# Energo Const. Pvt. Ltd v. U.P. Rajya Vidyut Utpadan Nigam Ltd. & Ors

- **Citation:** (2024) 3 ILRA 1976
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-02-21
- **Case number:** Writ-C No. 26784 of 2023
- **Bench:** Mahesh Chandra Tripathi, Prashant Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/energo-const-pvt-ltd-v-u-p-rajya-vidyut-utpadan-nigam-ltd-ors-51599
- **Pages:** 11

## Headnote

Civil Law - Constitution of India,1950Article 226-The petitioner was previously
contracted
for
operations
and
maintenance services-in a subsequent
tender the petitioner was disqualified
despite being the lowest bidder due to
allegations of submitting a false affidavit
denying prior blacklisting or termination
of contracts-The court analysed that
judicial review in tender matters is limited
and applies only in cases of arbitrariness,
malafide, or public interest violationsHowever, the petitioner's affidavit was
found to be misleading, rendering their
disqualification justified-the principle of
fairness was upheld and no malafide
intent
by
the
respondents
was
evident.(Para 1to 29)

The writ petition is dismissed. .(E-6)

List of cases cited:

## Text

1976 INDIAN LAW REPORTS ALLAHABAD SERIES
----------
(2024) 3 ILRA 1976
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 21.02.2024

BEFORE

THE HON'BLE MAHESH CHANDRA
TRIPATHI, J.
THE HON'BLE PRASHANT KUMAR, J.

Writ-C No. 26784 of 2023

Energo Const. Pvt. Ltd. ...Petitioner
Versus
U.P. Rajya Vidyut Utpadan Nigam Ltd. &
Ors. ...Respondents

Counsel for the Petitioner:
Sri Prashant Shukla, Sri Navin Sinha (Sr.
Advocate)

Counsel for the Respondents:
Sri Shishir Prakash, Sri Raghav Dev Garg, Sri
Shad Khan, Sri Anurag Khanna (Sr. Advocate)
Civil Law - Constitution of India,1950Article 226-The petitioner was previously
contracted
for
operations
and
maintenance services-in a subsequent
tender the petitioner was disqualified
despite being the lowest bidder due to
allegations of submitting a false affidavit
denying prior blacklisting or termination
of contracts-The court analysed that
judicial review in tender matters is limited
and applies only in cases of arbitrariness,
malafide, or public interest violationsHowever, the petitioner's affidavit was
found to be misleading, rendering their
disqualification justified-the principle of
fairness was upheld and no malafide
intent
by
the
respondents
was
evident.(Para 1to 29)

The writ petition is dismissed. .(E-6)

List of cases cited:

1. Central Coalfields Ltd & anr. Vs SLL-SML
(Joint Venture Consortium) & ors. (2016) 8 SCC
622
2. Tata Motors Vs Brihan Mumbai Electricity
Supply & Transport Undertaking & ors. (2023)
SCC Online SC 671

3. Meerut Development Authority Vs Assn of
Mgmt Studies & anr. (2009) 6 SCC 171.

4. Jai Bholenath Consn. Vs The Chief Exe.
Officer, Zilla Parishad, Nanded & ors. (Civil
Appeal No. 41440 of 2022

5. Ram & Shyam Co. Vs St. of Har. & ors.
(1945) 3 SCC 267

6. M/s Star Enterprises & ors. Vs City &
Industrial Development Corpn of Mah. Ltd. &
ors. (1990) 3 SCC 280

7. M/s Jai Hanuman Consn.Vs St. of U.P. & ors.
(2023) SCC OnLine All 2033

8. Jagdish Mandal Vs St.of Ori & ors.(2007)14
SCC 517

9. Afcons Infra. Ltd. Vs Nagpur Metro Rail Corpn
Ltd & anr. (2016)16 818

10. Sterling Computers Ltd Vs M & N
Publications Ltd MANU/SC/ 0439/1993 AIR 1996
SC 51

11. Tata Cellular Vs U.O.I. MANU/SC/0002/1996
AIR 1996 SC 11.

12. Raunaq International Ltd. Vs I.V.R Consn.
Ltd. MANU/SC/0770/1998 AIR 1999 SC 393

13. Air India Ltd. Vs Cochin International Airport
Ltd. MANU/SC/0055/2000 [2000] 1 SCR 505

14. Assn.of Registration Plates Vs U.O.I.
MANU/SC/1013/2004 AIR 2005 SC 469

15. B.S.N. Joshi Vs Nair Coal Services Ltd
MANU/SC/8598/2006 AIR 2007 SC 437

(Delivered by Hon'ble Mahesh Chandra
Tripathi, J.)

1. Heard Sri Navin Sinha, learned
Senior Advocate, assisted by Sri Prashant
3 All. Energo Const. Pvt. Ltd. Vs. U.P. Rajya Vidyut Utpadan Nigam Ltd. & Ors.
1977
Shukla, learned counsel for the
petitioner; Sri Shad Khan, learned counsel
holding brief of Sri Shishir Prakash,
learned counsel for the respondent Nos.1 to
3 and Sri Anurag Khanna, learned Senior
Advocate, assisted by Sri Raghav Dev
Garg, learned counsel for the respondent
No.4.

Facts:-

2. The facts of the case as
emerging out from the record are that the
petitioner herein is a company engaged in
business of Operation and Maintenance
Services (for the sake of brevity hereinafter
referred as 'O&M Services') for Uttar
Pradesh Rajya Vidyut Utapadan Nigam
Ltd. including O&M Services and Coal
Handling Plants. The respondent no.1
floated a tender sometimes in June 2020 for
execution of O&M Services for its Coal
Handling Plants at Paricha Station for a
period of two years. The petitioner, who
participated in the bid, was found suitable
and contract was awarded to it. It was at
that point of time, when one of the
unsuccessful bidder alleged that petitioner
had been debarred by another State owned
power generating company in Madhya
Pradesh, hence the petitioner was not
qualified to be awarded the contract, as
such, response was asked from the
petitioner. Vide letter dated 15.10.2020, the
petitioner clarified that the allegations
against it were incorrect and were raised
only to disqualify the petitioner. The tender
proceeding culminated into a contract dated
15.03.2021.

3. The respondent no.2 again
floated a tender for the period commencing
from 01.03.2023. For some reason this
tender could not be finalized and the
existing contract of the petitioner was
extended till 31.03.2023, for a period of
one month. Thereafter a fresh tender was
floated on 22.03.2023, which had two bid
mode of technical and financial bids. The
petitioner
alongwith
other
bidders
participated in the tender proceeding and
technical bid were opened on 06.04.2023.
The petitioner alongwith respondent no.4
and few others were found technically
qualified. Since the tender proceedings
could not be culminated for some reasons,
hence the existing tender of the petitioner,
which
was
coming
to
an
end
on
31.03.2023, was again extended upto
31.05.2023.

4. The financial bid of bidders,
who qualified in the technical bid, were
opened and the bid of petitioner was found
to be the lowest (L1). It is claimed that
despite the petitioner being L1, the tender
was not awarded to the petitioner. When the
petitioner met the officials of respondent
no.1, he came to know that the respondent
no.4 has filed a complaint alleging that the
petitioner had filed a false affidavit
regarding
blacklisting/debarment/termination of the
contract. It was alleged that earlier the
petitioner had been debarred by one of the
State owned company in Madhya Pradesh.
The
petitioner
submitted
that
no
communication has been made by the
respondent no.1 qua the said complaint and
he came to know that the respondent no.1
was about to award contract to respondent
no.4. Such situation impelled the petitioner
to prefer the earlier Writ C No.6515/2023
(Energo Construction Pvt. Ltd. New Delhi
vs. U.P. Rajya Vidyut Utpadan Nigam Ltd.)
before the Lucknow Bench of this Court,
which was dismissed as withdrawn by
order dated 02.08.2023 with liberty to file
fresh
petition
before
appropriate
Bench/Court as the matter pertains to
1978 INDIAN LAW REPORTS ALLAHABAD SERIES
district Jhansi. Meanwhile, the respondent
no.1 has issued LOI in favour of
respondent no.4 on 28.07.2023. Aggrieved
by the award of LOI to respondent no.4, the
petitioner preferred the instant writ petition
with following reliefs:-

(i) Issue an appropriate writ or
direction or order in the nature of
certiorari thereby quashing the Letter of
Intent dated 28.07.2023 bearing Ref.
No.441/CHD-IV/PTPP/ 2023-24/CF issued
by respondent nos.1 to 3 in favour of
respondent no.4 (Annexure-2).
(ii) Issue an approriate writ or
direction or order in the nature of
mandamus thereby seeking appropriate
directions to respondent nos.1 to 3 to
award to the petitioner (i.e. L1 bidder) in
Tender
breafing
Ref.
No.NPAR/C/O&MC5/CHD4/6000001163_00 for
'Round the Clock complete O&M of Coal
Handling Plant of Parichha Thermal
Power Project' (Annexure-1);
(iii) Direct respondent nos.1 to 3 to
not
take
any
precipitative/coercive/prejudicial
steps
against the petitioner including but not
limited to forfeiture of earnest money
deposit on any gound or prejudice other
contracts/tenders in any manner.
(iv) Such other appropriate writ,
order or direction as this Court may deem
just and proper in the circumstances of the
case and in the interest of justice, be passed
in favour of the petitioner.

(v) Cost of the writ petition be
awarded in favour of the petitioner.

5. After filing the present writ
petition, an Email was sent to the petitioner,
wherein, he was informed that the Tender
Valuation Committee had rejected the bid
of the petitioner with following remarks:-
"You are informed that your bid
for the above tender has been rejected
during Financial evaluation by the duly
constituted committee for the reason
Competent Committee did not consider the
offer of L-1 firm due to submission of
false information on notarized affidavit
regarding
blacklisting/debarment/termination
of
contract."

6. The petitioner herein, after
getting this Email moved an amendment
application,
which
was
allowed
on
28.11.2023. By the said order following
relief has been added:-

"i (A) Issue a writ, order or
direction in the nature of certiorari
quashing
the
impugned
email
dated
08.08.2023 (Annexure No.-11 to this
petition)"

Arguments of petitioner :-

7. Shri Navin Sinha, learned Senior
Advocate appearing for the petitioner,
submitted that the procedure adopted by
respondent Nos. 1 to 3 for issuing LOI in
favour of respondent No. 4 is arbitrary and
violative of Article 14 of the Constitution
of India. Petitioner complied with all the
requisite technical requirements and was
found eligible with lowest financial bid.
Despite the bid being the lowest, the
petitioner was disqualified (after opening of
the financial bid) ostensibly on the ground
that the petitioner had submitted a false
affidavit as a part of its bid. Before filing
the present writ petition, at no point of
time, the petitioner was informed of its
disqualification or even the fact that a
complaint was received against it. The first
official communication to the petitioner,
regarding its disqualification was received
3 All. Energo Const. Pvt. Ltd. Vs. U.P. Rajya Vidyut Utpadan Nigam Ltd. & Ors.
1979
on 08.08.2023 i.e. after filing of the present
Writ Petition.

8. Shri Sinha further submitted that
rejection
of
petitioner's
lowest
bid,
allegedly on ground of submission of false
information on notarized affidavit, is
wholly
misconceived.
The
petitioner
submitted the requisite affidavit in the
template provided at Annexure-V in
compliance with clause B-6 read with
Annexure-V, which seeks a declaration that
no termination has happened for any kind
of fraudulent activities. In support of his
submission, he placed reliance on the
judgement of Hon'ble Apex Court in
Central Coalfields Limited & Anr v SLL-
SML (Joint Venture Consortium) & Ors
(2016) 8 SCC 622, wherein, the importance
with the format in tender matters have been
dealt with. Respondents have alleged that
petitioner concealed material facts by
failing to disclose the termination by
MPPGCL. He submitted that in 2018,
MPPGCL
admittedly
terminated
petitioner's tender due to non-performance
and
not
for
'fraudulent
activities',
therefore, there was no concealment of
material facts. Further, the termination
itself is a matter pending adjudication
before Madhya Pradesh High Court in Writ
Petition No. 13486 of 2018. This fact was
already in the knowledge of Respondent
No.1 and in case, a proper opportunity
would have been provided to the petitioner,
it would have satisfactorily explained the
same. During the tendering process in
2020/2021,
the
issue
of
MPPGCL's
termination
was
raised,
which
was
satisfactorily explained by the petitioner
and consequently, the contract was awarded
by the respondent no.1.

9. Shri Navin Sinha, learned
Senior Advocate vehemently contended
that the dispute in question raises public
issues, in relation to the practice and
procedure adopted by a State entity while
awarding a tender. The action taken by the
respondent no.1 is arbitrary, irrational and
malafide and whenever there is an infirmity
in decision making process, the writ courts
have a Constitutional duty to interfere even
if they are contractual issues, especially in
cases where the conditions of the tender are
tailor-made to suit interests of one party
and the said conditions are to be examined
by way of reverse engineering. In support
of his submission, he placed reliance on the
dictum of Hon'ble Apex Court in Tata
Motors vs. Brihan Mumbai Electricity
Supply and Transport Undertaking and
others 2023 SCC OnLine SC 671 and
Meerut
Development
Authority
vs.
Association of Management Studies and
another 2009 (6) SCC 171. In this
backdrop, he submitted that the matter
warrants justifiable interference by this
Court.

10. Refuting the allegations
levelled in the complaint, Shri Sinha
submitted that during the tendering process
for preceding period of 2020-2021, similar
allegations
were
raised
against
the
petitioner. Even though, there was no
requirement of an affidavit, still an
opportunity to explain its position was
given at that point of time but no
opportunity of hearing/clarification was
given to the petitioner now. This makes the
conduct of respondent Nos. 1 to 3 even
more questionable since when the threshold
is higher, a show cause notice was required
to be issued to the petitioner for providing
an opportunity to submit its explanation. In
the case of Jai Bholenath Construction vs.
The
Chief
Executive
Officer,
Zilla
Parishad, Nanded & Ors. (Civil Appeal
No. 41440 of 2022 decided on 18.05.2022),
1980 INDIAN LAW REPORTS ALLAHABAD SERIES
the Supreme Court remanded back the
tender to its earlier stage, for it being
violative to principles of natural justice and
fairness.
The
procedure
adopted
by
respondent nos. 1 to 3 is violative to
principles of natural justice and fair play.
No show cause notice or opportunity of
hearing was given to the Petitioner before
rejecting its bid. Even, the decision of
rejecting
petitioner's
bid
was
not
communicated
till
08.08.2023.
He
submitted
that
after
unilaterally
disqualifying
the
petitioner,
secret
negotiations were held between respondent
no.1 and respondent no.4 and its offer was
revised. Most importantly, all of this was
done in secrecy and in an offline mode
without uploading any document on the
bidding portal or apprising the other
bidders. It is settled law that secret
negotiations cannot be undertaken with one
bidder (See Ram and Shyam Company v
State of Haryana & Ors. (1945) 3 SCC
267, Uttar Pradesh Procurement Manual,
2016 ("in short "Manual"] Clause 3.4
(11) Pg. 14, Clause (1) Pg. 17, Clause
14.12 Pg. 119, Clause 14.30 Pg. 126). The
said action can also not pass the judicial
scrutiny, being violative of Wednesbury
Principle of Reasonableness. (see M/s Star
Enterprises & Others v City and Industrial
Development Corporation of Maharashtra
Ltd. & Others (1990) 3 SCC 280 (Para
10), M/s Jai Hanuman Construction State
of UP & Ors 2023 SCC OnLine All 2033
(Para 25), Clause 14.14(4) Pg. 120,
Clause 14.34(3) @ Pg. 129 of the
Manual). Summing up his arguments, he
submitted that the petitioner has acted in
reasonable and fair manner and considering
the facts in entirity, relief is liable to be
accorded by this Court being empowered
under Article 226 of the Constitution of
India, otherwise, the petitioner would suffer
irreparable loss and injury.
Arguments
of
Contesting
Respondents :-

11. Shri Shad Khan, Advocate
holding brief of Shri Shishir Pathak,
learned counsel for respondent no.1, 2 and
3 submitted that an e-tender was published
on 22.03.2023 for the work "Round the
clock Complete Operation & Maintenance
Works of entire Coal Handling Plant of
2x210 MW CHP for uninterrupted coal
feeding of 2x210 MW + 2x250 MW (Unit
No.3,4,5&6),
unloading
works
of
2x110MW CHP including manual loading
works of 2x110 MW CHP including
manual
unloading
and
management,
operation and shutting work etc., and
Round the clock Complete Mechanical &
Electrical Maintenance works of Coal
Unloading Plant 2x110MW CHP etc. (for
two years)" of Parichha Thermal Power
Station, U.P. Rajya Vidyut Utpadan Nigam
Ltd. In the said e-tender, four firms have
participated and were found technically
qualified. On 03.05.2023, the financial bids
of the qualified bidder were as follows : (i)
L-1 M/s Energo Construction Pvt. Ltd.,
New Delhi -Bid Amount Rs.28,42,44,530/-,
(ii) L-2 M/s Lokenath Constructions Pvt.
Ltd.,
Kolkata-Bid
Amount
-
Rs.28,55,76,205.26/-, (iii) L-3 M/s Star
O&M Group, Ghaziabad- Bid AmountRs.28,95,90,856/-
and
(iv)
L-4
M/s
Chennai Radha Engineering Works (P)
Ltd.,
Chennai
-Bid
Amount-
Rs.63,97,04,928/-.

12. Shri Khan further submitted
that on 19.05.2023, a complaint was
received from the respected Member of
Parliament (Lok Sabha), wherein, it has
been informed that the work of the
petitioner's firm was terminated and the
firm was debarred by the MPPGCL,
Khandwa and there were certain disputes
3 All. Energo Const. Pvt. Ltd. Vs. U.P. Rajya Vidyut Utpadan Nigam Ltd. & Ors.
1981
regarding the G.S.T. at Hisaar Plant. The
complaint was sent for verification to
MPPGCL, who verified that the petitioner's
contract was terminated and it was
debarred from participating in the future
tenders of MPPGCL. He further submitted
that as per tender condition the bidder has
to
provide
declaration
on
notarized
affidavit, Non Judicial Stamp paper of
Rs.100/-, to the effect that the bidder has
not been blacklisted/work awarded to the
bidder has not been terminated by the
SEBs/State
GENCO/Central
GENCO/PSU's/CPSU/Statutory
Body,
Independent Power Producers (IPP). He
further submitted that, on 04.04.2023, the
petitioner company by concealment of
material facts has given an affidavit,
whereby, it has been declared that the
petitioner has not been blacklisted/debarred
and their work has not been terminated by
the
SEBs/State
GENCO/Central
GENCO/PSU's/CPSU/Statutory
Body,
Independent Power Producers (IPP).

13. He further submitted that the
petitioner was guilty of suppressiio veri
and suggestio falsi as it has submitted a
false declaration on affidavit and hence its
bid
was
rejected,
thereafter,
the
negotiations took place and the contract
was awarded to L2, who is respondent
no.4. After getting the contract, the
respondent no.4 has also commenced the
work with huge investment. He further
submits that at the time of awarding earlier
contract, petitioner was not required to file
an
affidavit
qua
blacklisting/debarment/termination
of
contract, however in the Tender 2023, a
specific clause was added requiring the
participating firms to give information on a
notarized
affidavit
regarding
the
blacklisting/debarment/termination of any
contract, which was falsely responded by
the petitioner firm. He also submitted that
petitioner vide letter dated 15.06.2023 and
23.06.2023 were duly informed that their
bid was rejected on the ground of false
declaration given by them. Lastly, he
submitted that since the the scope of
judicial review in contractual matters is
very limited and hence this Court should
refrain from interfering with the contractual
matters.

Arguments of Respondent no.4 :-

14. Shri Anurag Khanna, learned
Senior Advocate assisted by Shri Raghav
Dev Garg, learned counsel for respondent
no.4 submitted that Hon'ble Apex Court
has time and again held that the Courts
while
exercising
powers
under
the
Constitution of India must refrain from
interfering with such issues which are
contractual in nature and can only be
adjudicated upon after appreciation of
disputed questions of facts. He submitted
that petitioner has violated the terms of
Clause B-6 of the E-tender and Annexure-V
was to be incorporated by the bidders in
terms of Clause B-6. ]

15. He further submitted that the
intent of such clause is to verify the
credibility of the bidders on whom large
amount of public money are being
proposed to be spent. He elaborated that it
is immaterial as to why the firm has been
blacklisted/work terminated, since it is not
only the character of the firm, which has to
be considered but also the working
capabilities of the firm as well and the
contracting agency, being the drafter of the
terms of the document, are the best judge to
interpret the same in case of any ambiguity.
Lastly, he submitted that the principles of
equity and natural justice stay at a distance
in such matters of fraud and concealment
1982 INDIAN LAW REPORTS ALLAHABAD SERIES
and as such, no interference is required in
the matter. In support of his submission, he
placed reliance on the judgement passed by
Hon'ble Apex Court in Jagdish Mandal vs.
State of Orrissa and others 2007 (14) SCC
517 and Afcons Infrastructure Ltd. vs.
Nagpur Metro Rail Corporation Ltd and
another 2016 (16) SCC 818.

Analysis :-

Scope of judicial review in award
of Contracts:

16. We may refer to some of the
decisions of this Court, which have dealt
with the scope of judicial review in award
of contracts.

17. In Sterling Computers Ltd v.
M
&
N
Publications
Ltd.
MANU/SC/0439/1993 AIR 1996 SC 51,
this Court observed (SCC p.458, para 18):

"18. While exercising the power of
judicial review, in respect of contracts
entered into on behalf of the State, the court
is concerned primarily as to whether there
has been any infirmity in the decision
making process the courts can certainly
examine whether 'decision making process'
was reasonable, rational, not arbitrary and
violative of Article 14 of the Constitution."

18. In Tata Cellular v. Union of
India MANU/SC/0002/1996 AIR 1996 SC
11:, this Court referred to the limitations
relating to the scope of judicial review of
administrative decisions and exercise of
powers in awarding contracts, thus: (SCC
pp.687-88, para 94)

"(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
action. 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. More often than not,
such decisions are made qualitatively by
experts.
(5) The Government must have
freedom of contract. In other words, a
fairplay 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 facets
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."

19. In Raunaq International Ltd.
v.
I.V.R.
Construction
Ltd.
MANU/SC/0770/1998 AIR 1999 SC 393,
this Court dealt with the matter in some
detail. This Court held: (SCC pp.500-01,
paras 9-11)

"9.The award of a contract,
whether it is by a private party or by a
public body or the State, is essentially a
commercial transaction. In arriving at a
commercial decision considerations which
are
of
paramount
importance
are
3 All. Energo Const. Pvt. Ltd. Vs. U.P. Rajya Vidyut Utpadan Nigam Ltd. & Ors.
1983
commercial considerations. These would be
:
(1) The price at which the other
side is willing to do the work;
(2) Whether the goods or services
offered are of the requisite specifications;
(3) Whether the person tendering
has the ability to deliver the goods or
services as per specifications. When large
works contracts involving engagement of
substantial manpower or requiring specific
skills are to be offered, the financial ability
of the tenderer to fulfil the requirements of
the job is also important;
(4) the ability of the tenderer to
deliver goods or services or to do the work
of the requisite standard and quality;
(5) past experience of the tenderer,
and whether he has successfully completed
similar work earlier;
(6) time which will be taken to
deliver the goods or services; and often
(7) the ability of the tenderer to
take follow up action, rectify defects or to
give post contract services.
Even when the State or a public
body enters into a commercial transaction,
considerations which would prevail in its
decision to award the contract to a given
party would be the same. However, because
the State or a public body or an agency of
the State enters into such a contract, there
could be, in a given case, an element of
public law or public interest involved even
in such a commercial transaction.
10. What are these elements of
public interest? (1) Public money would be
expended for the purposes of the contract;
(2) The goods or services which are being
commissioned could be for a public
purpose, such as, construction of roads,
public buildings, power plants or other
public utilities. (3) The public would be
directly interested in the timely fulfilment of
the contract so that the services become
available to the public expeditiously. (4)
The public would also be interested in the
quality of the work undertaken or goods
supplied by the tenderer. Poor quality of
work or goods can lead to tremendous
public hardship and substantial financial
outlay either in correcting mistakes or in
rectifying defects or even at times in redoing the entire work - thus involving
larger outlays or public money and
delaying the availability of services,
facilities or goods, e.g. A delay in
commissioning a power project, as in the
present
case,
could
lead
to
power
shortages,
retardation
of
industrial
development, hardship to the general
public and substantial cost escalation.
11. When a writ petition is filed in
the High court challenging the award of a
contract by a public authority or the State,
the court must be satisfied that there is
some element of public interest involved in
entertaining such a petition. If, for
example, the dispute is purely between two
tenderers, the court must be very careful to
see if there is any element of public interest
involved in the litigation. A mere difference
in the prices offered by the two tenderers
may or may not be decisive in deciding
whether any public interest is involved in
intervening
in
such
a
commercial
transaction. It is important to bear in mind
that by court intervention, the proposed
project may be considerably delayed thus
escalating the cost far more than any
saving which the court would ultimately
effect in public money by deciding the
dispute in favour of one tenderer or the
other tenderer. Therefore, unless the court
is satisfied that there is a substantial
amount
of
public
interest,
or
the
transaction is entered into mala fide, the
court should not intervene under Article
226
in
disputes
between
two
rival
tenderers."
1984 INDIAN LAW REPORTS ALLAHABAD SERIES
20. In Air India Ltd. v. Cochin
International
Airport
Ltd.
MANU/SC/0055/2000 [2000] 1 SCR 505,
this Court summarized the scope of
interference as enunciated in several earlier
decisions thus: (SCC pp.623-24, para 7)

"7.......The award of a contract,
whether it is by a private party or by a
public body or the State, is essentially a
commercial transaction. In arriving at a
commercial decision considerations which
are
paramount
are
commercial
considerations. The State can choose its
own method to arrive at a decision. It can
fix its own terms of invitation to tender
and that is not open to judicial scrutiny. It
can enter into negotiations before finally
deciding to accept one of the offers made
to it. Price need not always be the sole
criterion for awarding a contract. It is free
to grant any relaxation, for bona fide
reasons, if the tender conditions permit
such a relaxation, for bona fide reasons, if
the tender conditions permit such a
relaxation. It may not accept the offer
even though it happens to be the highest
or
the
lowest.
But
the
State,
its
corporations,
instrumentalities
and
agencies are bound to adhere to the
norms, standards and procedures laid
down by them and cannot depart from
them arbitrarily. Though that decision is
not amenable to judicial review, the court
can examine the decision-making process
and interfere if it is found vitiated by mala
fides, unreasonableness and arbitrariness.
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 power 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 intervene.
[Emphasis supplied]

21. In Association of Registration
Plates
v.
Union
of
India
MANU/SC/1013/2004 AIR 2005 SC 469 ,
this Court held: (SCC p.700, para 43)

"Article 14 of the Constitution
prohibits
government
from
arbitrarily
choosing a contractor at its will and
pleasure. It has to act reasonably, fairly
and
in public interest
in
awarding
contracts. At the same time, no person can
claim a fundamental right to carry in
business with the government. All that he
can claim is that in competing for the
contract, he should not be unfairly treated
and discriminated, to the detriment of
public interest."

22. In B.S.N. Joshi v. Nair Coal
Services Ltd. MANU/SC/8598/2006 AIR
2007 SC 437, this Court observed: (SCC
p.568, para 56)

"56. It may be true that a contract
need not be given to the lowest tenderer but
it is equally true that the employer is the
best judge therefor; the same ordinarily
being
within
its
domain,
court's
interference in such matter should be
minimal. The High Court's jurisdiction in
such matters being limited in a case of this
nature, the Court should normally exercise
judicial restraint unless illegality or
arbitrariness on the part of the employer is
apparent on the face of the record."
3 All. Energo Const. Pvt. Ltd. Vs. U.P. Rajya Vidyut Utpadan Nigam Ltd. & Ors.
1985
23. The legal proposition drawn in
the light of above judgements of Hon'ble
Supreme Court is that the judicial review of
administrative action is intended to prevent
arbitrariness,
irrationality,
unreasonableness, bias and malafides. Its
purpose is to check whether choice or
decision is made 'lawfully' and not to check
whether choice or decision is 'sound'. When
the power of judicial review is invoked in
matters relating to tenders or award of
contracts, certain special features should be
borne in mind. A contract is a commercial
transaction.
Evaluating
tenders
and
awarding
contracts
are
essentially
commercial functions. Principles of equity
and natural justice stay at a distance. If the
decision relating to award of contract is
bona fide and is in public interest, courts
will not, in exercise of power of judicial
review, interfere even if a procedural
aberration or error in assessment or
prejudice to a tenderer, is made out.

24. The power of judicial review
will not be permitted to be invoked to
protect private interest at the cost of public
interest, or to decide contractual disputes.
The tenderer or contractor with a grievance
can always seek damages in a civil court.
Attempts by unsuccessful tenderers with
imaginary grievances, wounded pride and
business rivalry, to make mountains out of
molehills of some technical/procedural
violation or some prejudice to self, and
persuade courts to interfere by exercising
power of judicial review, should be
resisted. Such interferences, either interim
or final, may hold up public works for
years, or delay relief and succour to
thousands and millions and may increase
the project cost manifold. Therefore, in our
considered opinion, the court before
interfering in tender or contractual matters
in exercise of power of judicial review,
should pose to itself the following
questions :

i) Whether the process
adopted or decision made by the
authority is mala fide or intended to
favour someone.
ii) Whether public interest
is adversely affected.

25. If the answers to the above
questions are in the negative, there should
be no interference under Article 226 of the
Constitution of India in such cases
involving black-listing or imposition of
penal
consequences
on
a
tendered/contractor or distribution of state
largesse.

Conclusion :-

26. In this matter, the petitioner has
apparently given a wrong affidavit in order
to get the contract. For ready reference,
Clause B-6 is reproduced as under:-

B
6
Declarati
on
of
bidder
against
blacklisti
ng
Bidder has to provide
declaration on notarized
affidavit, Non Judicial
Stamp paper of Rs.100/-,
that the bidder has not
been
blacklisted/work
awarded to the bidder has
not been terminated by
the
SEBs/State
GENCO/Central
GENCO/PSU's/CPSU/St
atutory
Body,
Independent
Power
Producers (IPP). (As per
Annexure-V
must
be
uploaded)
Original
copy
of
declaration
on
nonjudicial stamp paper must
1986 INDIAN LAW REPORTS ALLAHABAD SERIES
be submitted in hard copy
to
the
office
of
Superintending Engineer,
O&MC-V,
2x250MW,
CTPS, PTPP, Parichha,
Jhansi.

A bare perusal of clause B-6 and
Annexure V incorporated in the bid
document clearly goes to show that the
bidder has to provide declaration on
notarized affidavit, Non Judicial Stamp
paper of Rs.100/-, that the bidder has not
been blacklisted/work awarded to the
bidder has not been terminated by the
SEBs/State
GENCO/Central
GENCO/PSU's/CPSU/Statutory
Body,
Independent Power Producers (IPP). The
petitioner knowing the fact that he was
disqualified gave a false declaration and in
order to cross the first hurdle of technical
qualifications,
by
misrepresenting
the
petitioner got itself to be technically
qualified and its bid was opened. Claim of
being L1 is immaterial as only those
financial bids could be entertained, who are
technically qualified. The petitioner herein
does not qualify or pass first hurdle and
hence it cannot take a benefit or argue that
since its bid was lowest, the tender should
be awarded to it.

27. As per ratio laid down in
catena of judgements of the Hon'ble
Supreme Court, it is clear that the scope of
judicial review in the contractual matter is
very limited. Moreover the respondents
have the freedom to award the contract.
The fair play in the joints is a necessary
concomitant for an administrative body
functioning in an administrative sphere or
quasi-administrative sphere. The decision
of the respondent must not only be tested
by the application of Wednesbury Principle
of Reasonableness but must be free from
arbitrariness not affected by bias or
actuated by malafides. This is the case in
which there is no malafides or bias or
arbitrariness. The bid of the petitioner had
rightly been rejected since it had given a
wrong statement on an affidavit stating that
nowhere they have been blacklisted or their
contract have been terminated.

28. The petitioner, knowing the
fact that it was not qualified to participate
in the tender, tried to grab the tender by
giving a false declaration by way of an
affidavit, by misrepresenting the petitioner
tried to get itself technically qualified and
accordingly, the bid was opened. The claim
of the petitioner that it being the lowest
(L1) is not material, as the bid of
technically
qualified
can
only
be
considered. Hence, the petitioner, who is
technically
disqualified,
cannot
be
considered in the tender procedure.

29. In view of above discussions,
we find no merit in the writ petition, hence
the writ petition is accordingly dismissed.

30. No order as to costs.
----------
(2024) 3 ILRA 1986
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 06.02.2024

BEFORE

THE HON'BLE SIDDHARTH VARMA, J.
THE HON'BLE ANISH KUMAR GUPTA, J.

Writ-C No. 28658 of 2023

Kavita Sharma ...Petitioner
Versus
State of U.P. & Ors. ...Respondents