Kashmir Handloom Industries vs The State and Others

A.M. Mir, J.—This petition seeks the indulgence of this Court to quash the supply order made in favour of respondent No. 5 along with

orders passed on 30-9-1996 and also a decision of issuing fresh tenders. Besides this, a direction in the form of mandamus also is sought

commanding the respondents I to 4 to place supply orders with the petitioner in terms of the decision of State Level Rate Contract Penalisation

Committee, (hereinafter called the Committee) dated 9-9-1996.

The petitioner is a registered contractor who in response to an advertisement notice floated on 27-9-1996 submitted his tenders for supply of

tarpaulin jute bags. He was one of the tenderers who qualified. After this the State Level Rate Contract Committee met on 9-9-1996 and declared

the samples of the petitioner to be of a standard quality. Subsequently the Committee seems to have met on 23-9-1996 and taken a fresh decision

of issuing fresh tenders. Supply orders in terms of the subsequent tender notice were placed with respondent No. 5 on 30-9-1996. Aggrieved by

this order the petitioner challenges the same on the following grounds : --

(i) That the impugned action is beyond jurisdiction as an earlier decision of full committee has been revoked by a committee of four members only;

(ii) That the order impugned is mala fide;

(iii) That the order impugned is violative of the fundamental/ legal rights of the petitioner.

The other side hat, filed elaborate returns, wherein the necessity for issuing fresh tenders is spelled out. It is maintained that Director of

Agriculture Jammu vide his communication No. Acctts-96-97/1261-66 dated 14-9-96 highlighted a discrepancy in respect of the specification as

required by NIT. The same discrepancy was based upon the findings of the technical experts. The communication was addressed to Director

Horticulture. J. and K. State, Srinagar. Director Horticulture found the report of Director Agriculture to be convincing and suggested to reconvene

the Committee. As a result of this decision a meeting of the Committee was convened on 23-9-1996 and the matter was reviewed, resulting in

retendering of the matter. It is a fact that only four out of seven members were present. Nonetheless, the quorum was complete.

The thrust of the argument advanced by Mr. Thakur appearing for respondents 1 to 4 is that on the date of reconvening the meeting, or on 30-

9-1996, when the supply order in favour of respondent No. 5 was issued, no agreement between the parties had come into being. The

respondents 1 to 4, according to him, before completion of the agreement, were within their rights to withdraw the tender notice.

I have heard the learned counsel for the parties at length. The point of law arising out of the present case is as to whether or not before

completion of a contract it is open to a party floating tenders to withdraw such tender.

The law of contract treats the tender notice as an 'invitation of offer'. A tender floated in response to such tender notice comes within the

purview of the term 'offer'. In English Law 'proposal' is known as an 'offer'. In Carlill v. Carbolic Smoke Ball Co. (1893) TQB 256 (C.A.) it was

held that a tender for work amounted to an offer and the contract could be completed only when this offer was accepted. It was also held that an

advertisement inviting tenders for supply of goods is only an invitation for offer. In the present case when the writ petitioner submitted his tender to

made an 'offer'. It was for the respondent-State either to accept this offer or reject it. The respondent-State in order to reach at a conclusion as to

whether the petitioner's offer should be accepted or rejected was getting the matter examined through its concerned agencies. State seems to have

streamlined the process of fixation of price, examination of samples and finalisation of contract by evolving a mechanism in the form of formation of

State Level Rate Contract Finalisation Committee. While the process of consideration at State level was in pipeline, a meeting of the committee

was convened on 9-9-1996. The committee found seven out of nine tenderers, including the petitioner, fulfilling the specifications of NIT. The

samples were also examined. The committee seems to have agreed with the finding of the technical expert member, who had certified that the

samples of the petitioner conforming to the specifications and were meeting the requirement of the department. However, the minutes were closed

with a decision of retendering such items in terms of Govt. Order No. 290-Agri of 1996 dated 30-5-1996, in respect of which the quotations

received did not fulfill the requirement of N.I.T. The responent-State retendered the matter and after finding respondent No. 5 to have quoted

lowest rates on 30-9-1996 placed an order for supply of 18000 bags. It was this order of which the petitioner is aggrieved. It is this order of

which the petitioner is aggrieved. It is the observation of the committee made on 9-9-1996 upon which •petitioner basis his claim of having been

discriminated against and his legal rights violated. He has also imputed bias to the respondents.

The point came up for consideration before their Lordships of the Supreme Court in Badri Parsad v. State of M. P. AIR 1970 SC 706 . In this

case acceptance of the offer was conveyed but that acceptance was conditional and qualified. Their Lordships held that the offer was never

unqualified. Therefore, the Court declined to accept the argument that the contract had been completed. In Mangaldas Raghavji Ruparel and

Another Vs. The State of Maharashtra and Another, their Lordships of the Supreme Court held that an offeree is not bound to accept the

proposal. On the other hand he has every choice with him to reject the same. In Bhagwandas Goverdhandas Kedia Vs. Girdharilal Parshottamdas

and Co. and Others, , at page 547 same view was held that in anticipation of a proposal having been accepted by the other side no contract gets

completed.

Applying the above authorities upon the facts of the present case we find that there has been no agreement between the parties on 30-9-1996

when the decision of placing supply order with respondent No. 5 was taken. The decisions of the committee convened on 9-9-1996 cannot be

said to have vested any right with the petitioner.

Privity of contract starts from the date when the agreement is perfected. The agreement gets completed only when the proposal is accepted.

Before according such acceptance the proposee will be within his rights to take appropriate steps in making up his mind for acceptance or non-

acceptance of the offer. Any deliberations made by the proposee prior to the completion of the agreement with his own advisors or confidents will

not provide a launching pad for any legal right of the proposer. Rights and liability of the parties take birth only when the agreement gets

completed.

The question in hand elaborately came up for determination before their Lordships of the Supreme Court in State of Orissa and Others Vs.

Harinarayan Jaiswal and Others, . The facts of that case were much stronger. Eight country liquor shops were put on sale by public auction. The

'H' participated and was the highest bidder in the auction. The Collector provisionally accepted H's bid subject to confirmation by the Government.

The Government rejected those bids being of the view that inadequate price had been offered. It ordered the Excise Commissioner to call for fresh

tenders in respect of these shops. After receiving fresh tenders the Government accepted the tender in respect of one shop only and again decided

that the price offered was insufficient and rest of seven shops were thereafter sold by negotiation with some of the tenderers. 'H' challenged this

action of the Government before the High Court. The High Court quashed the action of the Government and held that the Government had no

power to refuse to confirm the bids of the highest bidders, except on. good grounds. The Supreme Court quashed High Court's finding and apart

from tracing the, origin of the Government decision to Section 29 of Bihar and Orissa Excise Act authoritatively held that the contract between the

parties was not concluded as the last bid was not accepted and till completion of the agreement the Government was within its powers to reject the

offer made by the highest bidder. Their Lordships were appreciative of the attempt made by the Government to fetch best available price for its

property. Their Lordships observed as under (at p. 1822 of AIR):--

Public auctions are held to get the best possible price. Once these aspects were recognised, there was no basis for contending that the owner of

the privileges in question who had offered to sell them could not decline to accept the highest bid if he thinks that tke price offered is inadequate.

There was no concluded contract till the bid was accepted. Before there was a concluded contract, it was open to the bidders to withdraw their

bids. By merely giving bids, the bidders had not acquired any vested rights. The fact that the Government was the seller does not change the legal

position once its exclusive right to deal with those privileges was conceded. If the Government was the exclusive owner of those privileges, reliance

on Article 19(l)(g) or Article 14 became irrelevant. Citizens could not have any fundamental right to trade or carry on business in the properties or

rights belonging to the Government - nor could there be any infringement of Article 14, if the Government tries to get the best available price for its

valuable rights.

In the present case the price quoted by the petitioner for one bag is Rs. 18.50. On the other hand after issuing fresh tenders supply order was

placed with respondent No. 5 only @ Rs. 16.20 per bag. This makes a difference of Rs. 2,30 P. per bag. This shows that the decision of

retending was in public interest as considerable amount of public money has been saved. Therefore, I find no fault with the decision of issuing fresh

tenders.

Learned counsel for the petitioner has unsuccessfully tried to project a case of bias. According to him a decision of seven members of the

Committee was rescinded by a four member committee. No particulars of bias have been spelt out. Question of number of participants is not of

any significance. The Committee is only an advisory committee formulated by the Government for enabling itself to arrive at a correct and sound

decision. If the committee decide matter subsequently after a formal decision of retendering was taken on 9-9-1996 itself, no allegation of bias or

causing infringement of right can hold good. 13. I, on the foregoing analogy, find that the petitioner as on 30-9-1996 had no right vested in him.

The action of retendering the supply does not suffer from any vice or illegality. Same is upheld and the writ petition along with all its C.M.Ps.

dismissed. Interim direction issued on 15-10-1996 is vacated.