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2025 DAILYLAW 3706 (HP)

Danish Lab v. State of Himachal Pradesh

2025-09-16

G S Sandhawalia, Ranjan Sharma

body2025
JUDGMENT : G.S. Sandhawalia, C.J. The challenge in the present writ petition is to the order dated 24.03.2025 [Annexures P-14 & P-15], whereby the technical bid of the petitioners was rejected with the remarks “technically disqualified” regarding the bid made on 03.01.2025. Resultantly, out of the five bidders, three persons were put in the list to compete the financial bid programme of tenders for supply of “5000 MT (Approximately) BIS Certified Pregnancy Ration (Type-II) for Cattle” opened on 17.01.2025. 2. Learned Senior Counsel for the petitioners has submitted that the disqualification was on account of the fact that the petitioners did not have the minimum five years’ experience in manufacturing/marketing the goods in question. The eligibility criteria for participation under Clause XXVII, reads as under:- 5. The tenderer should be manufacturing/marketing the quoted BIS Certified Pregnancy Ration (Type- II) for Cattle for the last minimum five (5) years. The quoted BIS Certified Pregnancy Ration (Type- II) for Cattle' should be easily available in the market under same brand name by which name the product has been quoted in the tender. 6. The tenderer has to also submit (Upload) the online proof of Cost of Tender Document, Earnest Money Deposit (EMD) and documents etc, as required/specified in this tender document. 7. The company turnover for the manufacture and sale of BIS Certified Products taken together should be at least Rs.45.00 Crores during the last consecutive three years while product turnover for BIS Certified Pregnancy Ration (Type II) for Cattle should be at least Rs.1.50 crores during last consecutive three years. The cumulative sales turnover for the last 5 years is required but the tender will be decided on cumulative sales turnover for the last three years. In this connection please refer page No.24 of the tender document. 8. The production capacity of the Feed Manufacturing unit must be minimum 5000 MT/month at one location. This capacity should be got certified from the Govt. agency.” 3. It is the contention that vide Notification dated 15.11.2016 [Annexure P-20], the State had given benefits under the “Startup/Innovation Projects/New Industries Scheme” to provide skills to the youth/potential and there was an exemption under Clause 7.3.8, as such, to grant the said benefit for the experience as per proviso to Clause 7.3.8. to State based application but not to those based outside the State and was discriminatory. to State based application but not to those based outside the State and was discriminatory. The said proviso reads as under: “7.3.8 Purchase Preference by Govt. of H.P./ Public Sector undertaking: The products of Small Scale Industry including 'Village Industry' as defined under the Incentives Rules, 2004 as amended from time to time and located within Himachal Pradesh is being given purchase preference in respect of purchases affected by the Government Departments, Boards and State owned or controlled Corporations. Purchase orders to such firms may be placed at the lowest approved rates at least to the extent of 30% of the total procurement provided the quoted price of such local units are within the range of 15% of the L-1 rates. Provided further Start Ups in micro and small scale categories in the manufacturing sector will also be entitled for such purchase preference by Govt. of HP/PSUs. Such Start Ups may also be exempted from the prior experience/turnover requirements provided they meet the requisite quality standards as laid down in the tender.” 4. It is submitted that the said benefit has not been extended to the petitioners and would run foul of Article 14 of the Constitution of India. On the other hand, counsel for the State has submitted that the Amended Himachal Pradesh Financial Rules 2009 [HPFR], notified on 16.05.2020 [Annexure R-II], the Rule 22(i)(1) provides that the benefit is only to be given to the Local Micro and Small Scale Units/Startup Enterprises of the State of H.P. The petitioners, therefore, do not fall in the said category. It is further pointed out that though BIS certification was granted to the petitioners on 10.08.2023, even then the requirement of turnover of Rs.45.00 Crore remains applicable, and such benefit is to be granted only to local units. It is submitted that the petitioners not having the requisite turnover have been rightly rejected. It has further been averred that the feed manufacturing unit claimed to have a certain production capacity is neither certified by any Government Department nor any Government Agency, which was a requirement under Clause 8 of the Notice Inviting Tender. It has also been further averred that the petitioners’ turnover is not mentioned in the CA Certificate and does not match with the figures for the financial years 2020-21 to 2023-24. Therefore, in such circumstances, the bid has been rejected. 5. It has also been further averred that the petitioners’ turnover is not mentioned in the CA Certificate and does not match with the figures for the financial years 2020-21 to 2023-24. Therefore, in such circumstances, the bid has been rejected. 5. The State has held out that some benefits have been granted to local startups, and the minimum purchase from local manufactures, as provided in the Rules, shall not be applicable in respect of items which in the opinion of the Head of Department are of a sophisticated nature, high technology and precision standards. It has further been pleaded that the Rules make the provision that only Startup Enterprises/Units in micro can also be exempted from the prior experience provided, they meet the requisite quality standards. It is thus stand of respondent No.4 that proposal was rightly rejected by the Tender Evaluation Committee. 6. The argument of learned Senior Counsel that the judgment of the Apex Court in Lifecare Innovations Pvt. Ltd. & Anr. vs. Union of India & Ors., 2025 SCC OnLine SC 436, decided on 25.02.2025, would require the State to take corrective measures, is without any basis. A perusal of the facts would go on to show that the last date for opening the tender was 14.11.2024 and the process had already started and by virtue of that the rejection was done on 24.03.2025. The observations made by the Apex Court in the aforesaid case with respect to setting up of a Review Committee, would not affect the tender which had already been floated and in which the parties had applied and submitted their respective bids. In such circumstances, the arguments raised by learned Senior Counsel that the matter has to be re-considered afresh in view of the decision of the Review Committee does not hold much water, as such. 7. Reliance has been rightly placed upon the judgment of the Hon’ble Supreme Court in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 , by the State the relevant portion of which reads as under: “22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether the choice or decision is made lawfully and not to check whether the choice or decision is sound. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether the choice or decision is made lawfully and not to check whether the 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, the 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. 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, a 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; or Whether the process adopted or decision made is so arbitrary and irrational that the court can say: ‘the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached’; and (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.” 8. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.” 8. In Michigan Rubber (India) Limited v. State of Karnataka and Others, (2012) 8 SCC 216 , the principle’s were laid down keeping in view the law laid down in Raunaq International Ltd. v. I.V.R. Construction Ltd. (1999) 1 SCC 492 , and it was held that in commercial transactions the process of judicial review by the writ Court would not be justified except where is substantial public interest involved and where the transaction is malafide, as such. Resultantly, it was held that if only selection of a competent contractor is tailor-made and allegations are of malafides the jurisdiction of the Court would be there, but on the other hand, Courts are not to interfere with the terms of a tender prescribed by the Government only on account of it feels that some other terms in the tender would have been fairer, wiser or logical. 9. The  Hon’ble  Apex  Court  in  Montecarlo Limited v. National Thermal Power Corporation Limited, (2016) 15 SCC 272 , went on to hold that there has to be certain freedom given of contract to the State and  action  can  only  be  tested  by  applying  the Wednesbury principle and then interference would only be if there is arbitrariness or bias or mala fides. It is settled principle that the Courts are not to sit as experts and the constitutional Court is not to sit like a Court of appeal over the appropriate authority floating the tender who is the best judge of its requirements. Necessarily, if there are two interpretations possible then the appropriate authority following certain principles, as such, has to be respected. 10. Similarly, reliance has also been placed upon the judgment of Hon’ble Apex Court in Uflex Limited v. Government of Tamil Nadu and Others, (2022) 1 SCC 165 , the relevant paragraphs read as under: “The enlarged role of the Government in economic activity and its corresponding ability to give economic "largesse" was the bedrock of creating what is commonly called the "tender jurisdiction". The objective was to have greater transparency and the consequent right of an aggrieved party to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India (hereinafter referred to as "the Constitution"), beyond the issue of strict enforcement of contractual rights under the civil jurisdiction. However, the ground reality today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court under Article 226 of the Constitution. The public interest litigation (“PIL") jurisdiction is also invoked towards the same objective, an aspect normally deterred by the Court because this causes proxy litigation in purely contractual matters. 2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at a distance. 3. We cannot lost sight of the fact that a tenderer or contractor with a grievance can always seek damages in a civil court and thus, “attempts by unsuccessful tenderers with imaginary grievance, 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””. 11. Similarly, reliance has also been placed upon the judgment of Hon’ble Apex Court in Agmael India Private Limited v. Resoursys Telecom & Ors., (2022) 5 SCC 362 , the relevant paragraphs read as under: 24. The scope of judicial review in contractual matters, and particularly in relation to the process of interpretation of tender document, has been the subject-matter of discussion in various decisions of this Court. The scope of judicial review in contractual matters, and particularly in relation to the process of interpretation of tender document, has been the subject-matter of discussion in various decisions of this Court. We need not multiply the authorities on the subject, as suffice it would be refer to the three-Judge Bench decision of this Court in Galaxy Transport Agencies& wherein, among others, the said decision in Afcons Infrastructure has also been considered; and this Court has disapproved the interference by the High Court in the interpretation by the tender inviting authority of the eligibility term relating to the category of vehicles required to be held by the bidders, in the tender floated for supply of vehicles for the carriage of troops and equipment. 25. This Court referred to various decisions on the subject and stated the legal principles as follows: "14. In a series of judgments, this Court has held that the authority that authors the tender document is the best person to understand and appreciate its requirements, and thus, its interpretation should not be second- guessed by a court in judicial review proceedings. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd.7, this Court held: '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.' 15. In the judgment in Bharat Coking Coal Ltd. v. AMR Dev Prabha', under the heading "Deference to authority's interpretation", this Court stated: '50. Lastly, we deem it necessary to deal with another fundamental problem. It is obvious that Respondent 1 seeks to only enforce terms of NIT. Inherent in such exercise is interpretation of contractual terms. However, it must be noted that judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes. 51. Lastly, we deem it necessary to deal with another fundamental problem. It is obvious that Respondent 1 seeks to only enforce terms of NIT. Inherent in such exercise is interpretation of contractual terms. However, it must be noted that judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes. 51. In the present facts, it is clear that BCCL and C1-India have laid recourse to clauses of NIT, whether it be to justify condonation of S delay of Respondent 6 in submitting performance bank guarantees or their decision to resume auction on grounds of technical failure. BCCL having authored these documents, is better placed to appreciate their requirements and interpret them. 52. The High Court ought to have deferred to this understanding, unless it was patently perverse or mala fide. Given how BCCL's interpretation of these clauses was plausible and not absurd, solely differences in opinion of contractual interpretation ought not to have been grounds for the High Court to come to a finding that the appellant committed illegality.' 16. Further, in the recent judgment in Silppi Constructions Contractors v. Union of India 10, this Court held as follows: '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.' 17. 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.' 17. In accordance with these judgments and noting that the interpretation of the tendering authority in this case cannot be said to be a perverse one, the Division Bench ought not to have interfered with it by giving its own interpretation and not giving proper credence to the word "both" appearing in Condition No. 31 of the NIT For this reason, the Division Bench's conclusion11 that JK Roadways was wrongly declared to be ineligible, is set aside. 18. Insofar as Condition No. 27 of the NIT prescribing work experience of at least 5 years of not less than the value of Rs 2 crores is concerned, suffice it to say that the expert body, being the Tender Opening Committee, consisting of four members, clearly found that this eligibility condition had been satisfied by the appellant before us. Without therefore going into the assessment of the documents that have been supplied to this Court, it is well settled that unless arbitrariness or mala fide on the part  of  the  tendering  authority  is alleged, the expert evaluation of a particular tender, particularly when it comes to technical evaluation, is not to be second-guessed by a writ court. Thus, in Jagdish Mandal v. State of Orissa 12, this Court noted: (SCC pp. 531-32, para 22) '22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. 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. 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. 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, a 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; OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.' 19. Similarly, in Montecarlo Ltd. v. NTPC Ltd. 13, this Court stated as follows: '26. We respectfully concur with the aforesaid statement of law. We have reasons to do so. In the present scenario, tenders are floated and offers are invited for highly complex technical subjects. It requires understanding and appreciation of the nature of work and the purpose it is going to serve. We respectfully concur with the aforesaid statement of law. We have reasons to do so. In the present scenario, tenders are floated and offers are invited for highly complex technical subjects. It requires understanding and appreciation of the nature of work and the purpose it is going to serve. It is common knowledge in the competitive commercial field that technical bids pursuant to the notice inviting tenders are scrutinised by the technical experts and sometimes third-party assistance from those unconnected with the owner's organisation is taken. This ensures objectivity. Bidder's expertise and technical  capability  and  capacity must be assessed by the experts. In the matters of financial assessment, consultants are appointed. It is because to check and ascertain that technical ability and the financial feasibility have sanguinity and are workable and realistic. There is a multi-prong complex approach; highly technical in nature. The tenders where public largesse is put to auction stand on a different compartment. Tender with which we are concerned, is not comparable to any scheme for allotment. This arena which we have referred requires technical expertise. Parameters applied are different. Its aim is to achieve high degree of perfection in execution and adherence to the time schedule. But, that does not mean, these tenders will escape scrutiny of judicial review. Exercise of power of judicial review would be called for if the approach is arbitrary or mala fide or procedure adopted is meant to favour one. The decision-making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the Court should follow the principle of restraint. Technical evaluation or comparison by the Court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating  to  technical  works  and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints.' 20. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints.' 20. This being the case, we are unable to fathom how the Division Bench, on its own appraisal, arrived at the conclusion that the appellant held work experience of only 1 year, substituting the appraisal of the expert four-member Tender Opening Committee with its own." 26. The abovementioned statements of law make it amply clear that the author of the tender document is taken to be the best person to understand and with the language of the tender document or subserving the purchase of the appreciate its requirements; and if its interpretation is manifestly in consonance evaluation or comparison by the Court is impermissible; and even if the tender, the Court would prefer to keep restraint. Further to that, the technical interpretation given to the tender document by the person inviting offers is not as such acceptable to the constitutional court, that, by itself, would not be a reason for interfering with the interpretation given.” 12. Reliance has also been placed upon the judgment of Hon’ble Apex Court in Balaji Ventures Pvt. Ltd. v. Maharashtra State Power Generation Company Ltd. and Another, 2022 SCC OnLine SC 1967, the relevant paragraphs read as under: “10. In the case of Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489 , it is observed in para 20 as under: “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. 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." 12. Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand and when it is found that clause 1.12(V) cannot be said to be arbitrary, mala fide and/or tailor made and the same shall be applicable to all the bidders/tenderers and there is justification also shown providing such a clause and even subsequently a corrigendum has been issued and even the Respondent No. 2 private siders also made it clear that uniform charge shall be quoted for each bidder and even clause 1.12(V) was modified to the extent the necessary permission/consent/no objection certificate that was required at the time of submission of the bid was now required to be submitted before the opening of the price bid and the date for submission of the bid was extended, the High Court has rightly dismissed the writ petition and has rightly refused to interfere with the decisions of the respondents providing clause 1.12(V) of the tender document.” 13. Reliance placed upon the judgment of Hon’ble Apex Court in Principal Chief Conservator of Forest and Others v. Suresh Mathew and Others, 2025 SCC OnLine SC 933, the relevant part which reads as under would go on to show that we are not to substitute the view of the authorities. “23. We may state here that if our observations are seen qua the touchstone of questions framed by this Court in the judgment of Jagdish mandal (supra) the answer would be in negative, therefore the decision taken by the authorities cannot be termed as a mala fide decision or a decision to favour someone. At the cost of repetition, we may state that the decision of the authority is giving a fresh opportunity to all interested bidders to compete with each other in the process of the fresh selection. At the cost of repetition, we may state that the decision of the authority is giving a fresh opportunity to all interested bidders to compete with each other in the process of the fresh selection. In our opinion, the decision taken by the authority is not affecting the public interest, on the contrary it furthers the cause of the public interest and fair play.” 14. One has to examine the observations made by the Apex Court in State of Punjab and Others v. Mehar Din (2022) 5 SCC 648 , wherein the view taken was that plausible decisions need not be overturned and latitude ought to be granted to the State in the exercise of its executive power. Only in cases of allegations of illegality, irrationality and procedural impropriety would be a ground for Courts to assume jurisdiction and remedy such ills and Governments must be given a ‘fair play in the joints’ for functioning in their administrative affairs. Resultantly, it was held that it is not for the High Court to sit like a Court of appeal over the decision of the competent authority, who is competent to float the tender and the best judge of its own requirements. 15. It is the settled principle laid down by the Apex Court that in tender matters, it is not for the Writ Court to interfere, especially keeping in view the fact that food items, as in the present case, being invited for, would require certain set of urgency. In such circumstances, we are of the considered opinion that if the petitioners had any grouse against the Rules, they could have challenged the same, and having not raised such a challenge, the State is bound by the said Rules. Therefore, as the respondent has proceeded in a certain manner in accordance with the statutory Rules, no fault can be found. 16. Accordingly, the present Writ Petition is dismissed. Interim order dated 02.04.2025 is vacated. 17. Pending miscellaneous application(s), if any, shall stand disposed of.