HONOURABLE SRI JUSTICE P. NAVEEN RAO WRIT PETITION No.29948 OF 2014 Date: 07.10.2014 Between :
M/s. Sri Shiridi Sai Caterers at H.No.7-1-808, Nalla Bazar, Kingsway, Secunderabad, rep.by Its Proprietor, M.Mahesh s/o.M.Pentaiah.
… Petitioner and The State of Telangana rep.by its Principal Secretary to Government, Health, Medical and Family Welfare Department, Telangana Secretariat, Hyderabad and another.
… Respondents The Court made the following:
HONOURABLE SRI JUSTICE P. NAVEEN RAO WRIT PETITION No.29948 OF 2014
ORDER:
Petitioner was awarded contract to run Canteen in the premises of Government E.N.T. Hospital, Koti, Hyderabad, for a period of one year from 01.06.2013 to 31.05.2014. Since the tenders for awarding contract for subsequent period was not finalized, the petitioner was granted extension of contract for a limited period initially till 30.06.2014 and later on till 30.09.2014. Petitioner was informed that extension of contract shall be till the expiry of period mentioned therein or till the finalization of fresh tenders whichever is earlier. Petitioner was informed on 30.09.2014 that he would be ceased to be a contractor after 30.09.2014. On 01.10.2014 further orders are passed informing the petitioner that the contract ended on 30.09.2014 and his request for extension cannot be granted since tenders were already issued and are in the process of being finalized.
2. This writ petition is instituted praying to declare the termination of the contract of the petitioner for running the canteen in the premises of Govt. E.N.T Hospital, Koti, Hyderabad vide letter Rc.No.880/A1/ENT/2014 dated 30-09-2014 and consequential letter Rc.No.885/A1/ENT/2014 dated 01-10-2014 issued by the second Respondent as illegal, arbitrary, violation of the G.O.Ms.No.604 dated 15-12-1998 and set aside the same.
3. Thus the relief claimed by the petitioner is to grant renewal of contract for another year from the date of expiry of period of contract as agreed upon. In the matters concerning contracts, scope of judicial review is very limited.
4. In Tata Cellular v. Union of India
[1]
, Supreme Court listed out the points on which writ court can interfere in contractual matters.
“77. The duty of the court is to confine itself to the question of legality. Its concern should be:
1. Whether a decision-making authority exceeded its powers?
2. committed an error of law,
3. committed a breach of the rules of natural justice,
4. Reached a decision which no reasonable tribunal would have reached or,
5. abused its powers.
Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:
(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, “consider whether something has gone wrong of a nature and degree which requires its intervention”.
…… …….
81. Two other facets of irrationality may be mentioned.
(1) It is open to the court to review the decision-maker’s evaluation of the facts. The court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision-maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment, the Secretary of State referred to a number of factors which led him to the conclusion that a non-resident’s bar in a hotel was operated in such a way that the bar was not an incident of the hotel use for planning purposes, but constituted a separate use. The Divisional Court analysed the factors which led the Secretary of State to that conclusion and, having done so, set it aside. Donaldson, L.J. said that he could not see on what basis the Secretary of State had reached his conclusion.
(2) A decision would be regarded as unreasonable if it is impartial and unequal in its operation as between different classes. On this basis in R. v. Barnet London Borough Council, ex p Johnson the condition imposed by a local authority prohibiting participation by those affiliated with political parties at events to be held in the authority’s parks was struck down.
…… …….
94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
5. In Michigan Rubber (India) Limited Vs. State of Karnataka [2] and others , after reviewing the decisions on the principles of tender process and awarding of contracts, Supreme court culled out the principles governing the contracts. The principles that are culled out are enumerated in para 23 of the judgment:
“23. From the above decisions, the following principles emerge:
(a) The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts which in the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;
(b) fixation of a value of the tender is entirely within the purview of the executive and the courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by courts is very limited;
© in the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by courts is not warranted;
(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and
(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by court is very restrictive since no person can claim a fundamental right to carry on business with the Government.
6. As admitted by the petitioner, the contract to run the Canteen which was granted to him in the year 2013 was for a period of one year commencing from 01.06.2013. The period of contract as originally agreed upon has come to end on 31.05.2014. The extension was granted to him for further period of four months on account of delay in finalizing of tenders for awarding of fresh contract. Petitioner was aware of the temporary extension. The relationship between the petitioner and the respondents is governed by the contract and the terms of the contract stipulated period of contract as one year, which was already over. With eyes wide open petitioner agreed for one year contract.
7. There is no right vested in the petitioner to ask extension of contract. Granting extension would amount to directing the respondents to renew the contract to the petitioner as per his terms. Thus, the decision of respondents not to grant extension of contract is neither illegal nor irrational. It cannot be said, in the facts of the case that the competent authority exceeded his power, abused his power and committed breach of contract terms. His decision cannot be termed as arbitrary. It is also appropriate to note that fresh tenders were called and new contractor is identified.
8. Hence, there is no merit in the writ petition and writ petition is accordingly dismissed. No costs.
Miscellaneous petitions pending, if any, in this writ petition shall stand dismissed.
JUSTICE P.NAVEEN RAO Date: 07.10.2014 kkm Oval:
HON’BLE SRI JUSTICE P.NAVEEN RAO
Writ Petition No.29948 OF 2014 Date: 07-10-2014
kkm
[1] (1994) 6 SCC 651
[2] (2012) 8 SCC 216