8 August 2022


Judgments

High Court of Madras

The Chairman, V.O. Chidambaranar Port Trust and Ors. Vs. M. Sindhu

MANU/TN/3794/2018

27.07.2018

Commercial

Mere vague averment bereft of material particulars cannot satisfy requirement of pleading mala fide or favoritism

Present writ appeal is filed against the order passed by the Writ Court. The Appellants herein are the Respondents before the Writ Court. The Respondent herein, as the writ Petitioner, challenged Clause Nos. 3 and 4 of the Tender Notice dated 27th June, 2018 on the file of the second Respondent. Consequently, the writ Petitioner sought for a direction to the first Respondent to conduct the tender in a fair manner by amending Clauses 3 and 4 suitably in consonance with the Tender Transparency Act. The Writ Court allowed the writ petition in part and quashed the Clause No. 4 of the Tender Notification alone. Thus, the present writ appeal is filed by the aggrieved respondents.

The tender inviting authority being the owner, is undoubtedly having right and every justification to impose terms and conditions in the tender notification suitable for them, in order to select a qualified person to execute the contract work. Neither the intending bidder nor third party can have any say, whatsoever, on the terms and conditions of the contract, as to how it should be, so long as those terms and conditions are not opposed to public policy. Merely because, a particular Clause or condition in the tender notification is not either suitable for a person or it indirectly excludes his participation in the tender process, that itself cannot be a reason to say that imposition of such Clause or condition is either arbitrary or tainted with mala fide. The owner, certainly, cannot be expected to impose only such of those conditions which would suit all the intending bidders. Scope and ambit of commercial contract do not justify such expectation as reasonable. It is well settled that, the Court should desist from interfering with the terms and conditions of the contract either by substituting the one, as projected by the intending bidder, or diluting the existing condition, in a way that would suit the said proposed party. Owner of the contract, namely, the tender inviting authority is to be left with free hands to select a suitable and fully qualified person to execute the contract work, more particularly, when the public money is involved in such project.

When certain terms and conditions of tender notification are put to challenge, it should be first seen as to whether those terms and conditions are opposed to public policy. If not, the Court should show utmost restraint from interfering with those terms and conditions, unless an allegation of mala fide or favoritism is specifically pleaded and proved. The pleadings must be so specific to the effect that those terms and conditions are tailor-made only to suit a particular individual alone. If there is a possibility for a reasonable presumption that more than one person will have such qualification, then raising the question of mala fide or favoritism does not arise.

Mere vague averment bereft of material particulars cannot satisfy the requirement of pleading mala fide or favoritism. Likewise, the arbitrariness alleged also cannot be considered as existing, simply because it is stated so. On the other hand, such allegation of arbitrariness must be tested with touch stone of reasonableness, as what is arbitrary to one person may be reasonable to another person. It is obvious that a view on a particular clause of contract differ from person to person (intending bidder), depending upon their ability, suitability and capacity. Unsuitability or inability of a person to take part in a commercial contract cannot automatically lead to a presumption of arbitrariness against a particular clause which made such exclusion, more particularly when the terms and conditions stipulated are insisted upon all the intending bidders. Therefore, a particular clause, claimed to be arbitrary in nature, has to be tested from the point of view of owner / tender inviting authority and not from the point of view of the willing participants.

Preclusion is not prevention. If preclusion is resulting out of lack of the qualification of intending bidder, the owner/tender inviting authority cannot be found fault with or blamed for imposing such condition which precluded such person. Prescribing the necessary qualification for the bidders is the basic and in-built right of the owner and hence, it should be left within his exclusive domain. Merely because a condition seems to be onerous or unsuitable for a particular individual, the same cannot be termed as arbitrary or tainted with mala fide.

The Writ Court is not justified in quashing the Clause - 4 of the subject matter tender notification there is no arbitrariness or mala fide in introducing such clause. Accordingly, the writ appeal is allowed and the order of the Writ Court is set aside.

Tags : Tender notification Clause Arbitrariness

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