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TMI Blog1992 (11) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... India to allot to the respondent the necessary stocks of damaged rich for which the tenders had been invited by the appellant, since the respondent was the highest bidder. The appellant invited tenders for sale of stocks of damaged foodgrains in accordance with the terms and conditions contained in the tender notice (Annexure A ). The tenders were required to be submitted upto 2.45 p.m. on 18.5.92; the tenders were to be opened on 18.5.92 at 3.00 p.m.; and offers were to remain open for acceptance upto and inclusive of 17.7.92. The respondent submitted its tender for a stock of damaged rice within the time specified, but the respondent s tender was conditional and the full amount of earnest money required by the terms was also not depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant would have received by acceptance of the highest tenders, the appellant was to receive the amount of ₹ 1 crore 10 lakhs by accepting the highest offers made during the negotiations in which all the tenderers, including the respondent, were given equal opportunity to participate. The respondent filed the above Writ Petition in the High Court challenging the appellant s refusal to accept the highest tender submitted by it for the stock of damaged rice claiming that the appellant having chosen to invite tenders, it could not thereafter dispose of the stocks of damaged foodgrains by subsequent negotiations rejecting the highest tenders on the ground that a higher bid was obtained by negotiations. This action of the appellant, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by inviting tenders would be lost. Shri Sen submitted that the decision not to accept any tender and to negotiate thereafter for obtaining a higher price than that quoted in the highest bid, cannot be taken on the whim and caprice of the concerned authority and can be only for cogent reasons indicated while taking the decision, or else, the decision would be arbitrary. On this basis, Shri Sen further submitted that in the present case, no cogent reasons were indicated for rejecting all the tenders and deciding to dispose of the commodity by negotiation with the tenderers for procuring a higher price. He also added that the mere fact that a higher price was obtained by negotiation would not justify the decision if it was not taken in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to adopt a procedure which is fairplay in action . Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of nonarbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely lo be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Service, 1985 A.C. 374 (H.L.) the House of Lords indicated the extent to which the legitimate expectation interfaces with exercise of discretionary power. The impugned action was upheld as reasonable, made on due consideration of all relevant factors including the legitimate expectation of the applicant, wherein the considerations of national security were found to outweigh that which otherwise would have been the reasonable expectation of the applicant. Lord Scarman pointed out that the controlling factor in determining whether the exercise of prerogative power is subject to judicial review is not its source but its subject-matter . Again in In re preston 1985 A.C. 835 (H.L.) it was stated by Lord Scarman that the principle of fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e highest tender would be a question of fact in each case. Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest. A procedure wherein resort is had to negotiations with the tenderers for obtaining a significantly higher bid during the period when the offers in the tenders remain open for acceptance and rejection of the tenders only in the event of a significant higher bid being obtained during negotiations would ordinarily satisfy this requirement. This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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