# Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors

- **Citation:** 2024 INSC 486
- **Court:** Supreme Court of India
- **Decided:** 2024-07-09
- **Case number:** Civil Appeal No. 6741 of 2024
- **Bench:** Dr. Dhananjaya Y. Chandrachud
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/subodh-kumar-singh-rathour-v-the-chief-executive-officer-ors-37915
- **Pages:** 79

## Headnote

Scope of judicial review of the actions of the State in the matters
relating to contract/tender disputes under writ jurisdiction; whether
the action on the part of the respondent in cancelling the tender
was amenable to the writ jurisdiction of the High Court; if so,
whether the said action could be termed as arbitrary or unfair
and in consequence of violation of Article 14 of the Constitution
of India.
Headnotes†
Contract/tender disputes - Judicial review - Scope - Tender
awarded to the appellant on Public-Private Partnership basis
for maintenance of two underpasses was cancelled by the
respondent-Kolkata Metropolitan Development Authority
stating that there was a technical fault therein and also on
account of a change in policy whereby, the operation &
maintenance of the concerned underpasses was handed over
to another authority - Action to cancel the tender, if amenable
to writ jurisdiction and whether was arbitrary and influenced
by extraneous considerations:
Held: The tender was not terminated pursuant to any terms of the
contract subsisting between the parties - Respondent cancelled
the tender saying that there was technical fault in the tender
that was floated - Thus, the respondent exercised powers in its
executive capacity as the action to cancel the tender fell outside
the purview of the terms of the contract - Hence, the present
matter is not purely a contractual dispute even if related to a
tender, as the dispute involves a public law element - Although
there is no discharge of a public function by the respondent
* Author
[2024] 7 S.C.R.
533
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
towards the appellant yet there is a right to public law action
vested in him against the respondent in terms of Article 14 - Thus,
writ petition filed by the respondent was maintainable and the
relief prayed for could have been considered by the High Court
in exercise of its writ jurisdiction - On facts, just a month prior to
cancelling the tender, the respondent issued work stop notice to
the appellant, asking to stop all work in respect of the tender in
view of the handing over of the operation & maintenance of the
concerned underpasses by the respondent to another authority,
Kolkata Municipal Corporation - Appellant pointed out that the
work stop orders were misconceived as the respondent continued
to retain the custody as well as the advertisement rights of the
concerned underpasses - As such the respondent even after
the change in policy, remained well within its rights to continue
charging license fee in lieu of the advertisement rights by way
of the tender issued to the appellant - Change in policy had no
bearing on the cancellation of the tender - It was only after the
appellant highlighted why the work stop orders were misconceived
and uncalled for, that the respondent immediately flipped its stance
and in its notice of cancellation that was issued just 1-month
later, it attributed 'technical faults' in the tender - Furthermore,
although the internal-file notings mention about the policy change
in the operation and maintenance of the concerned underpasses,
however, the cancellation of the tender for work was neither due
to any technical fault nor due to the policy change but it was at
the behest of the concerned minister who suggested to cancel the
tender - The concerned minister's decision to cancel the tender on
account of purported 'change in policy' was without any application
of mind, capricious and influenced by malice - Cancellation of the
tender was not in public interest - Present lis is a classic case of
an arbitrary and capricious exercise of powers by the respondent
to cancel the tender on the basis of extraneous considerations
and at the behest of the concerned Minister-In-Charge - Notice
of cancellation was non-est, quashed - Impugned judgment of
the High Court upholding the decision of the respondent to cancel
the tender, set aside. [Paras 60-62, 103-105, 107, 122]
Contract/tender dispute

## Text

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[2024] 7 S.C.R. 532 : 2024 INSC 486
Subodh Kumar Singh Rathour
v.
The Chief Executive Officer & Ors.
(Civil Appeal No. 6741 of 2024)
09 July 2024
[Dr. Dhananjaya Y. Chandrachud, CJI,
J.B. Pardiwala* and Manoj Misra, JJ.]
Issue for Consideration
Scope of judicial review of the actions of the State in the matters
relating to contract/tender disputes under writ jurisdiction; whether
the action on the part of the respondent in cancelling the tender
was amenable to the writ jurisdiction of the High Court; if so,
whether the said action could be termed as arbitrary or unfair
and in consequence of violation of Article 14 of the Constitution
of India.
Headnotes†
Contract/tender disputes - Judicial review - Scope - Tender
awarded to the appellant on Public-Private Partnership basis
for maintenance of two underpasses was cancelled by the
respondent-Kolkata Metropolitan Development Authority
stating that there was a technical fault therein and also on
account of a change in policy whereby, the operation &
maintenance of the concerned underpasses was handed over
to another authority - Action to cancel the tender, if amenable
to writ jurisdiction and whether was arbitrary and influenced
by extraneous considerations:
Held: The tender was not terminated pursuant to any terms of the
contract subsisting between the parties - Respondent cancelled
the tender saying that there was technical fault in the tender
that was floated - Thus, the respondent exercised powers in its
executive capacity as the action to cancel the tender fell outside
the purview of the terms of the contract - Hence, the present
matter is not purely a contractual dispute even if related to a
tender, as the dispute involves a public law element - Although
there is no discharge of a public function by the respondent
* Author
[2024] 7 S.C.R.
533
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
towards the appellant yet there is a right to public law action
vested in him against the respondent in terms of Article 14 - Thus,
writ petition filed by the respondent was maintainable and the
relief prayed for could have been considered by the High Court
in exercise of its writ jurisdiction - On facts, just a month prior to
cancelling the tender, the respondent issued work stop notice to
the appellant, asking to stop all work in respect of the tender in
view of the handing over of the operation & maintenance of the
concerned underpasses by the respondent to another authority,
Kolkata Municipal Corporation - Appellant pointed out that the
work stop orders were misconceived as the respondent continued
to retain the custody as well as the advertisement rights of the
concerned underpasses - As such the respondent even after
the change in policy, remained well within its rights to continue
charging license fee in lieu of the advertisement rights by way
of the tender issued to the appellant - Change in policy had no
bearing on the cancellation of the tender - It was only after the
appellant highlighted why the work stop orders were misconceived
and uncalled for, that the respondent immediately flipped its stance
and in its notice of cancellation that was issued just 1-month
later, it attributed 'technical faults' in the tender - Furthermore,
although the internal-file notings mention about the policy change
in the operation and maintenance of the concerned underpasses,
however, the cancellation of the tender for work was neither due
to any technical fault nor due to the policy change but it was at
the behest of the concerned minister who suggested to cancel the
tender - The concerned minister's decision to cancel the tender on
account of purported 'change in policy' was without any application
of mind, capricious and influenced by malice - Cancellation of the
tender was not in public interest - Present lis is a classic case of
an arbitrary and capricious exercise of powers by the respondent
to cancel the tender on the basis of extraneous considerations
and at the behest of the concerned Minister-In-Charge - Notice
of cancellation was non-est, quashed - Impugned judgment of
the High Court upholding the decision of the respondent to cancel
the tender, set aside. [Paras 60-62, 103-105, 107, 122]
Contract/tender disputes - Involving State or its
instrumentalities - Administrative actions of the State -
Judicial Review - Shift in the scope of - Earlier position of
law; misconception of the State as a Largesse - Concept of
'Public Law' Element in contractual matters - Development
534
[2024] 7 S.C.R.
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of principles of natural justice, reasonableness and
proportionality - Judicial review and administrative discretion
- Interplay between - Discussed.
Administrative Law - Internal-file notings - Judicial review -
Constitution of India - Article 14 - Tender awarded to the
appellant was cancelled by the respondent-Authority on the
ground that there was a technical fault therein - Challenge
to - Appellant relied on various notings made in the internal
file of the respondent in respect of the tender to contend
that the cancellation thereof was arbitrary and influenced by
extraneous considerations:
Held: Once a decision has been officially made through proper
means and channel, any internal deliberations or file notings
that formed a part of that decision-making process can certainly
be looked into by the Court for the purposes of judicial review
in order to satisfy itself of the impeccability of the said decision
and whether it conforms to the principles enshrined in Article
14 of the Constitution - In the present case, if the purported
action of cancelling the tender was claimed to have been taken
in view of certain technical faults in the same or even a change
in policy, the same ought to be clearly reflected from its internal
file notings as-well, pursuant to which the purported decision
was taken - However, in the entire records, there is no whisper
of any particular clauses of the tender that was floated nor of
any conflict or technical fault in the same, as claimed by the
respondent - From the internal-file notings it is evident that the
notice of cancellation issued to the appellant was at the behest
of the concerned minister - Respondent recorded that, because
instructions for cancellation were received from the higher-ups,
there was no option but to proceed with the cancellation - Even
before the respondent could properly and thoroughly explore the
possibility of acceding to such request by consulting its legal
cell, the tender was cancelled only at the instance and specific
instructions of the concerned minister. [Paras 85, 90]
Contract/tender disputes - Administrative Decisions - Public
Interest - Potential financial losses - Possibility of fetching
higher license fees if can be a ground to cancel the tender:
Held: No - Any decision to terminate a contract must be grounded
in a real and palpable public interest, duly supported by cogent
[2024] 7 S.C.R.
535
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
materials and circumstances in order to ensure that State actions
are fair, transparent, and accountable - Public interest cannot
be used as a pretext to arbitrarily terminate contracts and there
must be a clear and demonstrable ramification or detriment on
the public interest to justify any such action - Considerations
of public interest should not be narrowly confined to financial
aspects - Courts must have a more holistic understanding of
public interest wherever the fairness of public authorities is in
question, giving due regard to the broader implications of such
action on the stability of contractual obligations - Merely because
the financial terms of a contract are less favourable over a period
of time does not justify its termination - Respondent's stance of a
mere possibility of fetching higher license fees was no ground to
cancel the tender for the purposes of rectifying it, especially when
it failed to demonstrate as to how there was a technical fault in
the tender or how potential interested bidders did not participate
due to it or how fetching higher license fees was more than a
mere possibility. [Paras 115, 116, 118]
Tenders - Sanctity of Public-Private Partnership Tenders -
Termination of tenders - Public authorities cautioned - Duty
of Courts:
Held: Public tenders are a cornerstone of governmental
procurement processes, ensuring transparency, competition, and
fairness in the allocation of public resources - It emanates from the
Doctrine of Public Trust which lays down that all natural resources
and public use amenities & structures are intended for the benefit
and enjoyment of the public - Public tenders are designed to
provide level playing field for all potential bidders - Its sanctity
lies in their role in upholding the principles of equal opportunity
and fairness - Once a contract has come into existence through a
valid tendering process, its termination must adhere strictly to the
terms of the contract, with the executive powers to be exercised
only in exceptional cases by the public authorities and that too in
loathe - Arbitrary terminations of contract create uncertainty and
unpredictability, thereby discouraging public participation in the
tendering process - Courts are duty bound to zealously protect the
sanctity of any tender duly conducted and concluded by ensuring
that the larger public interest of upholding bindingness of contracts
are not sidelined by a capricious or arbitrary exercise of power by
the State - Failure on the part of the courts to zealously protect
536
[2024] 7 S.C.R.
Digital Supreme Court Reports
the binding nature of a lawful and valid tender, would erode
public faith in contracts and tenders - Public authorities also to
be circumspect in disturbing or wriggling out of its contractual
obligations through means beyond the terms of the contract in
exercise of their executive powers. [Paras 124-126]
Contractual disputes - Judicial review - Amenability to
writ jurisdiction - Private law element vis-à-vis public law
element - Demarcation - Assessment:
Held: Demarcation between a private law element and public law
element in the context of contractual disputes, may be assessed
by ascertaining whether the dispute or the controversy pertains
to the consensual aspect of the contract or tender in question or
not - Judicial review does not extend to fixing contract stipulations
but ensures that the public authorities act within their authority to
prevent arbitrariness - Judicial review is permissible to prevent
arbitrariness of public authorities and to ensure that they do not
exceed or abuse their powers in contractual transactions and
requires overseeing the administrative power of public authorities
to award or cancel contracts or any of its stipulations - Although
disputes arising purely out of contracts are not amenable to writ
jurisdiction yet keeping in mind the obligation of the State to act
fairly and not arbitrarily or capriciously, when contractual power is
being used for public purpose, it is certainly amenable to judicial
review. [Paras 57-59]
Contract/tender disputes - Contractual disputes concerning
public authorities - Arbitrary exercise of powers by public
functionaries - Challenge to - Constitution of India - Article
14 - Duty of Courts:
Held: Where State action is challenged on the ground of being
arbitrary, unfair or unreasonable, the State would be under an
obligation to comply with the basic requirements of Article 14
and not act in an arbitrary, unfair and unreasonable manner -
This is the constitutional limit of their authority - There is a jural
postulate of good faith in business relations and undertakings
which is given effect to by preventing arbitrary exercise of powers
by the public functionaries in contractual matters with private
individuals - With the rise of the Social Service State more and
more public-private-partnerships continue to emerge, which makes
it all the more imperative for the courts to protect the sanctity of
such relation. [Para 56]
[2024] 7 S.C.R.
537
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
Contract - Contractual disputes - Arbitrariness of State
actions - Meaning and Import of - Test of reasonableness -
Vice of arbitrariness - When attracted:
Held: The question, whether an impugned action is arbitrary or
not, is to be answered on the facts and in the circumstances of a
given case - An obvious test to apply is to see whether there is
any discernible principle emerging from the impugned act and if
so, does it satisfy the test of reasonableness - Where a mode is
prescribed for doing an act and there is no impediment in following
that procedure, the performance of the act otherwise and in a
manner which does not disclose any discernible principle which
is reasonable, may itself attract the vice of arbitrariness - Every
State action must be informed by reason and an act uninformed
by reason, is arbitrary - To enthuse efficiency in administration,
a balance between accountability and autonomy of action should
be carefully maintained - Whether the public authority acted bona
fide would be gauged from the impugned action and attending
circumstances - The authority should justify the action assailed
on the touchstone of justness, fairness and reasonableness -
Test of reasonableness is more strict - Supporting an order with
a rationale which in the circumstances is found to be reasonable
will go a long way to repel a challenge to State action - The
reasons need not in every case be part of the order as such - If
there is absence of good faith and the action is actuated with an
oblique motive, it could be characterised as being arbitrary - A
total non-application of mind without due regard to the rights of
the parties and public interest may be a clear indicator of arbitrary
action - Another way to assess whether an action complained of
could be termed as arbitrary is by scrutinizing the reasons assigned
to such an action - However, the Court is not supposed to delve
into every minute details of the reasoning assigned, but should
only see whether the reasons were earnest, genuine and had a
rationale with the ultimate decision - What is under scrutiny in
judicial review of an action is the decision-making process and
whether there is any element of arbitrariness or mala fide - Thus,
the question to be answered in such situations is whether the
decision was based on valid considerations. [Paras 65, 67, 69-71]
Case Law Cited
Pimpri Chinchwad New Township Development Authority v.
Vishnudev Coop. Housing Society [2018] 11 SCR 310 : (2018)
538
[2024] 7 S.C.R.
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8 SCC 215; Shanti Sports Club v. Union of India [2009] 13 SCR
710 : (2009) 15 SCC 705 - distinguished.
Radhakrishna Agarwal & Ors. v. State of Bihar & Ors. [1977]
3 SCR 249 : (1977) 3 SCC 457; Premji Bhai Parmar & Ors. v.
Delhi Development & Ors. [1980] 2 SCR 704 : (1980) 2 SCC
129; Divisional Forest Officer v. Bishwanath Tea Co. Ltd. [1981]
3 SCR 662 : (1981) 3 SCC 238; Bareilly Development Authority
& Anr. v. Ajai Pal Singh & Ors. [1989] 1 SCR 743 : (1989) 2
SCC 116; M/s Indian Medicines Pharmaceuticals Corp Ltd. v.
Kerala Ayurvedic Co-operative Society Ltd. [2023] 1 SCR 473 :
(2023) SCC OnLine SC 5; M.C. Mehta v. Union of India [1987]
1 SCR 819 : (1987) 1 SCC 395; Mahabir Auto Stores & Ors. v.
Indian Oil Corporation [1990] 1 SCR 818 : (1990) 3 SCC 752;
Dwarkadas Marfatia & Sons v. Board of Trustees of the Port of
Bombay [1989] 2 SCR 751 : (1989) 3 SCC 293; LIC v. Consumer
Education & Research Centre [1995] Supp. 1 SCR 349 : (1995)
5 SCC 482; Shrilekha Vidyarthi (Kumari) v. State of U.P. [1990]
Supp. 1 SCR 625 : (1991) 1 SCC 212; Verigamto Naveen v.
Govt. of A.P. & Ors. [2001] Suppl. 3 SCR 112 : (2001) 8 SCC
344; Binny Ltd. & Anr. v. Sadasivan & Ors. [2005] Supp. 2
SCR 421 : (2005) 6 SCC 657; ABL International Ltd. v. Export
Credit Guarantee Corporation of India Ltd. (2004) 3 SCC 553;
Noble Resources Ltd. v. State of Orissa [2006] Supp. 6 SCR
53 : (2006) 10 SCC 236; Joshi Technologies International Inc.
v. Union of India & Ors. [2015] 6 SCR 1042 : (2015) 7 SCC
728; M.P. Power Management Co. Ltd., Jabalpur v. Sky Power
Southeast Solar India Pvt. Ltd. & Ors. [2022] 5 SCR 1 : (2023)
2 SCC 703; Ramana Dauaram Shetty v. The International Airport
Authority of India & Ors. [1979] 3 SCR 1014 : AIR 1979 SC
1628; Mahesh Chandra v. Regional Manager, U.P. Financial
Corporation & Ors. [1992] 1 SCR 616 : (1993) 2 SCC 279;
Tata Cellular v. UOI [1994] Supp. 2 SCR 122 : (1994) 6 SCC
651; Bachhittar Singh v. State of Punjab & Anr. [1962] Supp. 3
SCR 713 : AIR 1963 SC 395; Delhi Development Authority v.
Hello Home Education Society (2024) 3 SCC 148; Mahadeo &
Ors. v. Sovan Devi & Ors. [2022] 11 SCR 153 : (2023) 10 SCC
807; Municipal Committee, Barwala v. Jai Narayan and Co. &
Anr. [2022] 16 SCR 897 : (2022) SCC OnLine 376; Sethi Auto
[2024] 7 S.C.R.
539
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
Service Station v. DDA [2008] 14 SCR 598 : (2009) 1 SCC 180;
State of Uttaranchal v. Sunil Kumar Vaish [2011] 13 SCR 754 :
(2011) 8 SCC 670; State of Bihar v. Kripalu Shankar [1987] 3
SCR 1 : (1987) 3 SCC 34; Vice Chariman & Managing Director,
City & Industrial Development Corporation of Maharashtra Ltd.
& Anr. v. Shishir Realty Pvt. Ltd. & Ors. [2021] 13 SCR 190 :
(2021) SCC OnLine SC 1141; Vasantkumar Radhakisan Vora
(Dead) by His Lrs. v. Board of Trustees of the Port of Bombay
[1990] 3 SCR 825 : (1991) 1 SCC 761; Har Shankar & Ors. v. Dy.
Excise and Taxation Commr. & Ors. [1975] 3 SCR 254 : (1975) 1
SCC 737; Nagar Nigam v. Al. Farheem Meat Exporters Pvt. Ltd.
[2006] Supp. 10 SCR 354 : (2006) 13 SCC 382; Sivanandan
C.T. v. High Court of Kerala [2023] 11 SCR 674 : (2024) 3 SCC
799 - referred to.
List of Acts
Constitution of India.
List of Keywords
Contract/tender disputes; Contractual matters; Operation &
maintenance of underpasses; Advertisement rights of the
underpasses; Judicial review; Writ jurisdiction; Amenability to writ
jurisdiction; Public-Private Partnership basis; Notice of cancellation;
Tender cancelled/terminated; Tender cancelled at the behest
of the minister; Administrative actions of the State; Arbitrary;
Unfair; Unreasonable; Influenced by extraneous considerations;
Non-application of mind; Capricious exercise of powers; Malice;
Contractual disputes; Dispute not purely contractual; Public law
element; Private law element; Right to public law action; Work stop
notice/order; Handing over of the operation & maintenance of the
underpasses; Change in policy, License fee in lieu of advertisement
rights; Technical faults in the tender floated; Cancellation of the
tender not in public interest; Administrative discretion; Internal
file notings; Public interest; Potential financial losses; Possibility
of fetching higher license fees; Arbitrariness; Arbitrariness of
State actions; Administrative decisions; Test of reasonableness;
Vice of arbitrariness; Wednesbury principle of reasonableness;
Public tenders; Principles of natural justice, reasonableness and
proportionality; Valid considerations; Bona-fide.
540
[2024] 7 S.C.R.
Digital Supreme Court Reports
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6741 of 2024
From the Judgment and Order dated 25.05.2023 of the High Court
at Calcutta in MAT No. 744 of 2023
Appearances for Parties
Shyam Divan, Sr. Adv., Ateev Mathur, Ajay Monga, Sanjay Gupta,
Ms. Varsha Kriplani, Anmol Sharma, Ananta Prasad Mishra, Advs.
for the Appellant.
Rakesh Dwivedi, Sr. Adv., Zoheb Hossain, Advs. for the Respondents.
Judgment / Order of the Supreme Court
Judgment
J.B. PARDIWALA, J.
For the convenience of exposition, this judgment is divided in the
following parts: -
INDEX*
A. FACTUAL MATRIX
2
B. IMPUGNED ORDER
7
C. DEVELOPMENTS THAT OCCURRED DURING THE
PENDENCY OF THE PRESENT APPEAL.
10
D. SUBMISSIONS ON BEHALF OF THE APPELLANT
15
E. SUBMISSIONS ON BEHALF OF THE RESPONDENT
17
F. POINTS FOR DETERMINATION
18
G. ANALYSIS
19
i.
Scope of Judicial Review of the actions of the
State in matters relating to Contract / Tender
under Writ Jurisdiction.
19
* Ed. Note: Pagination as per the original Judgment.
[2024] 7 S.C.R.
541
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
a. Earlier Position of Law and Misconception of the
State as a Largesse.
19
b. Concept of 'Public Law' Element: Scope of
Judicial Review in Contractual Matters.
25
c. Meaning and True Import of Arbitrariness of State
Actions in Contractual Disputes.
47
ii. Whether the action of cancelling the tender is
arbitrary or unfair and in consequence of violation
of Article 14 of the Constitution?
53
a. Scrutiny of Internal File-Notings and Deliberations
of the State.
55
b. Concept of Public Interest in Administrative
Decisions.
69
iii. Sanctity of Public-Private Partnership Tenders
77
H. FINAL CONCLUSION
81
1.
This appeal arises out of the final judgment and order dated
25.05.2023 passed by the High Court of Calcutta in M.A.T. No.
744 of 2023 ("Impugned Order"), by which the High Court upheld
the decision of the respondent to cancel the tender that had been
awarded to the appellant for the maintenance of two underpasses
on Public-Private Partnership basis, and thereby dismissed the writ
appeal filed by the appellant.
A.
FACTUAL MATRIX
2.
The respondent floated a tender notice dated 12.05.2022 inviting bids
for the maintenance of two underpasses on the Eastern Metropolitan
Bypass and its abutting area against a License Fee for Advertisement
Rights over designated sites at each underpass, for a period of
10-years. As per the aforesaid tender, the scope of work included
the regular maintenance of the aforementioned underpasses and
the upkeep of its garden area and electro-mechanical fittings. The
relevant portion reads as under: -
542
[2024] 7 S.C.R.
Digital Supreme Court Reports
Sl.
No
Name of Work
License Fee of the
Yearly Charge for
the 1st year (Rs.)
Earnest
Money
(Rs.)
Allotted Time
Period for
License & Work
(1)
(2)
(3)
(4)
(5)
REGULAR
MAINTENANCE
OF BELIAGHATA
UNDERPASS
INCLUDING
UPKEEPING OF
UNDERPASS
PROPER, GARDEN
AREA, AT GRADE
UNDERPASS
AREA AND
ALL ELECTROMECHANICAL
FITTINGS AGAINST
LICENSE FEE OF
ADVERTISEMENT
RIGHTS OVER (10)
YEARS.
Tender ID - 2022_
KMDS_380215_1
TO BE QUOTED
5,00,000.00
[Rupees
Five Lakh
Only]
Online
(Net
Banking/
NEFT/
RTGS)
10 (Ten) Years
REGULAR
MAINTENANCE
OF SWABHUMI
UNDERPASS
INCLUDING
UPKEEPING OF
UNDERPASS
PROPER, GARDEN
AREA, AT GRADE
UNDERPASS
AREA AND
ALL ELECTROMECHANICAL
FITTINGS AGAINST
LICENSE FEE OF
ADVERTISEMENT
RIGHTS OVER (10)
YEARS.
Tender ID - 2022_
KMDS_380215_1
TO BE QUOTED
5,00,000.00
[Rupees
Five Lakh
Only]
Online
(Net
Banking/
NEFT/
RTGS)
10 (Ten) Years
[2024] 7 S.C.R.
543
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
3.
Pursuant to the aforesaid, the tendering process was undertaken
and the appellant herein on 13.06.2022 submitted his bid with a
quotation of Rs. 29,55,555/- for the Beliaghata Underpass and Rs.
23,55,555/- for the Swabhumi Underpass. Out of the total bids
received, the appellant's quotations were found to be the highest
and was classified as 'H1' for both the underpasses.
4.
Accordingly, the respondent issued two Letter of Intents dated
27.06.2022 in favour of the appellant, accepting the quotation
offered by him and declaring his firm as the successful bidder for
the aforementioned tender, and a formal Memorandum of Tender
for Work was executed and issued to the appellant.
5.
As per the Memorandum of Tender for Work, the detailed 'Scope
of Work' inter-alia included (i) the sweeping of floors & cleaning of
the walls, stairwell, escalators, railings and glass-fixtures, (ii) regular
emptying of dustbins and removal / processing of waste trash, (iii)
upkeep of the garden and plants and (iv) the maintenance of lightfittings, escalators, water pumps and other electro-mechanical fixtures.
6.
Furthermore, the Special Terms & Conditions of the Memorandum,
more particularly Clause 35 therein stipulated that the contract would
be liable to be terminated inter-alia in the event of any failure, breach
or non-compliance of any of the obligations or terms delineated in
the tender by the successful bidder.
7.
Upon completion of all the formalities, the Work Orders dated
18.10.2022 were issued by the Executive Engineer, pursuant to
which the appellant commenced his work in terms of the contract.
8.
On 01.12.2022, the Urban Development and Municipal Affairs
Department, Government of West Bengal issued an Order directing
that the maintenance of the roads and drainage of the E.M. Bypass
including the two subject underpasses shall be handed over by
the Kolkata Metropolitan Development Authority (KMDA) i.e., the
respondent herein to the Kolkata Municipal Corporation (KMC). The
said order reads as under: -
"Government of West Bengal
Urban Development and Municipal Affairs Department
NAGARYAN, DF-8, Sector-I
Salt Lake, Kolkata - 700 064
Memo No. 5783 - UDMA-22012(14)/11/2022
Date : 01.12.2022
544
[2024] 7 S.C.R.
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ORDER
KMDA was the custodian for the maintenance of the E.M
Bypass connecting the northern and southern part of the
city and starts from northern hub Ultadanga to Garia in the
South. The road length is 15.6 Km which runs along the
eastern ring of the city. After careful consideration it has
been decided that the maintenance of the road alongwith
the drainage be handed over from KMDA to KMC with the
following scope of activities.
(1) The defects in carriageway would be maintained and
restored by KMC henceforth.
(2) The existing carriageway alongwith the surface and
underground drainage would be maintained by KMC.
The conservancy in and around the Eastern Bypass
would also be maintained by KMC.
(3) Subject to clearance from KMDA, KMC would issue
NOC to all utility and service providers. The cost of
road restoration from the charges to be levied is to
be paid to KMC by all utility and service providers.
(4) The right of collecting revenues from the advertisement
displays will remain with KMDA.
(5) All the structures, as the new or old Bridges, Culverts,
FoBs etc. will be under the custody of KMDA.
(6)
All development activities along the road except for the
Bridges, Culverts, FoBs etc. will be taken up by KMC.
(7)
KMC would remain custodian for illumination of the
Bypass.
(8)
The green verge along the E.M. Bypass to be
maintained by KMC.
The order is issued in the interest of public service.
Sd/-
Principal Secretary
to the Govt. of West Bengal"
9.
As per the aforesaid Order dated 01.12.2022, the maintenance and
restoration of carriageway, structures, underground drainage and
[2024] 7 S.C.R.
545
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
development activities of the E.M. Bypass Area was taken over by
the KMC. However, the Order specifically, clarified that the right of
collecting revenue from advertisements displayed would continue to
remain with the KMDA.
10. Thereafter, in light of the aforesaid order, the Executive Engineer,
KMDA under instructions issued by the competent authorities sent a
notice dated 24.01.2023 to the appellant herein asking him to stop
all work in respect of the maintenance of the two underpasses with
immediate effect in view of the handing over of the maintenance of
the E.M. Bypass to the KMC.
11. In response to the above, the appellant sent a letter dated 25.01.2023
inter-alia pointing out that as per the Urban Development and
Municipal Affairs Department's Order dated 01.12.2022, the custody
and rights of revenue of all structures, bridges, culverts etc. including
the concerned underpasses, continued to remain with the respondent,
and requested to recall the notice dated 24.01.2023 asking him to
stop the work.
12. However, on 07.02.2023, the respondent issued one another notice
to the appellant stating that the tender for work of maintenance has
been cancelled on account of a technical fault in the tender. It was
stated therein that the tender was found to be 'non-specific' & 'not
well defined' and that had created ambiguity resulting in financial
losses to the respondent. The said Notice of Cancellation reads
as under: -
"Date: 07.02.2023
To,V.S. Advertising,
65/268, M.N. Sarkar Road,
Siliguri, West Bengal 7340001
Sub: Cancellation of Work/Tender
Sir,
The cited tender is hereby cancelled by the Authority in
KMDA. We would state with regret that the tender has
been found having technical fault, non-specific and not
well defined thus creating ambiguity for obvious reasons.
By this, the Authority is incurring financial loss as well.
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We regret for the inconvenience caused to you and are
ready to reimburse the cost you have so far incurred in
the work. This has been decided that the license fee
deposited by you and the cost incurred for construction
activity and maintenance work would be refunded as per
actual assessment by the divisional engineers based upon
the approved drawing and execution.
This is for your information with kind compliance please.
Sd/-
Chief Engineer-II (Bridge)
Roads & Bridges Sector, KMDA"
13. It is pertinent to note from the aforesaid that, no reference was made
as regards handing over of the maintenance to KMC which was
previously alluded to, for stopping all work pertaining to the tender.
B.
IMPUGNED ORDER
14. Aggrieved by the aforesaid, the appellant preferred a writ petition
being WPA No. 3381 of 2023 before the High Court of Calcutta
assailing the respondent's Notice dated 07.02.2023 cancelling the
tender for work of maintenance of the two underpasses.
15. The aforesaid writ petition referred to above came to be rejected
by the High Court vide its order dated 24.04.2023, wherein the Ld.
Single Judge held that the decision to cancel the tender had to be
taken on account of the administrative exigencies and also due to
the 'change in policy'. It was further held that the decision to cancel
the tender was not borne out of any ulterior motives on the part of
the respondent. The decision of the learned Single Judge is based
on two grounds: -
(i)
First, the High Court took the view that the decision
to cancel the tender cannot be termed as an arbitrary
action on the part of the respondent. The appellant was
put to prior notice as regards the change of hands of the
management of the concerned underpasses, much before
the ultimate cancellation notice was issued. It further
observed that, since the notice of cancellation dated
07.02.2023 specifically provided the reasons for cancelling
the tender i.e., the technical faults found in the tender that
[2024] 7 S.C.R.
547
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
was floated, there was no element of arbitrariness in the
said action. The relevant observations read as under: -
"11. [...] The effect of the administrative decision
was reiterated in the stop-work request of
24.01.2023 where the reason given for the
stop-work was also the "changed scenario"
of handover of the maintenance work of E.M.
Bypass to KMC from KMDA. Hence, the reason
for the stop-work and the impugned cancellation
is a change of policy for administrative
convenience simpliciter.
xxx
xxx
xxx
18. In the present case, the impugned
cancellation of 07.02.2023 cannot be described
as a bolt from the blue since the petitioner
was put on notice of the impending change
in circumstance on 24.01.2023 where the
reason for the change was also conveyed to
the petitioner. The order dated 01.12.2022 of
the Urban Development and Municipal Affairs
Department stating that the maintenance of
the E.M. Bypass would be handed over from
the KMDA to KMC provides the rationale
for the impugned cancellation. Seen in this
backdrop, it cannot be said that the impugned
letter of cancellation of the tender /work was
issued with an ulterior motive or for extraneous
considerations. In fact, the letter of cancellation
provides further reasons, namely, that the tender
has been found to be non-specific and having
technical faults. This would also be borne out
from clauses 10 and 14 of the Special Terms
and Conditions of the tender document which
give rise to conflicting interpretations on the
placement of the signboards. Hence, besides
the administrative decision to hand over the
maintenance of E.M. Bypass from KMDA to
KMC, the respondent KMDA as the tendering
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authority, has a right to rectify the ambiguities
in the bid document by cancelling the same."
(Emphasis supplied)
(ii) Secondly, the appellant could not have redressed his
grievances by invoking the writ jurisdiction of the High
Court under Article 226 of the Constitution, as there was
no failure of any statutory duty or public law element
involved. Moreover, since the relief sought was essentially
in the nature of specific performance, it could have been
prayed for only under ordinary civil law and not by way of
a writ petition. The relevant observations read as under: -
"20. It is well settled that a contractual dispute
with a public law element would be amenable
to writ jurisdiction. The present dispute however
arises out of a private contract for maintenance
of underpasses in the E.M. Bypass and
advertisement rights over certain spaces within
the contracted area. The rights following out of
the contract are purely private in nature and
there is nothing to show that the performance
of the contract or the consequence therefrom
would affect the public at large or even a
sizeable section of the public. A public law
element is generally understood to mean the
reach of an obligation to a large section of
the public or the obligation affecting the lives
and livelihood of the general public by its very
nature. M.P. Power sounded a cautionary note
in such cases where the State cites monetary
gains or losses as reason for termination of
a contract. This is also not' the case at hand
since the reasons given for cancellation were
on a wholly different plane."
21. The above reasons persuade this Court to
hold that the remedy available to the petitioner is
in the realm of private law and not under Article·
226 of the Constitution which contemplates
certain tests including that the dispute must
[2024] 7 S.C.R.
549
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
have a public law element. The complaint of
the petitioner is essentially for the specific
performance of the contractual obligation of the
respondent KMDA. Doubtless, the petitioner can
avail of appropriate civil remedies for redress
which would include damages for breach of the
contractual terms.
(Emphasis supplied)
16. Aggrieved with the aforesaid, the appellant went in appeal before
a Division Bench of the High Court by way of M.A.T. No. 744 of
2023, wherein the appeal court finding no fault in the decision of the
learned Single Judge, dismissed the appeal and thereby affirmed
the judgment of the learned Single Judge referred to above.
17. In view of the aforesaid, the appellant is here before this Court with
the present appeal.
C.
DEVELOPMENTS THAT OCCURRED DURING THE
PENDENCY OF THE PRESENT APPEAL.
18. During the pendency of the present appeal, the appellant herein
preferred a RTI seeking further information on the respondent's
internal note-file pertaining to the cancellation of the subject tender.
19. The Public Information Officer, KMDA vide its reply dated 18.08.2023
provided the internal file-notings of the respondent on the aforesaid
tender. In the internal file-notings of the respondent, the following
entries / notes are relevant: -
a)
As per Note #91 dated 30.12.2022, the respondent in view of
the maintenance of the concerned underpasses being handed
over to KMC, was contemplating the possibility of cancelling the
tender for work. The relevant noting reads as under: -
"Note # 91
Recently maintenance of EM Bye pass has been
handed over to KMC. Thus, in this changed scenario
we may cancel the work order.
03/01/2023 11:51 AM
FIRHAD HAKIM
CHRMN (KMDA)"
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b)
As per Note #95 dated 10.01.2023, the respondent instructed
that the tender be cancelled in view of the maintenance of the
concerned underpasses being handed over to KMC. However,
since the respondent was in doubt as regards the legality &
validity of such decision, it opined that the opinion of the Legal
Department may be sought first before any action of cancellation
is taken. However, as an interim measure, it decided to issue
a notice to stop all work in respect of the tender. The relevant
noting reads as under: -
"Note # 95
[...] Now, as instructed by the competent authority
of KMDA keeping in view of the recent changed
scenario of handing over of maintenance of E.M.
Bypass from KMDA to KMC, cancelling the work order
as instructed may require judicious action towards
implementing the same and to make it lawful, legal
advice from Law-Cell, KMDA may be required so that,
KMDA doesn't fall in any legal obligation. However,
for immediate compliance of the order, a notice to
stop the works in all respect with regards to the
two above-mentioned tenders may be served to the
agency for immediately stopping his all activities at
site till further notice. As instructed, a draft Letter is
attached herewith for his kind perusal and direction
in this regard. [...]
10/01/2023 02:55 PM PARTHA PROTIM GHOSH
EE (RBBRDG) (KMDA)"
c)
Again, in Note #96, it was noted that since the competent
authority of the respondent was desirous to cancel the tender,
the respondent was of the view that the opinion of its legal
cell be obtained first before such action is taken. The relevant
noting reads as under: -
"Note # 96
[...]
As per Note#91 ̧Competent Authority desires to
cancel the Work Order.
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551
Subodh Kumar Singh Rathour v. The Chief Executive Officer & Ors.
In Note#95 ̧a draft letter has been attached for
approval towards issuance to the agency to stop any
type of work related to this project.
Considering the Chronological development and
acceptance by Authority, the matter may kindly be
viewed lawfully, so that, if it is cancelled by this end,
no legal action is taken by the Agency.
Submitted for necessary action.
13/01/2023 02:13 PM
SANTANU PATRA
SE (RBBRDG) (KMDA)"
d)
In Note #97 dated 16.01.2023, the respondent has noted that
since the competent authority had decided to cancel the work
tender there was no option but to cancel it. However, the
respondent once again insisted that a legal opinion may be
sought first, in order to avoid further litigations. The relevant
noting reads as under: -
"Note # 97
Sub: Cancellation of Work Order of Maintenance of two Underpasses
A concurrence of Law Cell, KMDA may kindly be
obtained before cancelling the Work Order of the
existing agency. There is no different opinion than
to get this cancelled, once this has been decided by
the Authority but a legal opinion may be sought for
avoiding further litigations. [...]
16/01/2023 04:38 PM
SUBHANKAR
BHATTACHARYA
CE (RBBRDG) (KMDA)"
e)
Thereafter, it could be seen from Note #101 dated 19.01.2023,
that the other officials of the authority also concurred with the
respondent's opinion to first seek advice of its legal cell on
the possible consequences in the event the tender for work is
cancelled. The relevant observations read as under: -
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"Note # 101
As concurred by the Authority the legal aspects and
the possible consequences may be reviewed and
opined back prior to cancelling the Work Order.