TaxTMI 
TaxTMI 
2010 (9) TMI 222
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....heard counsel appearing for the appellant and Standing Counsel appearing for the third respondent. 2. The second respondent herein which is the Director of the Animal Husbandry Department of the State Government, invited tenders for purchase and installation of Freeze Dryer for the financial year 2009-10. Three tenders were received and out of which, one tender was rejected. The remaining two were submitted by the appellant as well as the third respondent. When tenders were opened, appellant's was the lower of the two bids. However, the second respondent decided to negotiate with the appellant for reduction of price and appellant vide Ext.P7 still lowered the price to Rs. 2,32,00,000. The third respondent which is a Central Government Co....
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....should have been granted in such a way that both appellant and third respondent got an opportunity to go on reducing the price to the lowest possible. The further contention raised by the appellant is that there is nothing in the tender condition to indicate that the third respondent being a Central Government Company is entitled to any preference or priority or weightage. In principle we agree with the contention of the appellant's counsel that if price is to be negotiated from the quoted price, equal opportunity should have been given to both the parties and probably a bargaining would have been better achieved by calling both appellant and the third respondent together and asking them to go on reducing the price on competitive basis so t....
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....of India AIR 1996 SC 11, the Supreme Court held that: "The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14, if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down." 5. What is clear from the above decisions of the Supreme Court is that even in the matter of awarding contract the Government should act fairly and reasonably and....
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....e tenders should be accepted. However, in this case it is to be noted that the awardee preferred by the Government over the appellant is a Central Government Company and the Government while awarding the contract very well knows that the profit if any in the contract will go to Government Company, which in turn reaches the Government as dividend. So much so, in regard to award of a contract to a fully owned Government Company, we feel Government need not be over sensitive about the contract amount as the cash flow is from itself to another agency of the Government. We, therefore, feel that even if Government orders or tender conditions do not provide for any preference to a Government Company in the award of contract by the Government, stil....