ground that it was the only prudent decision available to the Committee in view of immediate requirement of manpower. There is no denying that the condition was stipulated in the tender notice by the University itself, yet it deviated at a stage when the process of finalisation of tender was midway apparently for no genuine reason, resultantly, the University has on the one hand facilitated consideration of offers of ineligible firms and on the other, restricted the competition to handful of firms. It is saddening to notice that the University, having set a standard, chose to depart, relaxing the eligibility which power it did not have, because once the standard of norms is set out, it had to be adhered to. 3. The eligibility criteria under the tender notice is in the nature of prequalification for tenderers to compete for the works proposed. The said eligibility which requires requisite turnover is intended to assess the capacity of the tenderer to undertake and execute the works if awarded. The stipulation of the said eligibility is in the nature of an essential precondition for consideration of the tenderer on merits. The University has filed a counter affidavit and has specifically stated that the Committee appointed for evaluation of tenders found that all the tenders are invalid and not eligible for competing as they did not possess the turnover of Rs.20 crores or above with at least one contract of the value of Rs.1.00 crore and above. Admittedly, neither the writ petitioner nor respondent No.2 therefore fulfill the said eligibility criteria. The counter however further proceeds to state that the said Committee took a prudent decision to assess the tenderers in view of immediate requirement of the organization. In our opinion, this action on the part of the University clearly overlooks and amounts to deviation from the essential eligibility criteria and by this process, not only the ineligible tenderers are considered on a competitive basis and on the contrary several other prospective bidders were deprived of competing in the tender as they were not aware of the relaxation being granted by the University to the said essential eligibility criteria. The legal position in this respect is settled by a decision of the Supreme Court in M/s. G.J. Fernandez v. State of Karnataka[1], wherein the Supreme Court has discussed the legal position in the paragraph extracted below: “Should the MCC have been denied altogether the right to tender for the contract consequent on the delay in submitting this document is the second question that arises for consideration. Sri Parasaran, for the appellant would have us answer this question in the affirmative on the principle annunciated by Frankfurter, J. and approved by this Court in Ramana Dayaram Shetty v. The International Airport Authority of India, (1979) 3 SCR 1014: (AIR 1979 SC 1628). Bhagwati, J (as his Lordship then was) formulated in the following words a principle which has since been applied by this Court in a number of cases (at pp. 1635 and 1650-51 of AIR): “It is a well settled rule of administrative law that an executive authority must be rigorously held to be standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an Act in violation of them. This rule was enunciated by Mr. Justice Frankfurter in Vitarelli v. Seaton, (1959) 359 US 535 : 3 Law Ed (Second series) 1012, where the learned Judge said: “An executive agency must be rigorously held to the standards by which it professes its action to be judged. Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed. This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword.” This Court accepted the rule as valid and applicable in India in A.S. Ahluwalia v. Punjab, (1975) 3 SCR 82: (AIR 1975 SC 984) and in subsequent decision given in Sukhdev v. Bhagatram, (1975) 3 SCR 619 : (AIR 1975 SC 1331). Mathew, J., quoted the above referred observatioins of Mr. Justice Frankfurter with approval. It may be noted that this rule, though supportable also as emanation from Art. 14, does not rest merely on that article. It has an independent existence apart from Art.14. It is a rule of administrative law which has been judicially evolved as a check against exercise of arbitrary power by the executive authority. If we turn to the judgment of Mr. Justice Frankfurter and examine it, we find that he has not sought to draw support for the rule from the equality clause of the United States Constitution, but evolved it purely as a rule of administrative law. Even in England, the recent trend in administrative law is in that direction as is evident from what is stated at pages 540-41 in Prof. Wade’s Administrative Law 4th Edition. There is no reason why we should hesitate to adopt this rule as a part of our continually expanding administrative law. xxx xxx xxx It is, therefore, obvious that both having regard to the constitutional mandate of Art.14 as also the judicially evolved rule of administrative law, the 1st respondent was not entitled to act arbitrarily in accepting the tender of the 4th respondent, but was bound to conform to the standard or norm laid down in para 1 of the notice inviting tenders which required that only a person running a registered II class hotel or restaurant and having at least 5 years’ experience as such should be eligible to tender. It was not the contention of the appellant that this standard or norm prescribed by the 1st respondent was discriminatory having no just or reasonable relation to the object of inviting tenders namely, to award the contract to a sufficiently experienced person who would be able to run efficiently a II class restaurant at the airport. Admittedly the standard or norm was reasonable and non-discriminatory and once such a standard or norm for running a IInd class restaurant should be awarded was laid down, the 1st respondent was not entitled to depart from it and to award the contract to the 4th respondent who did not satisfy the condition of eligibility prescribed by the standard or norm. if there was no acceptable tender from a person who satisfied the condition of eligibility, the 1st respondent could have rejected the tenders and invited fresh tenders on the basis of a less stringent standard or norm, but it could not depart from the standard or norm prescribed by it and arbitrarily accept the tender of the 4th respondents. When the 1st respondent entertained the tender of the 4th respondent even though they did not have 5 years’ experience of running a IInd class restaurant or hotel, denied equality of opportunity to others similarly situate in the matter of tendering for the contract. There might have been may other persons, in fact the appellant himself claimed to be one such person, who did not have 5 years’ experience of running a IInd class restaurant, but who were otherwise competent to run such a restaurant and they might also have competed with the 4th respondent for obtaining the contract, but they were precluded from doing so by the condition of eligibility requiring five years’ experience. The action of the 1st respondent in accepting the tender of the 4th respondent, even though they did not satisfy the prescribed of eligibility, was clearly discriminatory, since it excluded other persons similarly situate from tendering for the contract and it was plainly arbitrary and without reason. The acceptance of the tender of the 4th respondent was, in the circumstances invalid as being violative of the equality clause of the Constitution as also of the rule of administrative law inhibiting arbitrary action. (Emphasis supplied)” In view of the legal position, if there was no acceptable tender from any person satisfying the condition of eligibility, the University had no option but to have rejected all the tenders and have invited fresh tenders on fresh terms and conditions. Examining from any angle, we find no option but to allow the writ petition. Accordingly Allowed. Impugned allotment is quashed. The University shall call for fresh tenders as directed hereunder. 4. Before parting with, we cannot afford to lose sight of the fact that the manpower required by the University, being the services of Secretarial Assistants, Drivers, Technicians (viz., Electricians, Plumbers, Carpenters, Masons), Office Attendants, Labourers for cleaning and other miscellaneous works, the University cannot run its business without such services. What has among other things persuaded us to permit the University to continue respondent No.2 in the interregnum is of the fact that the writ petitioner’s contract has already lived its life by 31-12-2010 and the allotment of contract in question made to respondent No.2, has taken effect from 01-11-2011 and is in force as on date by dint of the interim direction of the writ Court followed by our direction. 5. Needless to say that the writ petitioner as also respondent No.2 shall be entitled to consideration along with all other tenderers, provided they are eligible in terms of the fresh tender notice. 6. In that view of the matter, an interim arrangement has become imperative so that the functioning of the University is not paralysed. To achieve the objective, learned counsel for the University on instructions submitted that the University would expeditiously call for fresh tenders and finalise the same in the shortest possible time and offered to complete the entire process within one month. We therefore allow the University to receive the manpower from the respondent No.2 until allotment of fresh contract which shall have to be done within one month to be reckoned from today, of course, in accordance with the rules and the interim arrangement shall not be allowed to continue beyond one month unless this Court permits. 7. In view of disposal of the writ petition itself, writ appeal does not call for any orders. Dismissed as such. VILAS V. AFZULPURKAR, J NISAR AHMAD KAKRU, CJ 24-02-2011 K. Shyleshi LR Copy to be marked Furnish copy today [1] AIR 1990 SC 958