1974 (1) TMI 112 - SC - Indian Laws

Summary

Issues Involved:

1. Validity of Clause 7 of the tender terms and conditions.
2. Rejection of the highest tender without assigning reasons.
3. Application of Article 14 of the Constitution.
4. Contractual rights and judicial review.
5. Applicability of Legislative Diploma No. 1761.

Detailed Analysis:

1. Validity of Clause 7 of the tender terms and conditions:

The primary issue was whether Clause 7, which allowed the government to reject the highest tender without assigning any reason, was valid. The Court held that such a clause is not violative of Article 14 of the Constitution. The Court cited previous judgments, including *C. K. Achuthan v. The State of Kerala & Ors.*, *Trilochan Mishra, etc. v. State of Orissa & Ors.*, and *State of Orissa & Ors. v. Harinarayan Jaiswal & Ors.*, to substantiate that the government is not bound to accept the highest tender and can exercise discretion in selecting a tenderer. The Court emphasized that the government, like a private party, has the right to choose a contractor and is not obligated to accept the highest bid.

2. Rejection of the highest tender without assigning reasons:

Respondent No. 1 contended that the government was required to provide reasons for rejecting the highest tender. The Court reiterated that the government has the discretion to reject any tender without assigning reasons, as per Clause 7. This discretion is not arbitrary and does not contravene Article 14, as long as it is exercised in good faith and in the interest of the public.

3. Application of Article 14 of the Constitution:

The Court addressed the argument that rejecting the highest tender without reasons violated Article 14, which guarantees equality before the law. The Court found that the discretion granted to the government under Clause 7 does not amount to arbitrary action. The Court referenced *State of Orissa & Ors. v. Harinarayan Jaiswal & Ors.*, where it was established that the government's power to accept or reject bids is not unconstitutional and does not violate Article 14.

4. Contractual rights and judicial review:

The Court examined whether the rejection of the highest tender and the subsequent lease to the appellant could be reviewed under writ jurisdiction. It concluded that the invitation to tender and the subsequent acceptance or rejection of tenders are contractual matters. As such, any grievances arising from these processes should be addressed through contractual remedies, such as damages or specific performance, rather than through judicial review under Articles 226 and 227.

5. Applicability of Legislative Diploma No. 1761:

Respondent No. 1 argued that the lease should be governed by Article 9 of Legislative Diploma No. 1761. The Court noted that this argument was not raised before the Judicial Commissioner and that the tenders were not invited under this Legislative Diploma. The Court also clarified that the provisions of Article 9 pertain to auctions, not to the invitation of sealed tenders, and thus were not applicable in this case.

Conclusion:

The Court found that the Judicial Commissioner erred in setting aside the lease granted to the appellant without providing cogent reasons. The Court emphasized that the government's discretion in accepting or rejecting tenders, as outlined in Clause 7, is valid and does not violate constitutional principles. Consequently, the appeals were allowed, the judgment of the Judicial Commissioner was set aside, and the petitions under Article 226 filed by respondent No. 1 were dismissed. Each party was directed to bear its own costs.