Arvind Kumar Mishra vs State Of U.P. & Ors.

CASE OF THE PETITIONER

7.0 SECURITY DEPOSIT / PERFORMANCE SECURITY

The Performance Security shall be deposited in the form of Bank Guarantee issued by a Scheduled Bank on non judicial stamp papers legally acceptable as per Stamp Act 1899. The firm shall submit 10% of the Contract Value i.e. Rs. 2,88,400.00 Security Deposit and Rs. 359461.00 additional Performance security Total Rs. 547861.00 (Rs. Five Lakhs Forty Seven Thousand Eight Hundred Sixty one only) in the form of Bank Guarantee/FDR; on Non Judicial stamp paper of Rs. 20200.00 (Rs. Twenty thousand Two hundred only) purchased frorn Government Treasury only. Bank Gurantee/FDR duly pledged for payment" in the name of Executive Engineer, Minor Lift Canal Division, Banda for the purposes mentioned hereinabove and hereinafter before signing the Contract, in accordance with the terms & conditions of the contract.”

“4.

Considering the facts and circumstances of the case and without adverting into the merits of the case, we dispose off the writ petition permitting the petitioners to file a fresh representation alongwith certified copy of this order raising all his grievances before the respondent No.3/Executive Engineer, Laghudal Nahar Khand, Banda within a period of one month from today. In case, any such representation is filed by the petitioners, the respondent shall consider and decide the same in accordance with law within a period of one month from the date he receives the representation of the petitioners.”

CASE OF THE STATE-RESPONDENTS

“सेवा में, अधिशाषी अभियन्ता लघु डाल नहर खण्ड, बाँदा विषय- अनुबन्ध हेतु अवशेष परफोरमेंस धनराशि जमा न करने के सम्बन्ध में। महोदय, सादर अवगत कराना है कि इस खण्ड द्वारा ई-निविदा सं०-02 (लाट-05) / ल०डा०-०ख०या०/अधि० अभि०/2024 25/दिनांक- 14.08.2024 प्रकाशित की गयी थी जिसकी लाट-5 में प्रकाशित “जनपद बाँदा के विकासखण्ड वडोखरखुर्द में ग्राम गन्छा के समीप नवीन रामजानकी पम्प नहर परियोजना के मुख्य नहर की पाइपलाइन की रीच 2.400-2.480 किमी० तथा 2.500-2.610 किमी० तक RCC Padestal (P233-P262) के निर्माण कार्य तथा MS पाइपलाइन (500 मिमी० व्यास) 130 मी० पाइपलाइन की लेइंग (IS-5822-1994), कमिशनिंग एवं टेस्टिंग का कार्य (L-सेक्शन, X-सेक्शन एवं ड्राइंग के अनुसार) एवं गन्छा-2 माइनर की रीच 0.00-0.030 किमी० तथा 0.100-0.130 किमी०, 0.170-0.230 किमी० एवं 0.420-0.460 किमी० तक RCC Padestal (PG1-PG36) के निर्माण कार्य तथा MS पाइपलाइन (355 मिमी०व्यास) 160 मी० पाइपलाइन की लेइंग (IS-5822-1994), कमिशनिंग एवं टेस्टिंग का कार्य (L-सेक्शन, X-सेक्शन एवं ड्राइंग के अनुसार)" के कार्य हेतु श्री अरविन्द कुमार कॉन्ट्रैक्टर की दरें न्यूनतम प्राप्त होने उपरान्त अनुबन्ध गठन की प्रक्रिया की जानी प्रस्तावित है। श्री अरविन्द कुमार कॉन्ट्रैक्टर द्वारा दी गयी दरें प्राक्कलित धनराशि से 11.08 प्रतिशत कम होने के कारण परफोरमेन्स धनराशि रु०-359461.00 की आवश्यकता है। परफोरमेन्स धनराशि हेतु श्री अरविन्द कुमार कॉन्ट्रैक्टर नियमित रूप से कार्यालय परिसर में उपस्थित होते रहते हैं जिस कारण मौखिक रूप से अवगत कराया गया जिसके फलस्वरूप उनके द्वारा मात्र धनराशि रु०-54000.00 की परफोरमेन्स धनराशि ही एफडीआर के रूप में उपलब्ध करायी गयी है एवं मेरे द्वारा बार - बार मांगे जाने के उपरान्त भी शेष परफोरमेन्स धनराशि अगले दिवस में उपलब्ध कराने का आश्वासन दे दिया जाता है तथा अभी तक शेष परफोरमेन्स धनराशि उपलब्ध नहीं करायी गयी है जिसके कारण अनुबन्ध गठन किया जाना संभव नहीं हो पा रहा है।

अतः आपसे अनुरोध है कि उक्त प्रकरण में अपने स्तर अग्रिम आवश्यक कार्यवाही करने की कृपा करें।"

प्रार्थी (गजेन्द्र सिंह पटेल) आशुलिपिक लघु डाल नहर खण्ड, बांदा

ANALYSIS

“It is clear that once the power to auction is conferred, the bye-laws framed in pursuance to the statutory powers, the same cannot be modified/interfered by a Government Order without amending the bye-laws and, thus, this Court holds that the Government Order referred to in the impugned order cannot over ride the bye-laws framed in pursuance to the statutory power. It is further clear from the perusal of the Government Orders as discussed above, that none of the Government Orders have any applicability to the facts of the present case and, thus, reliance solely on the said Government Orders while passing the impugned order is wholly arbitrary, perverse and clearly suffers from the vice by wednesbury arbitrariness. There is one more aspect of the matter that while cancelling the contract executed in favour of the petitioner, the respondents-authorities have not cancelled the auction of the other items held through the same auction notice dated 12.9.2017, the explanation in the counter affidavit extracted above is wholly unacceptable as the Government Orders referred to in the impugned order would apply to the other items also, if the contention of the respondents are to be accepted. The impugned order is further bad in law as no opportunity of hearing was given to the petitioner prior to the cancellation of the contract on 20.9.2018. Thus, the order is also bad on account of non-following the principles of natural justice.”

“38.

A Constitution Bench of this Court in Natural Resources Allocation, In re, Special Reference No. 1 of 2012 [Natural Resources Allocation, In re, Special Reference No. 1 of 2012, (2012) 10 SCC 1] speaking through J.S. Khehar, J. (as His Lordship then was) observed in regard to contracts having the State as a party, as hereinunder reproduced : (SCC pp. 135-36, para 183)

“183.

The parameters laid down by this Court on the scope of applicability of Article 14 of the Constitution of India, in matters where the State, its instrumentalities, and their functionaries, are engaged in contractual obligations (as they emerge from the judgments extracted in paras 159 to 182, above) are being briefly paraphrased. For an action to be able to withstand the test of Article 14 of the Constitution of India, it has already been expressed in the main opinion that it has to be fair, reasonable, non-discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. The judgments referred to, endorse all those requirements where the State, its instrumentalities, and their functionaries, are engaged in contractual transactions. Therefore, all “governmental policy” drawn with reference to contractual matters, it has been held, must conform to the aforesaid parameters. While Article 14 of the Constitution of India permits a reasonable classification having a rational nexus to the object sought to be achieved, it does not permit the power of pick and choose arbitrarily out of several persons falling in the same category. Therefore, criteria or procedure have to be adopted so that the choice among those falling in the same category is based on reason, fair play and non-arbitrariness. Even if there are only two contenders falling in the zone of consideration, there should be a clear, transparent and objective criteria or procedure to indicate which out of the two is to be preferred. It is this, which would ensure transparency.” (emphasis supplied)

39.

A Bench of two learned Judges of this Court in Shrilekha Vidyarthi (Kumari) v. State of U.P. [Shrilekha Vidyarthi (Kumari) v. State of U.P., (1991) 1 SCC 212 : 1991 SCC (L&S) 742] observed that there exists “an obvious difference” between contracts concerning private parties to those which have State as a party. The primary difference being that the State while exercising its powers and discharging its functions “acts indubitably, as is expected of it, for public good and in public interest”. The said factor singularly is sufficient to bring into any transaction the minimal requirements of public law, to which the State is a party. The fact that a dispute falls into the contractual realm does not relieve the State of its obligation to comply with the requirements of Article 14.

40.

Further the Court in Shrilekha Vidyarthi case [Shrilekha Vidyarthi (Kumari) v. State of U.P., (1991) 1 SCC 212 : 1991 SCC (L&S) 742] had observed that : (SCC p. 237, para 24)

“24.

The State cannot be attributed the split personality of Dr Jekyll and Mr Hyde in the contractual field so as to impress on it all the characteristics of the State at the threshold while making a contract requiring it to fulfil the obligation of Article 14 of the Constitution and thereafter permitting it to cast off its garb of State to adorn the new robe of a private body during the subsistence of the contract enabling it to act arbitrarily subject only to the contractual obligations and remedies flowing from it. It is really the nature of its personality as State which is significant and must characterise all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. There is a basic difference between the acts of the State which must invariably be in pubic interest and those of a private individual, engaged in similar activities, being primarily for personal gain, which may or may not promote public interest. Viewed in this manner, in which we find no conceptual difficulty or anachronism, we find no reason why the requirement of Article 14 should not extend even in the sphere of contractual matters for regulating the conduct of the State activity.” (emphasis supplied)

41.

This case hinges on what would be construed to be “reasonable time” to consider any application for reduction in maximum demand, by the authorities. A three-Judge Bench of this Court in SEBI v. Bhavesh Pabari [SEBI v. Bhavesh Pabari, (2019) 5 SCC 90] has observed that : (SCC pp. 104-105, para 35)

“35.

… There are judgments which hold that when the period of limitation is not prescribed, such power must be exercised within a reasonable time. What would be reasonable time, would depend upon the facts and circumstances of the case, nature of the default/statute, prejudice caused, whether the third-party rights had been created, etc.”

42.

In Mansaram v. S.P. Pathak [Mansaram v. S.P. Pathak, (1984) 1 SCC 125] this Court has observed that when a power exists to effectuate a purpose it must be exercised within a reasonable time. It has been observed that this is all too well-settled principle to require buttressing precedent. Nonetheless, the Court refers to State of Gujarat v. Patil Raghav Natha [State of Gujarat v. Patil Raghav Natha, (1969) 2 SCC 187] wherein the period of one year was found to be too long for the Commissioner to exercise revisional jurisdiction under Section 211 of the Bombay Land Revenue Code. The principle of reasonable time as mentioned herein was followed recently by a two-Judge Bench in SEBI v. Sunil Krishna Khaitan [SEBI v. Sunil Krishna Khaitan, (2023) 2 SCC 643]”

“26.

It may be added that every case in which a citizen/person knocks at the doors of the writ court for breach of his or its fundamental rights is a matter which contains a “public law element”, as opposed to a case which is concerned only with breach of contract and damages flowing therefrom. Whenever a plea of breach of natural justice is made against the State, the said plea, if found sustainable, sounds in constitutional law as arbitrary State action, which attracts the provisions of Article 14 of the Constitution of India — see Nawabkhan Abbaskhan v. State of Gujarat [Nawabkhan Abbaskhan v. State of Gujarat, (1974) 2 SCC 121 : 1974 SCC (Cri) 467] , para 7. The present case is, therefore, a case which involves a “public law element” in that the petitioner (Respondent 1 before us) who knocked at the doors of the writ court alleged breach of the audi alteram partem rule, as the entire proceedings leading to cancellation of the tender, together with the cancellation itself, were done on an ex parte appraisal of the facts behind his back. 31. In some of the early judgments of this Court, the non-observance of natural justice was said to be prejudice in itself to the person affected, and proof of prejudice, independent of proof of denial of natural justice, was held to be unnecessary. The only exception to this rule is where, on “admitted or indisputable” facts only one conclusion is possible, and under the law only one penalty is permissible. In such cases, a Court may not issue its writ to compel the observance of natural justice, not because it is not necessary to observe natural justice, but because Courts do not issue writs which are “futile” — see S.L. Kapoor v. Jagmohan [S.L. Kapoor v. Jagmohan, (1980) 4 SCC 379] , para 24. In P.D. Agrawal v. SBI [P.D. Agrawal v. SBI, (2006) 8 SCC 776 : (2007) 1 SCC (L&S) 43] , however, the Court observed that this statement of the law has undergone a “sea change”, as follows : (P.D. Agrawal case [P.D. Agrawal v. SBI, (2006) 8 SCC 776 : (2007) 1 SCC (L&S) 43] , SCC pp. 793-94, para 39)

“39.

Decision of this Court in S.L. Kapoor v. Jagmohan [S.L. Kapoor v. Jagmohan, (1980) 4 SCC 379] whereupon Mr Rao placed strong reliance to contend that non-observance of principle of natural justice itself causes prejudice or the same should not be read “as it causes difficulty of prejudice”, cannot be said to be applicable in the instant case. The principles of natural justice, as noticed hereinbefore, have undergone a sea change. In view of the decisions of this Court in State Bank of Patiala v. S.K. Sharma [State Bank of Patiala v. S.K. Sharma, (1996) 3 SCC 364 : 1996 SCC (L&S) 717] and Rajendra Singh v. State of M.P. [Rajendra Singh v. State of M.P., (1996) 5 SCC 460] the principle of law is that some real prejudice must have been caused to the complainant. The Court has shifted from its earlier concept that even a small violation shall result in the order being rendered a nullity. To the principle/doctrine of audi alteram partem, a clear distinction has been laid down between the cases where there was no hearing at all and the cases where there was mere technical infringement of the principle. The Court applies the principles of natural justice having regard to the fact situation obtaining in each case. It is not applied in a vacuum without reference to the relevant facts and circumstances of the case. It is no unruly horse. It cannot be put in a straitjacket formula.” (emphasis supplied)

42.

An analysis of the aforesaid judgments thus reveals:

42.1.

Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused.

42.2.

Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest.

42.3.

No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission of facts, in cases in which the Court finds on facts that no real prejudice can therefore be said to have been caused to the person complaining of the breach of natural justice.

42.4.

In cases where facts can be stated to be admitted or indisputable, and only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person.

42.5.

The “prejudice” exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the non-observance of natural justice.”

9.

It is well settled that the terms of an invitation to tender are not open to judicial scrutiny, as they are in the realm of contract, unless they are arbitrary, discriminatory, or actuated by malice. Thus, in Directorate of Education v. Educomp Datamatics Ltd. [Directorate of Education v. Educomp Datamatics Ltd., (2004) 4 SCC 19] , this Court held: (SCC pp. 23 & 24, paras 9 & 12)

“9.

It is well settled now that the courts can scrutinise the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favouritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651] . After examining the entire case law the following principles have been deduced: (SCC pp. 687-88, para 94)

‘94. The principles deducible from the above are:

(1)

The modern trend points to judicial restraint in administrative action.

(2)

The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3)

The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4)

The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5)

The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application ofWednesbury [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6)

Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.’

11.

As has correctly been argued by learned counsel appearing on behalf of the respondents, this Court's judgment in Central Inland Water Transport Corpn. [Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly, (1986) 3 SCC 156 : 1986 SCC (L&S) 429] , which lays down that contracts of adhesion i.e. contracts in which there is unequal bargaining power, between private persons and the State, are liable to be set aside on the ground that they are unconscionable, does not apply where both parties are businessmen and the contract is a commercial transaction (see para 89 of the said judgment). In this view of the matter, the argument of the appellant based on this judgment must fail.

12.

It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.” (emphasis in original)

“14.

It has been submitted by the learned counsel for the appellant that there should be a cap in the quantum payable in terms of sub-clause (7) of Clause 25-A. This plea is clearly without substance. It is to be noted that it is structured on the basis of the quantum involved. Higher the claim, the higher is the amount of fee chargeable. There is a logic in it. It is the balancing factor to prevent frivolous and inflated claims. If the appellants' plea is accepted that there should be a cap in the figure, a claimant who is making higher claim stands on a better pedestal than the one who makes a claim of a lesser amount.”

“23.

It is clear from the above observations of this Court, once the State or an instrumentality of the State is a party to the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the abovesaid requirement of Article 14, then we have no hesitation in holding that a writ court can issue suitable directions to set right the arbitrary actions of the first respondent. …

27.

From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition:

(a)

In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable.

53.

From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. …”

“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. 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.”

“In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State authorities. Unless the action of tendering Authority is found to be malicious and misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of a class of intending tenderer under Article 19 of the Constitution. On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep out of field indigenous manufacturers. It is explained that on the date of formulation of scheme in rule 50 and issuance of guidelines thereunder by Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a long term basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates.

Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work, Article 14 of the Constitution prohibits the government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim fundamental right to carry on 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. Undisputedly, the legal position which has been firmly established from various decisions of this Court, cited at the Bar (supra) is that government contracts are highly valuable assets and the court should be prepared to enforce standards of fairness on government in its dealings with tenderers and contractors.”

“13.

In other words, a mere disagreement with the decision making process or the decision of the administrative authority is no reason for a constitutional Court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional Court interferes with the decision making process or the decision.

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.”

“10.

The award of public contracts is an exercise of public power. It involves the expenditure of public funds and the conferment of economic benefit by the State. Such decisions are not insulated as matters of private contract. They are subject to the discipline of Article 14 of the Constitution of India, because the State must act fairly, transparently, and in a non-arbitrary manner when it distributes public resources.

11.

This Court has repeatedly recognised that State owned or public owned resources cannot be dealt with at the absolute discretion of the executive. Public interest is the paramount consideration. One of the ordinary and safest methods of securing that public interest is by inviting competition through tenders. A departure from competitive tendering may be permissible in a limited set of situations, but only when the departure is justified by rational and recorded reasons that do not suggest discrimination. In Sachidanand Pandey v. State of W.B.2, this Court emphasised that appearance of public justice is as important as doing justice, and nothing should be done which gives an appearance of bias, jobbery or nepotism. That principle has particular force in matters of public contracting, because secrecy, discretion and personal proximity are precisely the conditions in which abuse of power becomes difficult to detect.

13.

The discipline that governs State largesse reinforces this position. The State and its instrumentalities cannot confer benefits according to the whims of any political or administrative functionary. In Akhil Bhartiya Upbhokta Congress v. State of M.P.3, this Court held that every decision to confer benefit must be founded on a sound, transparent and discernible policy and must be implemented by a non-discriminatory method, free from favouritism and nepotism. The same understanding informs the statement in Centre for Public Interest Litigation v. Union of India4, that whenever a contract or licence is granted the public authority must adopt a transparent and fair method so that eligible persons have a fair opportunity of competition. These decisions do not lay down tendering as a mechanical ritual. They treat transparency and fair opportunity as constitutional essentials in the disposition of public resources.

14.

These principles are especially stringent where the allegation is of conflict of interest or related party benefit. In such situations, the constitutional concern (2011) 5 SCC 29 (2012) 3 SCC 1 is not limited to whether the State obtained value for money. The concern is whether public power was used, directly or indirectly, to confer private advantage, or whether the process was structured in a manner that excluded competition and enabled a preferred beneficiary. Once such a concern arises on the record, it is not answered by showing that the overall percentage of work awarded to related parties is numerically small. A constitutional violation in public contracting is not diluted by statistics. Even a single instance, if established, undermines equality, the rule of law and public confidence in fair administration.

15.

At the same time, it must be emphasized that judicial review in this field does not convert the Court into a tender approving authority. The Court does not sit to choose the contractor or to re-evaluate technical bids. The Court examines whether the process conforms to constitutional standards of fairness, transparency and non-arbitrariness, and whether the record supports the decision. Where the complaint is not about comparative merits of bidders but about systemic opacity, repeated departures from competitive methods, missing records and alleged conflict of interest, the matter travels beyond an ordinary contractual grievance and raises questions of constitutional accountability.”

“3.

Power of Court to allow interest- (1)In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the Court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say,

(a)if the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings;

(b)if the proceedings do not relate to any such debt, then, from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceedings:

Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment.

(2)

Where, in any such proceedings as are mentioned in sub-section (1),

(a)judgment, order or award is given for a sum which, apart from interest on damages, exceeds four thousand rupees, and

(b)

the sum represents or includes damages in respect of personal injuries to the plaintiff or any other person, or in respect of a persons death, then, the power conferred by that sub-section shall be exercised so as to include in that sum interest on those damages or on such part of them as the Court considers appropriate for the whole or part of the period from the date mentioned in the notice to the date of institution of the proceedings, unless the Court is satisfied that there are special reasons why no interest should be given in respect of those damages.

(3)

Nothing in this section,

(a)shall apply in relation to

(i)any debt or damages upon which interest is payable as of right, by virtue of any agreement; or

(ii)any debt or damages upon which payment of interest is barred, by virtue of an express agreement;

(b)shall affect-

(i)the compensation recoverable for the dishonour of a bill of exchange, promissory note or cheque, as defined in the Negotiable Instruments Act, 1881 (26 of 1881); or

(ii)the provisions of Rule 2 of Order II of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908);

(c)

shall empower the Court to award interest upon interest.

4.

Interest payable under certain enactments- (1)Notwithstanding anything contained in section 3, interest shall be payable in all cases in which it is payable by virtue of any enactment or other rule of law or usage having the force of law.

(2)

Notwithstanding as aforesaid, and without prejudice to the generality of the provisions of sub-section (1), the Court shall, in each of the following cases, allow interest from the date specified below to the date of institution of the proceedings at such rate as the Court may consider reasonable, unless the Court is satisfied that there are special reasons why interest should not be allowed, namely:

(a)where money or other property has been deposited as security for the performance of an obligation imposed by law or contract, from the date of the deposit;

(b)where the obligation to pay money or restore any property arises by virtue of a fiduciary relationship, from the date of the cause of action;

(c)where money or other property is obtained or retained by fraud, from the date of the cause of action;(d)where the claim is for dower or maintenance, from the date of the cause of action.”

“21.

The above apart, even if it be assumed that no prayer for grant of a writ of mandamus was made, even orally or in pleadings, it was open for the High Court to mould and grant the relief. At the cost of repetition, the High Court had, in the present cases, returned conclusive findings in the appellants' favour. The High Court was in seisin of writ petitions filed invoking its extraordinary jurisdiction under Article 226 of the Constitution of India. A Division Bench of the Andhra Pradesh High Court, speaking through one of us (Ahsanuddin Amanullah, J.) in Mangalagiri Textile Mills Private Limited v. State Bank of India, 2022 SCC OnLine AP 525, considered the power to mould relief under Article 226 of the Constitution of India, including a situation where the appropriate prayer/relief was not specifically pleaded for, and held:

‘45. The power to mould relief is an inherent and intrinsic component of Article 226. At Paragraph 5 of B.R. Ramabhadraiah v. Secretary, Food and Agriculture Dept., AP, (1981) 3 SCC 528 and Paragraph 4 of State of Rajasthan v. Hindustan Sugar Mills Ltd., (1988) 3 SCC 449, it has been held that under Article 226, the High Court's power includes the capacity to mould relief to remedy injustice and as per the demand of the situation. In Air India Statutory Corporation v. United Labour Union, (1997) 9 SCC 377, it was observed:

“59.

The Founding Fathers placed no limitation or fetters on the power of the High Court under Article 226 of the Constitution except self-imposed limitations. The arm of the Court is long enough to reach injustice wherever it is found. The Court as sentinel on the qui vive is to mete out justice in given facts. On finding that either the workmen were engaged in violation of the provisions of the Act or were continued as contract labour, despite prohibition of the contract labour under Section 10(1), the High Court has, by judicial review as the basic structure, a constitutional duty to enforce the law by appropriate directions. The right to judicial review is now a basic structure of the Constitution by a catena of decisions of this Court starting from Indira Nehru Gandhi v. Raj Narain [1975 Supp SCC 1 : AIR 1975 SC 2299] to Bommai case [(1994) 3 SCC 1]. It would, therefore, be necessary that instead of leaving the workmen in the lurch, the Court properly moulds the relief and grants the same in accordance with law.” (emphasis supplied)

46.

Moreover, in Rajesh Kumar v. State of Bihar, (2013) 4 SCC 690, particularly at Paragraphs 14-16, it has been held that the power to mould relief is well-recognised and is available to a Writ Court to render complete justice.

47.

We have noticed an injustice and a violation of law. We, thus, proceed to fashion out the appropriate relief, despite no formal application for the same being made via pleadings. However, in the course of arguments, learned counsel for the petitioner did urge us to pass an order that would subserve justice.

48.

In Ramesh Chandra Sankla v. Vikram Cement, (2008) 14 SCC 58, the Hon'ble Supreme Court was pleased to state:

“98.

From the above cases, it clearly transpires that powers under Articles 226 and 227 are discretionary and equitable and are required to be exercised in the larger interest of justice. While granting relief in favour of the applicant, the court must take into account the balancing of interests and equities. It can mould relief considering the facts of the case. It can pass an appropriate order which justice may demand and equities may project. As observed by this Court in Shiv Shankar Dal Mills v. State of Haryana, [(1980) 2 SCC 437 : (1980) 1 SCR 1170] courts of equity should go much further both to give and refuse relief in furtherance of public interest. Granting or withholding of relief may properly be dependent upon considerations of justice, equity and good conscience. (emphasis supplied)