Case: State Of Jharkhand  Vs. M/S Cwe-Soma Consortium

not justified to sit in judgment over the decision of tender Committee and substitute its opinion on the cancellation of tender. Decision of the state issuing tender notice to cancel the tender and invite fresh tenders could not have been interfered with by the High Court unless found to be mala fide or arbitrary. When the authority took a decision to cancel the tender due to lack of adequate competition and in order to make it more competitive, it decided to invite fresh tenders, it cannot be said that there is any mala fide or want of bona fide in such decision. While exercising judicial review in the matter of government contracts, the primary concern of the court is to see whether there is any infirmity in the decision-making process or whether it is vitiated by mala fide, unreasonableness or arbitrariness. 19. Observing that while exercising power of judicial review, court does not sit as appellate court over the decision of the government but merely reviews the manner in which the decision was made, in Tata Cellular v. Union of India (1994) 6 SCC 651 , in para (70) it was held 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 purpose the exercise of that power will be struck down.” 20. The government must have freedom of contract. In Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. and Anr. (2005) 6 SCC 138 , in para (12) this Court held as under:- “12. After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. 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. The Government must have freedom of contract. In other words, 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 principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. (See para 113 of the Report, SCC para 94.)” The court does not have the expertise to correct the administrative decision as held in Laxmikant and Ors. v. Satyawan and Ors. (1996) 4 SCC 208 , the government must have freedom of contract. 21. The right to refuse the lowest or any other tender is always available to the government. In the case in hand, the respondent has neither pleaded nor established mala fide exercise of power by the appellant. While so, the decision of tender committee ought not to have been interfered with by the High Court. In our considered view, the High Court erred in sitting in appeal over the decision of the appellant to cancel the tender and float a fresh tender. Equally, the High Court was not right in going into the financial implication of a fresh tender.22. Having addressed the correctness of reasonings recorded by the High Court, it is important to note one further aspect. When the SLP came up for hearing, by an order dated 10.08.2015, while granting interim stay on the operation of the impugned judgment, this Court directed that the appellants shall be free to invite fresh tenders and process the same, but no allotment shall be made without permission of this Court. The appellant-state has filed an additional document stating that about 20,421.43 acre of land is to be acquired under the “Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act, 2013” which came into force on 01.01.2014. Section 41 of the said Act states that no acquisition of land as far as possible could be made in the Scheduled Area. If it is necessary, it should be done only as per last resort. It also states that land in Scheduled Areas can only be acquired with the prior consent of Gram Sabha or Panchayats or the autonomous District Councils. The learned Attorney General submitted that the entire sub-mergence area of the proposed Icha Dam is in the scheduled area and the remaining land for Icha Dam can be acquired only with the prior consent of the Gram Sabha of the affected villages. It is further stated that the issue was discussed in the meeting of Tribal Advisory Council held on 27.09.2014 and that Tribal Advisory Council and the sub-committee opined that the construction of Icha-Kharkai Dam may be cancelled. Learned Attorney General therefore submitted that there are some issues which need to be resolved before floating a fresh tender of Icha dam. The impugned judgment of the High Court is liable to be set aside.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]21. The right to refuse the lowest or any other tender is always available to the government. In the case in hand, the respondent has neither pleaded nor established mala fide exercise of power by the appellant. While so, the decision of tender committee ought not to have been interfered with by the High Court. In our considered view, the High Court erred in sitting in appeal over the decision of the appellant to cancel the tender and float a fresh tender. Equally, the High Court was not right in going into the financial implication of a fresh tender.22. Having addressed the correctness of reasonings recorded by the High Court, it is important to note one further aspect. When the SLP came up for hearing, by an order dated 10.08.2015, while granting interim stay on the operation of the impugned judgment, this Court directed that the appellants shall be free to invite fresh tenders and process the same, but no allotment shall be made without permission of this Court. The appellant-state has filed an additional document stating that about 20,421.43 acre of land is to be acquired under theto Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act,which came into force on 01.01.2014. Section 41 of the said Act states that no acquisition of land as far as possible could be made in the Scheduled Area. If it is necessary, it should be done only as per last resort. It also states that land in Scheduled Areas can only be acquired with the prior consent of Gram Sabha or Panchayats or the autonomous DistrictThe impugned judgment of the High Court is liable to be set