Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fide: Orissa High Court

IN THE HIGH COURT OF ORISSA AT CUTTACK WRIT PETITIONNo. 2850 OF 2021 An application under Articles 226 & 227 of the Constitution of M s. Ashirbad Industries & others State of Odisha & Others Opposite Parties Advocate(s) appeared in this case: For Petitioners Mr. U.C. Mohanty Advocate. For Opposite Parties Mr. S. Palit Additional Government Advocate. CORAM : THE CHIEF JUSTICE JUSTICE B.P. ROUTRAY B.P. Routray J. 1. Three petitioners viz. M s.Ashirbad Industries M s.Poojarini Enterprisers and M s.Bhagabati Industries have jointly filed the present writ petition challenging the cancellation of Tender Call Notice No.1W 2020 21 invited through e Tender by the Executive Engineer Mechanical Division Bhubaneswar to execute the Hydro Mechanical Gate works under different Civil Divisions. W.P.(C)No.28521 2. The Petitioners state that they all are registered small scale industrial units and in pursuance to Tender Call Notice No.1W 2020 21 they participated in the tender process for Fabrication Supply Transportation and Erection of hydro mechanical gate works under Opposite Party No.5 i.e. the Executive Engineer Mechanical Division Bhubaneswar. The tender was available from 21st May 2020 to 30th May 2020 through e Tender with stipulation for opening of the technical bid on 1st June 2020. The Petitioners are the successful L 1 bidders for 24 nos. of works as per the tender notice. On 10th June 2020 Opposite Party No.5 recommended the case of the Petitioners for the work to the Superintending Engineer Opposite Party No.4) and thereafter the Superintending Engineer further recommended the same to the Chief EngineerNo.17602 2020 W.P.(C) No.17593 2020 and W.P.(C) No.17594 2020 individually which were disposed of by this Court with direction to Opposite Party No.5 to consider and dispose of the representation of the Petitioners by passing a reasoned and speaking order after affording reasonable opportunities of hearing to the Petitioners. Since the direction of this Court has not complied in time CONTC No.3706 2020 CONTC No.3702 2020 and CONTC No.3707 2020 have been preferred by the Petitioners. 3. In the meantime the Superintending Engineer and the Chief Engineer in their orders dated 10th September 2020and 15th September 2020intimated Opposite Party No.5 for rejection of the tender as the tender documents are found defective and the discrepancies regarding “Structure and W.P.(C)No.28521 Organization” “Plant and Equipment” and “Performance record” are noticed during re scrutinization. 4. Getting information of such letters of the Superintending Engineer and the Chief Engineer the Petitioners filed three writ petitions in W.P.(C) No.29174 2020 W.P.(C) No.29192 2020 and W.P.(C) No.29194 2020 individually challenging such instructions of the Superintending Engineer and the Chief Engineer as well as for a direction to Opposite Party No.5 to finalize the tender process in favour of the Petitioners. In W.P.(C) No.29174 2020 Opposite Party No.5 filed his counter stating that submission of details about “Structure and Organization” “List of Plant and Equipment” and “Performance record” are mandatory requirements as per Form B Form E and Annexure A of the Tender Call Notice and non submission of the same were noticed after re verification of the bids. 5. While the matter stood as thus the order under Annexure 1 cancelling the tender was issued by the Opposite Party No.5 Executive Engineer. 6. Mr. U.C. Mohanty learned counsel for the Petitioners contends that when the writ petitions filed by the Petitioners in W.P.(C) No.29174 2020 W.P.(C) and W.P.(C) No.29194 2020 praying for finalizing the tender are pending adjudication the order of cancellation passed by the Executive Engineer under Annexure 1 is erroneous and hit by the principles of lis pendens. His further contention is that when the Petitioners have been selected as successful bidders the unilateral action of the Opposite Parties in cancelling the tender without giving any W.P.(C)No.28521 opportunity of hearing to the Petitioners is illegal arbitrary and not sustainable in the eye of law. To substantiate his contention he cites two decisions of this Court in the case of Homogenomics Private Ltd. vs. State of Odisha and others reported in 2017(I) ILR CUT 31 and Sampad Samal vs. State of Odisha and others reported in 2017ILR CUT 262. 7. On the contrary Mr. Palit learned Additional Government Advocate for the State Opposite Parties submits that mere acceptance of the bid of the Petitioners by the Executive Engineer without approval of the higher authorities i.e. the Superintending Engineer and Chief Engineer does not create any right in their favour for execution of the work. He further submits that as per the Tender Call Notice the authority reserves the right to reject any order or all of the bids even without assigning any reason. Mr. Palit continues to submit that upon re verification of the bids at the level of Superintending Engineer and Chief Engineer since error was noticed in evaluation of bids the same needs to be rectified by taking a conscious decision in cancelling the tender process and thus no illegality is involved in the same. Further since no agreement has been executed with the Petitioners no right of the Petitioners can be said to have been violated by such cancellation. 8. Undoubtedly the selection of the Petitioners as L 1 bidders for 24 nos. of works as per the Tender Call Notice by the Executive Engineer has not been questioned by the Opposite Parties. But during re verification of the bid documents by the Opposite Party Nos.3 and 4 some defects and discrepancies were noticed resulting cancellation of the tender process. It is not the case of the parties that the tender W.P.(C)No.28521 was cancelled in order to grant the work in favour of any other person. It is also not the case of the parties that the tender was cancelled without any reason. What is to be seen is whether such cancellation of the tender violates any right accrued in favour of the Petitioners or such cancellation of the tender is so unreasonable or illegal that will not stand the test of law. 9. In the case of Jagdish Mandal vs. State of Orissa and others reported in14 SCC 517 the Hon’ble Supreme Court considering the scope of the Court to interfere in tender and contractual matters in exercise of powers of judicial review has held as follows: to prevent arbitrariness is a commercial “22. Judicial review of administrative action 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 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 if a procedural interfere even 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 review W.P.(C)No.28521 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 succor to thousands and millions and may increase the project cost manifold. Therefore a court before interfering in tender or contractual matters in exercise of power of judicial review should pose to itself the following 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. Cases blacklisting or imposition of penal consequences on a tenderer contractor or distribution of State largesse allotment of sites shops grant of licences dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.” 10. In the case of Homogenomics Private Ltd. relied on by the Petitioners the facts are quite different as in the said case the technical bid of the Petitioner in that case was rejected being disqualified and during pendency of the case Opposite Party No.3 was selected and issued with work order. This Court has observed W.P.(C)No.28521 On the basis of the admitted facts when the Opposite Party No.3 had no valid DCGI certificate at the time of opening of technical bid and price bid this Court is of the considered view that the contention raised that subsequent renewal made cannot validate the invalid contract. Thereby Opposite Party No.2 has acted in excess of its jurisdiction.” 11. Similarly in the case of Sampad Samalthe cancellation of the tender granted in favour of the Petitioner therein was on a mere technical ground i.e. for lapse of 90 days. However this Court held as follows: in clause 17 of “14. Applying the aforesaid well settled principles to the present context and taking into consideration the conditions stipulated document read with clause 10 of the terms and conditions of the tender paper and giving them their plain meaning as the authority concerned has passed the impugned order of cancellation without any proper and adequate ground rather as it is clear in an arbitrary manner because of pendency of frivolous petition the same cannot be sustained in the eye of 12. Therefore both the above cases as cited by the Petitioners do not lend any help to the Petitioners being distinguishable on facts. 13. Coming to examine the other contention of the Petitioners the doctrine of lis pendens as envisaged in Section 52 of the Transfer of Property Act denotes the operation of common law maxim pendent lite nihil innovetur. It is based on equity good conscience and justice because it will be impossible to bring an action or suit to a successful termination if changes are permitted to prevail. W.P.(C)No.28521 14. In the present case the facts are clear that the tender process was not finalized and no agreement of execution of work has been issued. The bid documents offered by the Petitioners has been accepted at the level of Executive Engineer which is subject to further approval by the Superintending Engineer and Chief Engineer and while undergoing such stage of approval at the higher level due to revelation of defects and discrepancies the tender was cancelled. Therefore there was no creation of right accrued in favour of the Petitioners to execute the work for which the Tender Call Notice was issued. Since no such right can be construed which can be said to have accrued in favour of the Petitioners the cancellation of the tender process in entirety in no way affects the Petitioners and thus nothing can be said to have changed by such cancellation. Since by mere acceptance of the bid documents on the part of the Executive Engineer would not create any right in favour of the Petitioners the cancellation of the tender also cannot be said to have attracted the doctrine of lis pendens. 15. The reasons as assigned by the Opposite Party Nos.3 and 4 in Annexures 6 and 7 regarding defects and discrepancies in the bid papers which is regarding non submission of the mandatory requirements as per the Tender Call Notice cannot be said as illegal or arbitrary by any stretch. The higher authorities have rectified the errors noticed in the evaluation process resulting cancellation of the tender. Since no other intention or mala fide purpose is found from the action of the Opposite Parties in cancelling the tender we do not find any merit in the submission of the Petitioners to interfere in the action of the Opposite Parties in cancelling the tender. W.P.(C)No.28521 16. In view of the discussions made above no merit is found to warrant interference in the action of the Opposite Parties in cancelling of the e Tender under Annexure 1 and as such we do not incline to interfere with the same. 17. Accordingly the writ petition is dismissed. There shall be no order as to costs. B.P. Routray Dr. S. Muralidhar Chief Justice 18th February 2021. B.K. Barik Secretary W.P.(C)No.28521 

Summary: The purpose of judicial review is to avoid arbitrariness, irrationality, lack of logic, prejudice and mala fide. The aim is to verify if choices or decisions have been made “legally” and not to evaluate if choices or decisions are sound. If the authority of judicial control is used on bids or contract awards, specific characteristics should be taken into consideration. The judgment was passed by The High Court of Orissa in the case of M/s. Ashirbad Industries &amp; Others Vs the State of Odisha and Ors. [W.P.(C) No. 2850 OF 2021] by Single Bench consisting of Hon’ble Shri Justice. B.P. Routray. Three petitioners have jointly filed the present writ petition challenging the cancellation of the Tender Call Notice invited through e-Tender by the Executive Engineer to execute the Hydro-Mechanical Gate works under different Civil Divisions. Learned Counsel for the Petitioners contends that when the writ petitions filed by the Petitioners praying for finalizing the tender are pending adjudication, the order of cancellation passed by the Executive Engineer under Annexure-1 is erroneous and hit by the principles of lis pendens. His further contention is that, when the Petitioners have been selected as successful bidders, the unilateral action of the Opposite Parties in cancelling the tender without giving any opportunities of hearing to the Petitioners is illegal, arbitrary and not sustainable in the eye of law. The Learned Counsel submits that mere acceptance of the bid of the Petitioners by the Executive Engineer without the approval of the higher authorities, i.e., the Superintending Engineer and Chief Engineer does not create any right in their favour for the execution of the work. He further submits that as per the Tender Call Notice, the authority reserves the right to reject any order or all of the bids even without assigning any reason. He continues to submit that upon re-verification of the bids at the level of Superintending Engineer and Chief Engineer since the error was noticed in the evaluation of bids, the same needs to be rectified by making a conscious decision in cancelling the tender process and thus no illegality is involved in the same. Further, since no agreement has been executed with the Petitioners, no right of the Petitioners can be said to have been violated by such cancellation. The court while further, clearing the contention of the petitioner noted that “the doctrine of lis pendens as envisaged in Section 52 of the Transfer of Property Act, denotes the operation of common-law maxim pendent lite nihil innovetur. It is based on equity, good conscience and justice because it will be impossible to bring an action or suit to a successful termination if changes are permitted to prevail.”