2005 (4) TMI 579 - SC - Indian Laws

Whether the High Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution while undertaking judicial review of an administrative action relating to award of a contract? Whether the High Court erred in setting aside the order of the CONCOR awarding the contract to the appellant?

Summary

Issues Involved:
1. Eligibility of the appellant to participate in the tender process.
2. Compliance with tender conditions regarding the license to act as surveyor/loss assessor.
3. Judicial review of administrative decisions in awarding contracts.

Detailed Analysis:

1. Eligibility of the appellant to participate in the tender process:
The first respondent challenged the appellant's eligibility on the grounds that it did not possess a license to act as a surveyor/loss assessor under the Insurance Act, 1938. The High Court initially dismissed this challenge, suggesting that the appellant might have obtained the requisite license. However, upon a subsequent writ petition, the High Court concluded that the appellant did not meet the prequalification norm as it did not have a license in its name, thus quashing the contract awarded to the appellant.

2. Compliance with tender conditions regarding the license to act as surveyor/loss assessor:
The tender floated by CONCOR required bidders to submit a copy of the license to act as a surveyor/loss assessor under the Insurance Act, 1938. The appellant submitted a license in the name of Capt. Percy Meher Master, who was the Chairman of the appellant company. The Tender Evaluation Committee (TEC) considered this submission and, given the appellant's established reputation and the fact that the major work under the contract did not require such a license, decided to relax the tender condition. The High Court, however, held that this relaxation was arbitrary and violated the equity clause of the Constitution.

3. Judicial review of administrative decisions in awarding contracts:
The Supreme Court emphasized the principles of judicial review, noting that courts should not interfere with administrative decisions unless there is evidence of arbitrariness, bias, or mala fides. The Court referenced several precedents, including Tata Cellular v. Union of India and Sterling Computers Ltd. v. M/s M.N. Publications Ltd., to highlight that the scope of judicial review is limited to examining the decision-making process, not the merits of the decision itself. The Court observed that CONCOR had the right to relax tender conditions in the overall interest of the trade, and such relaxation was justified in this case given the commercial considerations and the nature of the work involved.

Conclusion:
The Supreme Court concluded that the High Court erred in quashing the contract awarded to the appellant. The TEC's decision to relax the tender condition regarding the license was within its rights and justified by the commercial interests of CONCOR. The appeal was allowed, and the High Court's judgment was set aside, reinstating the contract awarded to the appellant.