The scope of judicial review in the matters of Contract is no more res integra: High Court Of Jammu & Kashmir And Ladakh

HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT SRINAGAR WP(C) No. 1330 2021 c w CCP(S) No. 356 2021 Firdous Kamran Shora Dated: 24th of September 2021. … Petitioner(s) Union of India & Ors. … Respondent(s) Mr A. H. Naik Senior Advocate with Mr Tawheed Ahmad Advocate. Through: Mr Tahir Majid Shamsi ASGI for R 1 and Mr N. A. Beig Senior Advocate with Mr Sofi Manzoor Advocate for R 2 & 3. Hon’ble Mr Justice Ali Mohammad Magrey Judge. In the instant Petition the Petitioner is aggrieved of Notice No. 658 EE DIV SGR 350 dated 5th of July 2021 as well as the impugned tender Notice bearing NIT No.12 EE DIV SGR 2021 22 dated 7th of July 2021 issued by the Respondent No.3. Mr A. H. Naik the learned Senior Counsel representing the Petitioner submitted that the action and inaction on the part of the Respondents in determining the contract between the parties and changing the site that too without negotiating with the Petitioner amounts to arbitrary exercise of power aimed at giving undue benefit to some other blue eyed WP(C) No. 1330 2021 c w CCP(S) No. 356 2021 contractor(s). It is submitted that there was no agreement executed between the parties therefore there was no question of invoking any clause of the agreement which was not in existence. Objections stand filed on behalf of Respondents 2 and 3. It is stated that the BSNL Civil wing was assigned the responsibility of execution of NFS project by the Department of Telecommunication No. 1330 2021 c w CCP(S) No. 356 2021 be questioned but the decision making process can certainly be subject to judicial review. The soundness of the decision may be questioned firstly if the decision made is so arbitrary and irrational that the Court can say that the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached or second if the process adopted or decision made by the authority is malafide or intended to favour someone or third if the public interest is affected. In the case on hand when the Petitioner firm did not fulfil all the terms and conditions prescribed by the Respondents with regard to completion of the project on time despite repeated reminders in such eventuality the decision of the Respondents in issuing the impugned communication and putting the work to fresh tender cannot be said to be one where they have acted in a manner in which no responsible authority acting reasonably and in accordance with the relevant law would have acted. Furthermore a bare perusal of the pleadings on record does not indicate that the decision made by the authority is malafide or intended to favour someone. In fact the decision of the Respondents was the result of non completion of the Contract on time on part of the Petitioner more so when the entire project was located at a highly sensitive and strategic area of LOC. Likewise the third ground of public interest is also not affected in the present case because while it may be in public interest to have greater competition it is also in public interest that all the tender conditions are complied with as prescribed by the tender issuing authority and that there is no uncertainty in that area. WP(C) No. 1330 2021 c w CCP(S) No. 356 2021 Law on the subject of scope of judicial review in the matters of Contract is no more res integra. In case titled ‘Tata Cellular V. Union of India: 6 Supreme Court Cases 651’ at Paragraph No.94 Hon’ble the Supreme Court of the country while dealing with the issue similar to the one subject matter of the instant Petitions evolved the following principles: 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 expe4rtise 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 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 but must be free from arbitrariness not affected by bias or actuated by mala fides and 6. Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.” In case ‘Sterling Computers Limited V. M&N Publications Ltd:1 SCC 445’ the Apex Court at Paragraph No.12 has laid down as under: WP(C) No. 1330 2021 c w CCP(S) No. 356 2021 “In contracts having commercial element some more discretion has to be conceded to the authorities so that they may enter into contracts with persons keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognized by courts while dealing with public property. It is not possible for courts to question and adjudicate every decision taken by an authority because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand they can come out with a plea that it is not always possible to act like a quasi judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts such decisions are upheld on the principle laid down by Justice Holmes that courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of play in the joints to the executive." Again the Apex Court in case titled ‘Directorate of Education Ors. V. Educomp Datamatics Ltd. And Ors: 4 SCC 19’ while applying the principles enunciated in Tata Cellular’s case at Paragraph No.12 observed thus: “12. It has been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The Courts would interfere with the administrative policy decision only if it is arbitrary discriminatory malafide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The Courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair wise or logical. The Courts can interfere only if the policy decision is arbitrary discretionary or malafide.” On an appreciation of the law laid down above what comes to limelight is that the modern trend points to judicial restraint in administrative WP(C) No. 1330 2021 c w CCP(S) No. 356 2021 action and that the Court does not sit as a ‘Court of Appeal’ but merely reviews the manner in which the decision was made. It has also been declared that Court does not have the expertise to correct the administrative decision and that 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. Furthermore fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi administrative sphere and quashing administrative decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. It is thus settled that public authorities must be left with the same liberty as they have in framing the policies even while entering into contracts because many contracts amount to implementation or projection of policies of the Government. But it cannot be overlooked that unlike policies contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the Constitution of India in many cases for years. It is for this reason that the Courts have impressed that even in contractual matters the public authority should not have unfettered discretion. In contracts having commercial element some more discretion has to be conceded to the authorities so that they may enter into contracts with persons keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognized by Courts WP(C) No. 1330 2021 c w CCP(S) No. 356 2021 while dealing with public property. It is not possible for the Courts to question and adjudicate every decision taken by an authority because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand they can come out with a plea that it is not always possible to act like a quasi judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract by giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bonafide manner although not strictly following the norms laid down by the Courts such decisions are upheld on the principle laid down by Justice Holmes that Courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of ‘play in the joints’ to the executive. Looking at the instant case in the above perspective the Petitioner has not been able to establish before the Court that the decision taken by the Respondents putting the works in question to fresh tenders is an arbitrary exercise of power or that the same was is malafide in nature. In ‘Jagdish Mandal v. State of Orissa:14 SCC 517’ at Paragraph No.22 the Hon’ble Supreme Court held thus: “22. …. Therefore a Court before interfering in tender or contractual matters in exercise of power of judicial review should pose to itself the following questions: WP(C) No. 1330 2021 c w CCP(S) No. 356 2021 i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached” ii) Whether public interest is affected. If the answers are in the negative there should be no interference under Article 226.” From a bare perusal of the pleadings placed on record as well as after going through the relevant records placed before the Court by the Respondents it is more than apparent that the decision taken by the Respondents in putting the work in question to fresh tenders was certainly not irrational in any manner whatsoever or intended to favour anyone. This decision apart from being lawful and sound appears to have been taken by the Respondents in view of non acceptance of all the terms and conditions of contract on part of the Petitioner. For all that has been said and done hereinabove I do not find any merit in this Petition. It entails dismissal and is accordingly dismissed. Interim direction(s) if any subsisting as on date shall stand vacated. Pending miscellaneous applications if any shall also stand disposed of accordingly. No order as to costs. WP(C) No. 1330 2021 c w CCP(S) No. 356 2021 The relevant record as produced by Mr Beig the learned Senior Counsel representing the Respondents 2 and 3 is returned to him in the open CCP(S) No. 356 2021: This Contempt Petition is filed alleging violation of ad interim Order dated 14th of July 2021 passed in WP(C) No. 1330 2021. In view of the dismissal of the Writ Petition wherein the interim Order was passed as above the Contempt Petition has turned infructuous which shall stand closed as such. Registry to place a copy of this Judgment on each file. September 24th 2021 Judge Whether the Judgment is reportable Yes No. Yes No. Whether the Judgment is speaking 

Summary: Contracts having commercial elements, some more discretion had to be conceded to the authorities in order to enter into contracts with persons keeping an eye on the augmentation of the revenue. The Hon’ble High Court Of Jammu &amp; Kashmir And Ladakh, at Srinagar before the Hon’ble Mr. Justice Ali Mohammad Magrey held such opinion in the matter of Firdous Kamran Shora vs. Union of India &amp; Ors [WP(C) No. 1330/2021 c/w CCP(S) No. 356/2021]. The facts of the case in this instant petition was related to the petitioner who was aggrieved of the Notice No. 6 (6) 58 EE/DIV/SGR/350 dated 5th of July, 2021 and the impugned tender Notice bearing NIT No.12/EE/DIV/SGR/2021-22 dated 7th of July, 2021 issued by the Respondent No.3. The learned senior counsel, Mr. A. H. Naik, representing the petitioner, contended that determining the contract between the parties and changing the site without any negotiation without the petitioner, signifies random execution of power and the objective was to give undue benefit to some other contractors. It was stated that the responsibility of execution of the NFS project by the Department of Telecommunication (Government of India) was assigned to the BSNL, Civil wing. It was appealed that the petitioner was given the contract for timely execution, inspite of the repeated orders given, the petitioner never executed on time, constraining the respondents.   The Hon’ble Court mentioned that the courts are expected to execute judicial restraint in interfering with the administrative action specifically in cases of tenders or contracts. The Hon’ble Court also stated, “The soundness of the decision may be questioned, firstly, if the decision made is so arbitrary and irrational that the Court can say that the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached or; second, if the process adopted or decision made by the authority is malafide or intended to favour someone or; third, if the public interest is affected.”  Within the meaning of Article 12 of the Constitution of India, it cannot be overlooked that, unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State. While dealing with public property, they have to follow the norms of the Court. The work put on the question was certainly not irrational in any manner. The Hon’ble Court mentions “… This decision, apart from being lawful and sound, appears to have been taken by the Respondents in view of non-acceptance of all the terms and conditions of the contract on part of the Petitioner.” The Hon’ble Court ruled out “For all that has been said and done hereinabove, I do not find any merit in this Petition. It entails dismissal and is, accordingly, dismissed. Interim direction(s), if any, subsisting as on date, shall stand vacated. Pending miscellaneous applications, if any, shall also stand disposed of, accordingly.”