Judicial Review of administrative actions is intended to prevent arbitrariness, bias and mala fides. : Andhra Pradesh High Court

M S. K.Beeran Kutty vs The State Of Andhra Pradesh on 6 July 2021 Andhra Pradesh High Court Amravati M S. K.Beeran Kutty vs The State Of Andhra Pradesh on 6 July 2021 HON BLE SRI JUSTICE R. RAGHUNANDAN RAO WRIT PETITION No.104521 The petitioner submits that he is a diet contractor and has been supplied diet to inpatients and doctors at various hospitals in Tirupati including the 3rd respondent hospital for the past 34 years The petitioner is also a diet contractor for the 4th respondent hospital 2. Respondents 2 and 4 issued tender notification in Sl.No.222 DIET 2021 dated 12.04.2021 for supplying diet for inpatients and duty doctors for a period of two years in sealed tenders. All bids in pursuance of the said tender were to be considered in two stages technical bid and financial bid The tender document also stipulated that the conditions set out in G.O.Ms.No.325 HMFWLimited vs. State of Karnataka and Others3 ABL International Limited and Another vs Export Credit Guarantee Corporation of India Limited and Another4 6. The official respondents have filed a counter affidavit setting out their case. In the said counter affidavit it is stated that the services of the petitioner were sought to be terminated by the 2nd respondent on account of the dissatisfaction with the diet being supplied by the petitioner. This resulted in W.P.No.380318 and W.P.No.151117 which came16 SCC 4898 SCC 2163 SCC 553 to be disposed of by a Division Bench of this Court on 24.02.2021 wherein the Division Bench without going into the question regarding the legality or otherwise of the termination order dated 08.10.2018 was pleased to permit the petitioner to participate in the fresh tender. It is further contended in the counter that the representation of the petitioner on 19.04.2021 for issue of satisfactory certificate one day before the submission of the tender document on 20.04.2021 was not considered and no certificate was issued as there were various applications against the petitioner regarding short supply core quality skipping of certain items etc. It is stated that on account of these complainants a satisfactory certificate was not given to the petitioner 7. Sri Dammalapati Srinivas learned Senior Counsel appearing for 5th respondent and learned Government Pleader for Medical and Health have contended that in view of the fact that all the three tenderers had quoted the same price and there was no possibility for any reduction in the said price the 2nd respondent committee had to consider the matter and take a call as to who would be more suitable for executing the contract. In such a situation the 2nd respondent committee took the view that it would be appropriate to award the contract to the 5th respondent as neither the petitioner nor other tenderer to whom Sri Y.Koteswara Rao had furnished experience certificates which were up to date 8. The learned Government Pleader for Medical and Health would submit that the petitioner having applied for a satisfactory certificate on 19.04.2021 could not expect such certificate to be issued in one day. He further submits that the petitioner was fully aware of the fact that the last date of submission of tenders was 20.04.2021 and he could not have applied for a certificate on 19.04.2021 Consideration of the Court 9. The tender document stipulated that the intending bidders could bid for the contract in the price band of Rs.36 to Rs.40 only. In view of the said stipulation none of the bidders could have quoted a figure of less than Rs.36 . Accordingly all the three qualified bidders had bid for the tender at the rate of Rs.36 Indian Kanoon M S. K.Beeran Kutty vs The State Of Andhra Pradesh on 6 July 2021 10. In the light of the bids of all the tenderers being at the lowest rate possible the tendering authority was faced with the requirement of selecting one of the bidders out of the three bids available. In the circumstances the 3rd respondent committee was given the task of narrowing the o f f e r t o o n e b i d d e r . A f t e r c o n s i d e r i n g a l l c i r c u m s t a n c e s i t a p p e a r s t h a t t h e 3 r d respondent committee decided to apply the criteria of satisfactory experience as the deciding factor for finalising the bid in favour of the 5th respondent on the ground that only the 5th respondent had a satisfactory certificate available for the latest period 11. The application of the criteria has been challenged by the petitioner. The question that arises before this Court is whether the application of such a criteria is permissible or would amount to an arbitrary action of the respondents which requires to be set aside 12. Before answering that question it would be necessary to understand the scope of such an exercise by this Court under Article 226 of the Constitution of India 13. The Judgments cited by Sri K.G.Krishna Murthy learned Senior Counsel would set out the contours of such judicial review of government practice. The leading case in this regard would be Tata Cellular vs. Union of India5 which has been followed by the Hon ble Supreme Court in the Judgments cited above. In the circumstances paragraph 94 of the said Judgment would be relevant 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.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 1994) 6 SCC 651The 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 reasonablenessbut must be free from arbitrariness not affected by bias or actuated by mala fides Indian Kanoon M S. K.Beeran Kutty vs The State Of Andhra Pradesh on 6 July 2021 6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure 14. The said Judgment has been consistently followed by the Hon ble Supreme Court. In Jagadish Mandal vs. State of Orissa6 Para 22 of the said Judgment reads as follows 22. Judicial review of administrative action is intended to prevent arbitrariness irrationality unreasonableness bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest courts will not in exercise of power of judicial review interfere even if a procedural aberration or error in assessment or prejudice to a tenderer is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances wounded pride and business rivalry to make mountains out of molehills of some technical procedural violation or some prejudice to self and persuade courts to interfere by exercising power of judicial review should be resisted. Such interferences either interim or final may hold up public works for years or delay relief and succour to thousands and millions and may increase the project cost manifold 15. A conspectus of the above Judgements and the Judgments of the Hon ble Supreme Court in Raunaq International Limited. vs. I.V.R. Construction Limited7 Air India Limited Vs.Cochin 2007) 14 SCC 5141 SCC 492 International Airport Limited8 Master Marine ServicesLimited9 Michigan RubberLimited vs. State of Karnataka10 Municipal Corporation. Ujjain vs. BVGLimited. 11 would lay down the principle that the Courts should not normally intervene in the decision making process for award of contracts unless blatant illegality and arbitrariness can be pointed out. The contention of the Court is to ascertain whether there was any illegality or arbitrariness in the decision making process rather than the question of whether the decision was a sound decision. In the present case the 3rd respondent committee was left with an unenviable task of finalising the tender in favour of one b i d d e r w h i l e t h e b i d s o f a l l t h e t h r e e q u a l i f i e d b i d d e r s w e r e t h e s a m e . T h e 3 r d respondent committee discharged this task by fixing the satisfactory conduct of the bidders as the 16. In the circumstances such a criteria cannot be treated as arbitrary criteria. It has been the contention of Sri K.G.Krishna Murthy learned Senior Counsel for the petitioner that in the absence of stipulating such a criteria in the tender document the 3rd respondent committee could not have fixed such a criteria subsequent to the submission of the tenderers. It was further submitted that Indian Kanoon M S. K.Beeran Kutty vs The State Of Andhra Pradesh on 6 July 2021 fixing such a criteria subsequent to the filing of the bids caused prejudice to the petitioner as the petitioner would2 SCC 6176 SCC 1388 SCC 2165 SCC 462 have been able to get a certificate of satisfactory performance up to 2020 from the 3rd respondent hospital 17. This contention has to be rejected on two grounds. Firstly the petitioner did attempt to get such a certificate from the 3rd respondent hospital and was unsuccessful on account of the complaints given against the petitioner while he was a diet contractor for the 3rd respondent hospital Secondly it cannot be held that the decision of the 3rd respondent committee in considering satisfactory performance as a criteria for finalising the tender can be treated as an action which is so arbitrary that no reasonable person would have taken such a call 18. In the circumstances it cannot be held that the decision taken by the respondents in finalising the tender in favour of the 5th respondent and awarding the contract to the 5th respondent is so arbitrary that it requires interference from this Court 19. In the circumstances the Writ Petition has been failed and accordingly dismissed As a sequel pending miscellaneous petitions if any shall stand closed R. RAGHUNANDAN RAO J 06.07.2021 RJS HON BLE SRI JUSTICE R. RAGHUNANDAN RAO WRIT PETITION No.104521 06.07.2021 RJS Indian Kanoon 

Summary: Administrative activity is subject to judicial review in order to prevent arbitrariness, irrationality, unreasonableness, bias, and mala fides. Its goal is to see if a choice or decision is made “lawfully,” not to see if the choice or decision is “sound.” Certain unique aspects should be kept in mind while using the judicial review power in instances involving tenders or contract awards was referred by Justice R.Raghunandan Rao of Andhra Pradesh High Court in the matter of M/S. K. Beeran Kutty versus State of Andhra Pradesh [WRIT PETITION No.10457 of 2021] The order was passed for the past 34 years, the petitioner claims to be a diet contractor who has supplied diet to inpatients and doctors at several hospitals in Tirupati, including the 3rd respondent hospital. The petitioner also works as a dietician for the fourth respondent hospital.  Respondents 2 and 4 published a sealed tender notice in Sl.No.222/DIET/2021, dated 12.04.2021, for the supply of diet for inpatients and duty doctors for a two-year term. All offers submitted in response to the above-mentioned tender were to be evaluated in two stages: technical and financial. Learned Senior Counsel for the petitioner will argue that the petitioner’s bid was rejected because he had not provided an experience certificate for the previous three years and that all of his experience certificates were for times prior to 2017. He claims that the petitioner’s proposal could not have been rejected on that basis. He claims that the obligation to provide an experience certificate was stated in G.O.Ms.No.325 in clause 12 of the said G.O, which stated that a “good conduct certificate from the appropriate hospital authority” had been provided. Sri K.G.Krishna Murthy, learned Senior Counsel appearing for the petitioner, contends that the only requirement was that the petitioner provides a good conduct certificate and that in the absence of any stipulation for the period for which good conduct is required, the 3rd respondent committee could not have discriminated against the petitioner on the basis that the 5th respondent provided experience certificates. He contends that the 3rd respondent committee could not have imposed a condition requiring the certificate to be for immediate past experience in the absence of any provision as to the period for which such certificate should be presented.He claims that, in any case, he was the 3rd respondent’s diet supply contractor until 2020, and that he had applied to the 3rd respondent for the granting of such a certificate. The aforementioned certificate, however, was not issued by the 3rd respondent, therefore it could not be delivered. Because all three tenderers had quoted the same price and there was no possibility of a price reduction, the 2nd respondent committee had to consider the matter and make a decision as to who would be more suitable for executing the contract, according to learned Senior Counsel for the 5th respondent and learned Government Pleader for Medical and Health. In this situation, the 2nd respondent committee decided to award the contract to the 5th respondent because neither the petitioner nor any other tenderer to whom Sri Y.Koteswara Rao had provided up-to-date experience certificates. A summary of the foregoing decisions, as well as the Supreme Court’s decisions in Raunaq International Limited vs. I.V.R. Construction Limited Cochin International Airport Limited vs. Air India Limited (2007) 14 SCC 514 (1999) 1 SCC 492 International Airport Limited 8, Metcalfe &amp; Hodgkinson (P) Limited vs. Master Marine Services (P) Limited 9, Michigan Rubber (India) Limited vs. State of Karnataka10, Municipal Corporation of Ujjain vs. BVG (India) Limited11 would establish the notion that courts should not typically intervene in contract award decisions unless there is clear illegality or arbitrariness. This claim must be dismissed for two reasons. To begin with, the petitioner attempted to obtain such a certificate from the 3rd respondent-hospital but was unable due to complaints filed against him while working as a diet contractor for the 3rd respondent-hospital. Second, it cannot be maintained that the 3rd respondent-choice committee’s to consider good performance as a criterion for finalising the tender is so arbitrary that no reasonable person would make such a judgement.