2017 (4) TMI 1624 - HC - Indian Laws

Irregularity in supplying of substandard items - seeking commanding the respondents not to interfere in the functioning of the petitioner as supplier of medicine - HELD THAT - In NATIONAL HIGHWAY AUTHORITY OF INDIA VERSUS GANGA ENTERPRISES ANR. 2003 (8) TMI 546 - SUPREME COURT the Hon ble Supreme Court cautioned the High Courts that while examining the contractual matters in a writ jurisdiction the Court is duty bound first to examine the issue of maintainability for the reason that contractual matters cannot be entertained in a routine manner. In the matter of policy decision and economic tests the scope of judicial review is very limited. Unless the decision is shown to be contrary to any statutory provision or the Constitution the Court would not interfere with an economic decision taken by the authorities of the State. The court cannot examine the relative merits of different economic policies and cannot strike down the same merely on ground that another policy would have been fairer and better. In a democracy it is the prerogative of each elected Government to follow its own policy - Normally there is always a presumption that the State action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. The burden is a heavy one and it has to be discharged to the satisfaction of the court by proper and adequate material. The court cannot lightly assume that the action taken by the Government is unreasonable or against public interest because there are large number of considerations which necessarily weigh with the Government in taking an action. In Hira Nath Mishra Ors. Vs. The Principal Rajendra Medical College Ranchi Anr. 1973 (4) TMI 115 - SUPREME COURT the Hon ble Supreme Court held that principles of natural justice are not inflexible and may differ in different circumstances. Rules of natural justice cannot remain the same applying to all conditions. It is clear that when there is a failure on the part of the contractor to comply with the express terms of the contract and/or to commit breach of the said terms resulting into failure to commence/execute the work or supply the items as per specification as stipulated in the agreement or giving the performance that does not meet the statutory requirements of the contract or the action of the petitioner is reported against the provisions and against the interest of the State the Department has a right to regulate its business through various directions to State Agencies in which the petitioner has no right to interfere. The petition is dismissed.

Summary

Issues Involved:
1. Legality of the rejection of the petitioner’s tender due to pending CBI case.
2. Validity of the impugned order dated 21.08.2015.
3. Applicability of principles of natural justice.
4. Maintainability of writ jurisdiction in contractual matters.

Detailed Analysis:

Legality of the Rejection of the Petitioner’s Tender Due to Pending CBI Case:
The petitioner’s firm, a supplier of medicine, faced rejection of its tender by the Central Purchase Committee due to a pending CBI case. The Committee’s decision was based on the terms and conditions of the tender notice, which required disclosure of any pending criminal cases against the company. The Court previously upheld this rejection, finding no illegality in the exclusion of the petitioner’s firm from the tender process.

Validity of the Impugned Order Dated 21.08.2015:
The impugned order directed authorities not to purchase medicine from firms against whom a CBI charge sheet had been filed. The Court observed that this directive was consistent with the Government Order and the terms of the tender policy, which required firms to declare the absence of pending court cases, including CBI cases. The Court found that the order did not curtail the petitioner’s rights but was a regulatory measure within the State’s authority.

Applicability of Principles of Natural Justice:
The petitioner argued that they were not given an opportunity of hearing before the impugned order was passed. The Court emphasized that principles of natural justice are flexible and depend on the facts and circumstances of each case. It was noted that the order was a regulatory directive and did not necessitate a prior hearing. The Court cited precedents where the principles of natural justice were not rigidly applied, especially in cases involving widespread irregularities or public interest.

Maintainability of Writ Jurisdiction in Contractual Matters:
The Court reiterated that contractual disputes, particularly those involving non-statutory contracts, are generally not maintainable under writ jurisdiction. The Supreme Court has consistently held that writ petitions under Article 226 of the Constitution are not intended to facilitate avoidance of contractual obligations. The Court cited several judgments affirming that disputes arising out of contractual obligations should be resolved through civil courts or arbitration, rather than through writ petitions. The Court found that the petitioner’s case, involving a breach of tender conditions and contractual terms, did not warrant interference under writ jurisdiction.

Conclusion:
The Court dismissed the writ petition, holding that the rejection of the petitioner’s tender due to the pending CBI case was lawful and consistent with the tender policy. The impugned order was a valid regulatory measure, and the principles of natural justice were not violated. The Court also emphasized that contractual disputes should not be resolved through writ jurisdiction, thereby upholding the regulatory actions of the State and dismissing the petition with costs.