# Dynamic Infracon Pvt. Ltd v. State of U.P. & Ors

- **Citation:** (2024) 9 ILRA 855
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-09-06
- **Case number:** Writ - C No. 22963 of 2024
- **Bench:** Shekhar B. Saraf, Manjive Shukla
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/dynamic-infracon-pvt-ltd-v-state-of-u-p-ors-52524
- **Pages:** 14

## Headnote

A. Civil Law - Constitution of India,1950Article 226-The cases involved challenges
to a tender process for the supply of Sal
wood sleepers and edgings for the Maha
Kumbh
Mela
2025-a
mandatory
requirement that bidders or the lead
member of a consortium hold at least
51% of 1,000 cubic meters of Sal wood
stock-physical inspection of the stock as
per clause 6(g) of the e-bid document was
not
conducted-the
alleged
violations
rendered the selection process arbitrary
and biased-Held, the court found no
conclusive evidence that the lead member
of the winning consortium failed to meet
stock requirements-the decision-making
856 INDIAN LAW REPORTS ALLAHABAD SERIES
process
was
not
found
arbitrary
or
discriminatory-the
requirement
for
physical inspection was discretionary, as
stated in the tender document, and
uniformly waived for all bidders-the court
emphasized restraint in interfering with
tender
processes
unless
actions
are
proven arbitrary, discriminatory or mala
fide.Hence, both petitions were dismissed
as the court upheld the tender process's
validity.(Para 1 to 21)

The writ petitions are dismissed. (E-6)

List of Cases cited:

## Text

_Characters 0–39,860 of 45,703. This is a partial read: ask again with offset=39860 for what follows._

9 All. Dynamic Infracon Pvt. Ltd. Vs. State of U.P. & Ors.
855
order for forfeiture of gratuity payable
to
the
respondent
employee
was
premature and could not have been
taken until the respondent employee was
convicted by a Court of competent
jurisdiction for the act constituting an
offence involving moral turpitude as per
Section 4(6)(b)(ii) of the Act.

97. Considering the principles
laid down by the Hon'ble Supreme
Court, as well as the consistent view
taken
by
various
High
Courts
including this Court, the submission
advanced
by
the
petitioner
Bank
cannot be accepted.

98.
For
all
the
aforesaid
reasons, this Court does not any merit in
the instant petition and the same is,
hereby, held to be misconceived and
unnecessary. The petitioner Bank has
not been able to make out a case which
warrants the interference of this Court
under
the
extraordinary
writ
jurisdiction.

99. In view of the foregoing
discussions, this Court finds no infirmity
in the impugned Order dated 7th April,
2022 passed by the learned Appellate
Authority
under
the
Payment
of
Gratuity Act, 1972 in Appeal No.
36(09)/2021 P.A.DYC and subsequent
Notice dated 26th April, 2022 issued by
the respondent no.2 bearing no. ALCI/36(88)2018, accordingly, the same are
upheld.

100.
In
light
of
the
aforementioned observations, the instant
writ petition is accordingly dismissed
along with pending applications, if any.

101. The order be uploaded on
the website forthwith."

21. Considering the entire facts and
circumstances of the case, no interference
is required against the impugned orders.

22. The writ petitions are dismissed
and interim orders granted on 18.7.2024 are
vacated.

23. No order as to cost.
----------
(2024) 9 ILRA 855
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 06.09.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.
THE HON'BLE MANJIVE SHUKLA, J.

Writ - C No. 22963 of 2024
With
Writ - C No. 20023 of 2024

Dynamic Infracon Pvt. Ltd. ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Shashi Nandan (Sr. Adv.), Sri Udayan
Nandan

Counsel for the Respondents:
Sri Manish Goyal (Addl. A.G.), Ms. Akansha
Sharma (S.C.), Sri Navin Sinha (Sr. Adv.),
Sri Nikhil Agarwal, Sri Manmohan Singh, Sri
R.P. Singh

A. Civil Law - Constitution of India,1950Article 226-The cases involved challenges
to a tender process for the supply of Sal
wood sleepers and edgings for the Maha
Kumbh
Mela
2025-a
mandatory
requirement that bidders or the lead
member of a consortium hold at least
51% of 1,000 cubic meters of Sal wood
stock-physical inspection of the stock as
per clause 6(g) of the e-bid document was
not
conducted-the
alleged
violations
rendered the selection process arbitrary
and biased-Held, the court found no
conclusive evidence that the lead member
of the winning consortium failed to meet
stock requirements-the decision-making
856 INDIAN LAW REPORTS ALLAHABAD SERIES
process
was
not
found
arbitrary
or
discriminatory-the
requirement
for
physical inspection was discretionary, as
stated in the tender document, and
uniformly waived for all bidders-the court
emphasized restraint in interfering with
tender
processes
unless
actions
are
proven arbitrary, discriminatory or mala
fide.Hence, both petitions were dismissed
as the court upheld the tender process's
validity.(Para 1 to 21)

The writ petitions are dismissed. (E-6)

List of Cases cited:

1. B.S.N Joshi & Sons Ltd. Vs. Nair Coal Services
Ltd. (2006) 11 SCC 548

2. W.B. SEB Vs Patel Engg. Co. Ltd.(2001) 2
SCC 451

3. Tata Motors Ltd. Vs Brihan Mumbai Electric
Supply & Trans. Undertaking (BESY1⁄2 (2023)
SCC Online SC 671

4. Balaji Ventures (P) Ltd. Vs Mah. St. power
Generation Co. Ltd. (2022) SCC Online SC 1967
Directorate of Edu. Vs Educomp Datamatics Ltd.
(2004) 4 SCC 19

5. Jai Hanuman Cons. Jagdish Saran Vs St. of
U.P. (2023) SCC Online All 2033

6. Tata Cellular Vs U.O.I. (1994) 6 SCC 651

7. Central Coalfields Ltd Vs SLL- SML (joint
Venture Consortium) (2016) 8 SCC 622

8. Afcons Infra. Ltd. Vs Nagpur Metro Rail Corps
Ltd.(2016) 16 SCC 818

9. Silppi Cons. Contractors Vs U.O.I. (2020) 16
SCC 489

(Delivered by Hon'ble Shekhar B. Saraf, J.)

1. The instant connected petitions
have been filed under Article 226 of the
Constitution of India by the Dynamic
Infracon Pvt. Ltd. (Petitioner in Writ-C No.
22963 of 2024) and M/s Bengal Wood &
Allied Products (Petitioner in Writ-C No.
20023 of 2024) seeking quashing of the
entire tender process held in pursuance of
e-bid tender document dated May 28, 2024
issued by Superintending Engineer, PWD,
Prayagraj Circle, Prayagraj (hereinafter
referred to as respondent No.2). The
Petitioners have further prayed for some
other numerous reliefs in accordance with
their satisfaction through their respective
petitions.
 FACTS

2. Factual matrix of the present case is
delineated below:

 (a) The petitioner is a Private
Limited Company (in Writ-C No. 22963 of
2024) & Sole Proprietorship Firm (in WritC No. 20023 of 2024) engaged in the
business of supply of Sal wood sleepers
and edgings and have previous experience
in the supply of said products at the earlier
Kumbh Mela held in Prayagraj, Uttar
Pradesh.

 (b) On May 28, 2024, the Sal
Sleeper Purchase Committee through the
Office of the Chief Engineer, PWD,
Prayagraj Zone, Prayagraj issued an e-bid
document wherein it invited applications
from interested Government institutions/
corporations/firms/contractors/business
entities either individually or as joint
venture/consortium for supply of sal wood
sleeper and edgings for construction of
Pontoon bridges in the Maha Kumbh Mela,
2025 that was to be held in the city of
Prayagraj, Uttar Pradesh.

 (c) As per the bid document, the
process of selection consists of two stages
namely, technical bid and financial bid.
9 All. Dynamic Infracon Pvt. Ltd. Vs. State of U.P. & Ors.
857
The financial bids would be open at a
subsequent stage for only those bidders,
who were successful in the technical bid.

 (d) The date of commencement of
the bidding process was fixed as May 27,
2024 and the last date of submission of the
bidding documents was fixed as June 11,
2024 and thereafter, the technical bids were
to be opened on the same day itself.
However, on May 27, 2024, the Competent
Authority issued a corrigendum, whereby
the last date for the opening of the technical
bid was extended to June 12, 2024.

 (e) The petitioner in Writ-C No.
22963 of 2024 submitted its technical as
well as financial bid at the rate of
Rs.2,26,900 per cubic meter for the supply
of Sal wood sleeper and edgings on June 12,
2024 and was found eligible in the technical bid.
Out of total 12 bidders who submitted their
technical bids, 11 bidders (including petitioner)
were found to be qualified for the financial bid
which was opened on June 15, 2024 wherein the
contract was granted in favor of 5 bidders at the
rate of Rs.1,58,000/- per cubic meter who were
designated as L-1 to L-5 because L-2 to L-5
agreed to supply the required product at the same
rate quoted by the L-1 bidder (a consortium of 3
entities namely Dhoramnath Traders, Shraddha
Timber Stores and Vasant Timber Mart) that is at
the rate of Rs.1,58,000/-. The Petitioner was
placed at L-10 in the bidding process.

 (f) On June 28, 2024, after the
completion of the bidding process, the
Letter of Award ('LoA') was granted in
favor of 5 bidders who were placed at L-1
to L-5 in the financial bids to supply Sal
wood sleepers and edgings at Maha Kumbh
Mela, 2025.

 (g) Therefore, the petitioner being
aggrieved by the conferring of LoA to the
L-1 to L-5 without allegedly following
mandatory condition of the e-bid document
dated May 28, 2024 has approached this
Court seeking the aforementioned reliefs
through the present Writ Petitions.

CONTENTIONS
OF
THE
PETITIONER

3. Sri Shashi Nandan, learned
senior counsel appearing on behalf of the
petitioner
has
made
the
following
submissions:

 (i) According to clause 5(d) and
5(e) of the e-bid document issued by the
respondent No. 2, the bidder must have at
least 1000 cubic meters of Sal wood/Sal
sleepers/Sal edgings at the time of bidding
and in the case of a consortium, the lead
member of the consortium must have 51%
of the said quantity.

 (ii) Dhoramnath Traders, the
respondent No. 6, who is the lead member
of the L-1 consortium gave an undertaking
that it has more than 1000 cubic meters of
Sal wood edgings available with it.
However, a report dated June 24, 2024 of
the Assistant Range Officer, Raipur,
Chhattisgarh shows that the total stock
available with the respondent No. 6 was
only 386.878 cubic meters.

 (iii) A letter dated July 10, 2024
was issued by the Range Officer, Forest
Range, Raipur, Chhattisgarh that a further
inspection for proper verification of the
stock is needed to be carried out and on
July 31, 2024, in pursuance of the same, the
Principal Chief Conservator of Forest
passed an order for the constitution of a
committee headed by the Divisional Forest
Officer, Raipur Chhattisgarh to conduct an
inquiry into the matter and submit its report
858 INDIAN LAW REPORTS ALLAHABAD SERIES
within 7 days from the date of the
constitution of the committee. However,
the
inquiry
regarding
stock
of
the
respondent No. 6 is yet to be completed and
in spite of this fact, the contract has been
awarded in favor of the respondent Nos. 6
to 21.

 (iv) The lead member of L-1
consortium was not qualified to participate
in the bidding because it did not possess the
required 51% of 1000 cubic meters of Sal
wood edgings at the time of bidding as per
the condition of the e-bid document.

 (v) According to clause 6(g) of
the
e-bid
document,
the
appropriate
committee had to carry out a physical
inspection of the stock of the bidders at the
time of opening of the technical bid.
However, no physical inspection was
carried out by the committee either before,
during or after opening of the technical bid
and the quality and quantity of stock of the
bidders was never inspected or verified.

 (vi) Clause 6(g) of the bid
document is an essential and mandatory
condition which could not have been
ignored by the concerned committee and
without following the said condition, no
contract could have been granted in favor
of the respondents.

 (vii) The petitioner had written
two letters dated June 22, 2024 and June
24,
2024
asking
for
the
physical
verification of the stock. However, no reply
was given to the said letters.

 (x) Clauses 5(d), 5(e) and 6(g) of
the
e-bid
document
were
essential
conditions dealing with the eligibility of the
bidders and they had to be meticulously
followed.
 (xi) The objection raised by the
respondents with regard to the eligibility of
the petitioner that it does not have the
requisite qualification for succeeding in the
e-bid process is totally misconceived as it is
clear from the undertaking of the petitioner
that at the time of bidding, the petitioner
had a stock of 1,425.894 cubic meters of
the Sal wood.

 (xii) To buttress his arguments,
counsel for the petitioner has relied upon
the judgments of the Supreme Court in
cases of B.S.N. Joshi & Sons Ltd. v. Nair
Coal Services Ltd. reported in (2006) 11
SCC 548 and W.B. SEB v. Patel Engg. Co.
Ltd. reported in (2001) 2 SCC 451.

CONTENTIONS
OF
THE
RESPONDENTS

4. Sri Manish Goyal, learned
Additional Advocate General and Sri Navin
Sinha, learned Senior Advocate appearing
for the State and respondent Nos. 6 to18
respectively have made the following
submissions:

 (i) According to clause 5(d) and
clause 5(e) of the e-bid document the
prospective bidder had to have at least a
stock of 1000 cubic meters of Sal
Wood/Sal sleepers/Sal edgings at the time
of bidding and in case of a consortium the
lead member should have at least 51% of
the Sal Wood/Sal sleepers/Sal edgings. The
cumulative requirement of 1000 cubic
meters of the stock was in respect of the
total stocks of all the members of the
consortium.

 (ii)
Substantiating
the
aforementioned arguments, counsel for the
respondents placed reliance on the record
dated June 7, 2024 which shows that the
9 All. Dynamic Infracon Pvt. Ltd. Vs. State of U.P. & Ors.
859
total stock available with the respondent
No. 6 is 1,131.97 cubic meters which
consists of 913.609 cubic meters of Sal
wood logs and 218.361 cubic meters of Sal
wood edgings and the said record had been
duly certified by the Assistant Forest Range
Officer, Raipur, Chattisgarh. Hence, the
respondent No. 6 (lead member of the
consortium)
fulfilled
the
criteria
of
minimum 510 cubic meters which is
equivalent to 51% of the total requirement
of 1000 cubic meters at the time of bidding
as per clause 5(d) and clause 5(e).

 (iii) The inquiry report, certifying
the stock as on June 24, 2024 was an ex-parte
inspection and ex-parte report, pursuant to
which a show cause notice dated June 25,
2024 was issued. Consequently, the Range
Officer after duly verifying the stocks, the
registers maintained as prescribed, purchases
during the period as well as the sales,
subsequently came to the conclusion that the
stock of month of May as certified by the
Assistant Range Officer on June 7, 2024 was
correct and there was no discrepancy in the
certificate issued by the Assistant Range
Officer.

 (iv) The petitioner had not
approached this court with clean hands as it
itself is not eligible to participate in the
tender proceedings in view of the clause
5(d) of the qualification criteria for eligible
bidders, which envisaged at least 1000
cubic meters of stock of Sal Wood at the
time of bidding but as per the registration
certificate dated January 4, 2024, the
licensed capacity has been specified as 500
cubic meters only for the petitioner which
had been issued by the Divisional Forest
Officer, Raipur.

 (v) The rate of Sal Wood quoted
by the petitioner was at Rs.2,26,900/- per
cubic meter as against the rate quoted by L1 which was Rs.1,58,000/- per cubic meter.

 (vi) The condition of physical
inspection of the stock stipulated in clause
6(g) of the e-bid document was only an
auxiliary/ancillary/non-mandatory
condition of the technical bidding process.
As evident from a conjoint reading of
clauses 6(g) and 6(h) of the said e-bid
document particularly the contents of
clause 6(h) that the physical inspection by
the
purchase
committee
or
its
representative was subject to if "purchase
committee requires", it can be inferred that
there was a discretion which was given to
the purchase committee for the requirement
of physical inspection.

 (vii) The further reading of part 2
relating to financial bid would make it
absolutely clear that the requirement of
physical inspection is not a condition
precedent for opening of the financial bids.
The bidders were only required to furnish
details as per the tender document.

 (viii) A conjoint reading of
clauses 6(g), 6(h) and 6(i) would clearly
establish that the condition of physical
inspection of the stock of Sal round logs
was only an auxiliary and ancillary
condition and not a mandatory condition
and was left to the discretion of the
Purchase
Committee
to
conduct
the
physical inspection.

 (ix) In the e-bid document it is
stated that the "Purchase Committee" is the
only authority created for the purposes of
conducting the entire tendering process and
there is no other authority constituted by
the order of the Principal Secretary, PWD .
As the Purchase Committee has uniformly
dispensed with the requirement of carrying
860 INDIAN LAW REPORTS ALLAHABAD SERIES
out physical inspection in respect of all the
bidders, it cannot be said that it had not
fulfilled the requirements of various clauses
of the technical as well as the financial bid.
Hence, there was no arbitrariness on the
part of the State.

 (x) The Sal sleeper purchase
committee had been given the exhaustive
powers under the bid document to facilitate
the entire tendering process including the
firm right to change the terms and
condition
in
the
Request
for
Proposal(RFP).

 (xi) To buttress the arguments,
counsel for the respondents have placed
reliance upon umpteen judgments of the
Apex Court such as Tata Motors Ltd. v.
Brihan Mumbai Electric Supply &
Transport Undertaking (BEST) reported
in 2023 SCC OnLine SC 671 ; Balaji
Ventures (P) Ltd. v. Maharashtra State
Power Generation Co. Ltd. reported in
2022 SCC OnLine SC 1967; Directorate
of Education v. Educomp Datamatics
Ltd. reported in (2004) 4 SCC 19; and
the judgment of Allahabad High Court
in Jai Hanuman Construction Jagdish
Saran v. State of U.P. reported in 2023
SCC OnLine All 2033;

ANALYSIS
AND
CONCLUSION

5. We have heard the counsel
appearing for the parties and perused the
material on record.

6. Before carrying out analysis, we
are delineating the relevant clause of the ebid document herein below:

 "5. Qualification Criterion for
Eligible Bidders
 (d). The Bidder must have stock
of at least 1000 (One Thousand) cubic
meter of Sal wood / Sal Sleepers / Sal
Edgings at the time of bidding. The Bidder
shall have to provide the documentary
evidence of invoice and GST payment. The
source of timber has to be legal for which
the Bidder will have to produce the
relevant document to the Sal Sleeper
Purchase Committee. The Bidder will have
to produce undertaking/Affidavit about the
stock.

 (e). The Bidder can be a single
entity or a consortium of not more than five
member entities, where the Lead Member
shall meet at least 51% requirement of the
entire qualification criterion mentioned in
this RFP. The nomination(s) by all other
members of the Consortium / JV shall be
supported by a Power of Attorney, as per
the format at Appendix-XI, signed by all
such other members. Other Member(s)
shall meet at least 10% requirement of all
the qualification criteria mentioned in this
RFP and the Consortium / JV as a whole
shall cumulatively / collectively fulfill the
100% requirement of the said qualification
criteria.

 6. Submission of Bids

 (g) Technical bids upon opening
will be evaluated and all documents/details
furnished by the bidder will be scrutinized.
The Bid Evaluation Committee or any of its
representative will carry out physical
inspection of stock of Sal round logs. The
technical bids will be evaluated on the
basis of scrutiny of submitted documents
and physical inspection of the stock of the
bidders.

 (h) Only those bidders whose
technical bids upon opening are found in
9 All. Dynamic Infracon Pvt. Ltd. Vs. State of U.P. & Ors.
861
order with regard to correct documentation
shall be subjected to physical inspection by
the
Purchase
Committee
or
its
representative, if Purchase Committee
requires."

7. The argument raised by Sri
Shashi Nandan, Senior Advocate appearing
on behalf of the petitioner stands on two
foundational pillars. Firstly, his argument is
that the applicants were required to have
1000 cubic meters of stock (Sal wood/Sal
sleepers/Sal edgings), if the applicant was
an
individual,
and
in
the
case
of
consortium, atleast 51 % of the 1000 cubic
meters of stock should have been possessed
by the lead member. The second limb of his
argument is that at the time of opening of
the technical bid, physical inspection of
stock was required to be carried out by the
Bid Evaluation Committee as per clause
6(g) of the e-bid document. Once the said
physical inspection of stock was carried out
as per clause 6(g), the Bid Evaluation
Committee was to look into the technical
bid on the basis of scrutiny of documents
and physical inspection of the stock of the
bidders. Sri Shashi Nandan has relied on
the report dated June 24, 2024 of the
Assistant
Range
Officer,
Raipur,
Chattisgarh to indicate that the concerned
respondent who has been chosen as L1 was
not an eligible bidder as per clause 5(d). In
fact, he submits that the stock maintained
by the respondent No. 6 (Dhoramnath
traders) is only 386.878 cubic meters as per
the said report. Secondly, he has submitted
that the petitioner had written two letters
dated June 22, 2024 and June 24, 2024 to
the State authorities requesting them to
carry out a physical inspection of the stock
as per clause 6(g) but the same was never
done in contravention of the said clause of
the tender document. He submitted that this
was a mandatory requirement that had not
been fulfilled and accordingly, the entire
process that has been initiated and carried
out by the State authorities is arbitrary,
capricious, whimsical and without any
basis in law.

8. Per contra, Sri Manish Goyal,
learned
Additional
Advocate
General
appearing on behalf of the State and Sri
Navin Sinha, learned Senior Advocate
appearing on behalf of the respondent Nos.
6 to 18 have debunked the entire argument
made by the petitioner submitting that the
petitioner is only trying to create a cloud
over the entire matter without bringing on
record any factual data that could indicate
that the State authorities have acted in
contravention of the terms and conditions
in tender document. Sri Navin Sinha has
placed on record a report dated June 7,
2024 which was duly certified by the
Assistant Forest Range Officer, Raipur,
Chattisgarh and also subsequently affirmed
by Range officer, Forest division, Raipur
vide letter dated July 4, 2024 showing that
the total stock with the lead member of L-1
namely Dhoramnath Traders was 1,131.97
cubic meters consisting of 913.609 cubic
meters of Sal Wood logs and 218.361 cubic
meters of Sal wood edgings.

9. With regard to the objection
raised by the senior counsel appearing on
behalf of the petitioner that the inspection
was not carried out as per clause 6(g), it is
to be noted that the Purchase Committee
(Bid Evaluation Committee) had uniformly
waived off the requirement of carrying out
the physical inspection in respect of all the
bidders and not for some of the applicants.
Ergo, no case has been made out regarding
any arbitrary or malafide action on the part
of the State authorities. The authorities,
upon checking the documents submitted by
the applicants and using their discretionary
862 INDIAN LAW REPORTS ALLAHABAD SERIES
power under clause 6(h) of the e-bid
document did not carry out inspection of
any of the applicants. In fact, vide letters
dated June 19, 2024 and June 22, 2024 they
had also written to the petitioner to bring
down the rate to the rate quoted by the L-1
that is Rs.1,58,000/- per cubic meter.

10. Counsel appearing on behalf of
the State submitted that the private
respondents/applicants have brought down
their rates to Rs.1,58,000/- per cubic meter
as per the demand of the State authorities
and in light of the terms and conditions, the
allocation was made to all the applicants
who have brought down their rate to
Rs.1,58,000/-. They further submitted that
there was no arbitrariness as the documents
submitted by the applicants were found to
be in order, and therefore, the Committee
did not carry out any inspection.

11. Before concluding on the issue
at hand, one may examine the law laid
down by the Apex Court on the issue of
interference by writ courts in tender
matters. The Supreme Court in the case of
Directorate of Education v. Educomp
Datamatics Ltd. reported in (2004) 4 SCC
19, reiterating the view contemplated in
Tata Cellular v. Union of India reported
in (1994) 6 SCC 651 has espoused on the
scope of judicial review in terms of tender
prescribing eligibility criteria and held that
the interference by the writ courts is open
only when the action of the State authorites
is arbitrary, discriminatory or biased but
not merely because the court feels that
some other term would have been more
preferable. Relevant paragraphs of the
judgment are quoted herein below:

 "9. It is well settled now that the
courts can scrutinise the award of the
contracts by the Government or its
agencies in exercise of their powers of
judicial review to prevent arbitrariness or
favouritism. However, there are inherent
limitations in the exercise of the power of
judicial review in such matters. The point
as to the extent of judicial review
permissible in contractual matters while
inviting bids by issuing tenders has been
examined in depth by this Court in Tata
Cellular v. Union of India [(1994) 6 SCC
651]. After examining the entire case-law
the
following
principles
have
been
deduced:

 "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
9 All. Dynamic Infracon Pvt. Ltd. Vs. State of U.P. & Ors.
863
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."

(emphasis supplied)

***
 13. Directorate of Education,
Government of NCT of Delhi had invited
open tender with prescribed eligibility
criteria in general terms and conditions
under tender document for leasing of
supply, installation and commissioning of
computer
systems,
peripherals
and
provision of computer education services in
various
government/government-aided
senior secondary, secondary and middle
schools
under
the
Directorate
of
Education, Delhi. In the year 2002-03, 748
schools were to be covered. Since the
expenditure involved per annum was to the
tune of Rs. 100 crores, the competent
authority took a decision after consulting
the Technical Advisory Committee for
finalisation of the terms and conditions of
the tender documents providing therein that
tenders be invited from firms having a
turnover of more than Rs. 20 crores over
the last three years. The hardware cost
itself was to be Rs. 40-45 crores. The
Government introduced the criterion of
turnover of Rs. 20 crores to enable the
companies with real competence having
financial
stability
and
capacity
to
participate in the tender, particularly in
view of the past experience. We do not
agree with the view taken by the High
Court that the term providing a turnover of
at least Rs. 20 crores did not have a nexus
with either the increase in the number of
schools or the quality of education to be
provided. Because of the increase in the
number of schools the hardware cost itself
went up to Rs. 40-50 crores. The total cost
of the project was more than Rs. 100
crores. A company having a turnover of Rs.
2 crores may not have the financial
viability to implement such a project. As a
matter of policy the Government took a
conscious decision to deal with one firm
having financial capacity to take up such a
big project instead of dealing with multiple
small companies which is a relevant
consideration while awarding such a big
project. Moreover, it was for the authority
to set the terms of the tender. The courts
would not interfere with the terms of the
tender notice unless it was shown to be
either arbitrary or discriminatory or
actuated by malice. While exercising the
power of judicial review of the terms of the
tender notice the court cannot say that the
terms of the earlier tender notice would
serve the purpose sought to be achieved
better than the terms of tender notice under
consideration and order change in them,
unless it is of the opinion that the terms
were either arbitrary or discriminatory or
actuated by malice. The provision of the
terms inviting tenders from firms having a
turnover of more than Rs. 20 crores has not
been shown to be either arbitrary or
discriminatory or actuated by malice."

12. The Supreme Court in the case
of Central Coalfields Ltd. v. SLL-SML
(Joint Venture Consortium) reported in
(2016) 8 SCC 622 has held that the issue of
acceptance or rejection of a bid or a bidder
should be looked at not only from the point
864 INDIAN LAW REPORTS ALLAHABAD SERIES
of view of the unsuccessful party but also
from the point of view of the employer.
The terms of Notice Inviting Tender (NIT)
can not be ignored as being redundant or
superfluous. Relevant paragraphs of the
judgment are delineated below:

 "47. The result of this discussion
is that the issue of the acceptance or
rejection of a bid or a bidder should be
looked at not only from the point of view of
the unsuccessful party but also from the
point of view of the employer. As held
in Ramana
Dayaram
Shetty [Ramana
Dayaram Shetty v. International Airport
Authority of India, (1979) 3 SCC 489] the
terms of NIT cannot be ignored as being
redundant or superfluous. They must be
given a meaning and the necessary
significance.
As
pointed
out
in Tata
Cellular [Tata Cellular v. Union of India,
(1994) 6 SCC 651] there must be judicial
restraint in interfering with administrative
action. Ordinarily, the soundness of the
decision taken by the employer ought not to
be questioned but the decision-making
process can certainly be subject to judicial
review. The soundness of the decision may
be questioned if it is irrational or malafide
or intended to favour someone or a
decision "that no responsible authority
acting reasonably and in accordance with
relevant law could have reached" as held
in Jagdish
Mandal [Jagdish
Mandal v. State of Orissa, (2007) 14 SCC
517]
followed
in Michigan
Rubber [Michigan
Rubber
(India)
Ltd. v. State of Karnataka, (2012) 8 SCC
216] .

 48. Therefore, whether a term of
NIT is essential or not is a decision taken
by the employer which should be respected.
Even if the term is essential, the employer
has the inherent authority to deviate from it
provided the deviation is made applicable
to all bidders and potential bidders as held
in Ramana
Dayaram
Shetty [Ramana
Dayaram Shetty v. International Airport
Authority of India, (1979) 3 SCC 489] .
However, if the term is held by the
employer to be ancillary or subsidiary,
even that decision should be respected. The
lawfulness
of
that
decision
can
be
questioned on very limited grounds, as
mentioned
in
the
various
decisions
discussed above, but the soundness of the
decision cannot be questioned, otherwise
this Court would be taking over the
function of the tender issuing authority,
which it cannot."

13. The Supreme Court reiterated
its view contemplated in Central Coalfields
Ltd.(supra)
in
the
case
of
Afcons
Infrastructure Ltd. v. Nagpur Metro
Rail Corpn. Ltd. reported in (2016)16
SCC 818 and held that the decision making
process of the employer or owner of the
project in accepting or rejecting the bid of a
tenderer should not be interfered with.
Interference is permissible only if the
decision making process is malafide or
intended to favor someone. Relevant
paragraph thereof is delineated below:

 "11. Recently,
in Central
Coalfields Ltd. v. SLL-SML (Joint Venture
Consortium) [Central
Coalfields
Ltd. v. SLL-SML
(Joint
Venture
Consortium), (2016) 8 SCC 622 : (2016) 4
SCC (Civ) 106 : (2016) 8 Scale 99] it was
held by this Court, relying on a host of
decisions that the decision-making process
of the employer or owner of the project in
accepting or rejecting the bid of a tenderer
should not be interfered with. Interference
is permissible only if the decision-making
process is mala fide or is intended to
favour someone. Similarly, the decision
9 All. Dynamic Infracon Pvt. Ltd. Vs. State of U.P. & Ors.
865
should not be interfered with unless the
decision is so arbitrary or irrational that
the Court could say that the decision is one
which no responsible authority acting
reasonably and in accordance with law
could have reached. In other words, the
decision-making process or the decision
should be perverse and not merely faulty or
incorrect or erroneous. No such extreme
case was made out by GYT-TPL JV in the
High Court or before us.

***
 15. We may add that the owner or
the employer of a project, having authored
the tender documents, is the best person to
understand and appreciate its requirements
and
interpret
its
documents.
The
constitutional courts must defer to this
understanding and appreciation of the
tender documents, unless there is mala fide
or perversity in the understanding or
appreciation or in the application of the
terms of the tender conditions. It is possible
that the owner or employer of a project
may give an interpretation to the tender
documents that is not acceptable to the
constitutional courts but that by itself is not
a
reason
for
interfering
with
the
interpretation given."

14. In the case of Silppi
Constructions Contractors v. Union of
India reported in (2020) 16 SCC 489 the
Apex Court further observed that the
Courts should exercise a lot of restraint
while exercising their powers of judicial
review in contractual or commercial
matters.
Relevant
paragraph
of
the
judgment is quoted herein below:

 "20. The essence of the law laid
down in the judgments referred to above is
the exercise of restraint and caution; the
need for overwhelming public interest to
justify judicial intervention in matters of
contract
involving
the
State
instrumentalities; the courts should give
way to the opinion of the experts unless the
decision
is
totally
arbitrary
or
unreasonable; the court does not sit like a
court of appeal over the appropriate
authority; the court must realise that the
authority floating the tender is the best
judge of its requirements and, therefore,
the court's interference should be minimal.
The authority which floats the contract or
tender, and has authored the tender
documents is the best judge as to how the
documents have to be interpreted. If two
interpretations are possible then the
interpretation of the author must be
accepted. The courts will only interfere to
prevent arbitrariness, irrationality, bias,
mala
fides
or perversity.
With
this
approach in mind we shall deal with the
present case."

15. The Supreme Court in the case
of Tata Motors Ltd. v. Brihan Mumbai
Electric
Supply
&
Transport
Undertaking (BEST) reported in 2023
SCC
OnLine
SC
671
has
again
emphasised that the Courts should not
ordinarily interfere in matters relating to
tender or contract. The relevant paragraphs
of the judgment are quoted herein below:

 "48.This
Court
being
the
guardian of fundamental rights is dutybound
to
interfere
when
there
is
arbitrariness, irrationality, mala fides and
bias. However, this Court has cautioned
time and again that courts should exercise
a lot of restraint while exercising their
powers of judicial review in contractual or
commercial matters. This Court is normally
loathe to interfere in contractual matters
unless a clear-cut case of arbitrariness
or mala fides or bias or irrationality is
866 INDIAN LAW REPORTS ALLAHABAD SERIES
made out. One must remember that today
many public sector undertakings compete
with the private industry. The contracts
entered into between private parties are not
subject to scrutiny under writ jurisdiction.
No doubt, the bodies which are State within
the
meaning
of
Article
12of
the
Constitution are bound to act fairly and are
amenable to the writ jurisdiction of
superior courts but this discretionary
power must be exercised with a great deal
of restraint and caution. The courts must
realise their limitations and the havoc
which needless interference in commercial
matters can cause. In contracts involving
technical issues the courts should be even
more reluctant because most of us in
Judges' robes do not have the necessary
expertise to adjudicate upon technical
issues beyond our domain. The courts
should not use a magnifying glass while
scanning the tenders and make every small
mistake appear like a big blunder. In fact,
the courts must give "fair play in the
joints" to the government and public sector
undertakings in matters of contract. Courts
must also not interfere where such
interference will cause unnecessary loss to
the public exchequer.

***
 53.The law relating to award of
contract by the State and public sector
corporations was reviewed in Air India
Ltd. v. Cochin International Airport Ltd.,
reported in (2000) 2 SCC 617 and it was
held that the award of a contract, whether
by a private party or by a State, is
essentially a commercial transaction. It can
choose its own method to arrive at a
decision and it is free to grant any
relaxation for bona fide reasons, if the
tender conditions permit such a relaxation.
It was further held that the State, its
corporations,
instrumentalities
and
agencies have the public duty to be fair to
all concerned. Even when some defect is
found in the decision-making process, the
court must exercise its discretionary
powers under Article 226 with great
caution and should exercise it only in
furtherance of public interest and not
merely on the making out of a legal point.
The court should always keep the larger
public interest in mind in order to decide
whether its intervention is called for or not.
Only when it comes to a conclusion that
overwhelming public interest requires
interference, the court should interfere.

 54. As observed by this Court
in Jagdish
Mandal v. State
of
Orissa,
reported in (2007) 14 SCC 517 that while
invoking power of judicial review in
matters as to tenders or award of contracts,
certain special features should be borne in
mind that evaluations of tenders and
awarding of contracts are essentially
commercial functions and principles of
equity and natural justice stay at a distance
in such matters. If the decision relating to
award of contract is bona fide and is in
public interest, courts will not interfere by
exercising powers of judicial review even if
a procedural aberration or error in
assessment or prejudice to a tenderer, is
made out. Power of judicial review will not
be invoked to protect private interest at the
cost of public interest, or to decide
contractual disputes."

16. A coordinate bench of this
Court in the case of Jai Hanuman
Construction Jagdish Saran v. State of
U.P. reported in 2023 SCC OnLine All
2033 also followed the views espoused by
the Apex Court in the above cited
judgments and held that the High Court
should refrain from interfering in matters
pertaining to tender matters unless the
9 All. Dynamic Infracon Pvt. Ltd. Vs. State of U.P. & Ors.
867
approach of State authority is highly
arbitrary and mala fide in the eyes of law.
Relevant paragraphs of the said judgment
are quoted below:

 "29. The Hon'ble Supreme Court
in
the
matter
of Directorate
of
Education v. Educomp Datamatics Ltd. has
held as under:-

 "It is well settled now that the
courts can scrutinise the award of the
contracts by the government or its agencies
in exercise of its powers of judicial review
to prevent arbitrariness or favouritism.
However, there are inherent limitations in
the exercise of the power of judicial review
in such matters.