TaxTMI 
TaxTMI 
1986 (5) TMI 269
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....ernment Departments including respondents Nos. 2 and 3. The appellant as a registered contractor has been supplying fresh buffaloes and cows milk to respondent Nos. 2 and 3 as per the requirements for the last twenty years. The appellant is on their approved list for the same period and his supplies and work were always appreciated and accepted by the respondents for all these periods. The appellant is also capable of supplying any quantity of pasteurized milk and, indeed, he had been supplying to various organisations the milk and milk products and also pasteurized milk. Later on Respondent No. 2, the officer- incharge of the Military Farms, Pimpri, directed that the local purchase of milk be stopped and regular supply under a contract by inviting tenders be effected. Accordingly, the appellant's contract for supply of fresh buffalo and cow milk ended in 1984 The Military Farm had its own plant for pasteurization and for all these years respondents Nos. 2 and 3 had been making purchases of only fresh buffalo milk and used to pasteurize the milk for their own purposes in their own plant. The plant of respondents 2 and 3 is very much in operation till to-day and also on the d....
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....85. The appellant was the lowest bidder. The rates given by the appellant in the tender for supply of fresh buffalo milk was lower and tender of respondent No. 4 could be of no consequence as it was for a different item not contemplated by the tender notice. The tender given by Respondent No. 4 was however accepted on November 19-20, 1985 and the tender of the appellant was rejected although it was lower than that of respondent No. 4. The concerned officer had made a report to the higher authorities about the two tenders, one from the appellant and the other from respondent No. 4, vide letter dated August 23, 1985. It will be appreciated at this stage to refer to the advice given by the officer concerned which is as follow: "CONCLUSION OF CONTRACT FOR SUPPLY OF MILK AT PR MF KIRKEE / PIMPRI. 1. Reference discussion DDME and ADMP of date. 2. The information required is given below: (a) The cost of blended milk and standard milk taking the buff milk rate of Rs. 421 for 100 litres works out to: i) Blended Milk (Taking -Rs.3.5....
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....espondent No. 4 was accepted in preference to the tender made by the appellant. Respondents 2 and 3 would have gained by accepting the tender of the appellant which is strictly in terms of the tender notice because the respondent could further increase the quantity of milk by diluting the same to bring to fat and gravity standard. From the terms and conditions inviting the tender, the Government suppliers were given exemption from depositing the earnest money and tender form fee but no other concession to the Government supplies was indicated in the tender notice yet 10 per cent price preference was given to respondent No. 4 without any basis and in violation of the terms of notice inviting the tender. All the same the price of the appellant quoted in the tender was lower than that of respondent No. 4 and there was absolutely no justification whatsoever for not accepting the tender of the appellant. To start with the appellant had made an offer of Rupees four hundred fifty per hundred litres but para 16 of the tender notice provided for negotiations by respondents 2 and 3 with the contractors on rates or otherwise. As a result of subsequent negotiations between the appellant and....
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....ts, that the pasteurized milk supplied by respondent No. 4 would have to be re-pasteurized and secondly the cost of 5() paise had to be added even to the price of respondent No. 4 as the same was being added to the price given by the appellant. The action of the respondent is completely arbitrary and discriminatory inasmuch as respondent No. 4 merely being the Government organisation had been given preference over the appellant while respondent No. 4 had no better quality or standard for effecting the supplies asked for under the contract and even tor the pasteurized milk. Even in the matter of contract, the Government has to act fairly and justly and the failure of the Government to do so given a right to the citizen to approach the court for justice. The respondents have made a wrongful exercise of their power in rejecting the tender of the appellant. It was contended for the appellant that he being the lowest bid der, the authorities concerned acted arbitrarily in accepting the bid of respondent No. 4 which was higher than that of the appellant. We find considerable force in this contention. In Ramana Dayaram Shetty v. The International Airport Authority of India and Ors., [1....
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.... pure fresh buffaloes milk testing not less than 6.0% butter fat and 1.030 specific gravity or pure fresh cows milk testing not less than 4% butter fat and 1.029 specific gravity daily at Military farms/depots as mentioned in Appendix `A'. Para 16 provides that as per orders of Army Headquarters, Military Farms contracts are to be concluded through a panel of officers which may hold negotiations with the contractor where necessary and recommend the reasonable rates to the higher authorities. Para 19 provides that the Central Government/State Governments are purely governments concerns need not pay tender form fees and earnest money. They are, however, requested to inimate the period of supply for which they desire to tender their rates to enable the undersigned to send them the required tender form. It is contended for the appellant that the tender submitted by respondent No. 4 did not satisfy the requirement of para 2 of the tender notice. The tenders had been invited for the supply of pure fresh buffaloes milk or fresh cows milk but the respondent had submitted tender for supplying pasteurized milk, and therefore, the tender submitted by respondent No. 4 being not in....
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....This was the only concession available to the Central/State Government or to the purely Government concerns, and no other concession or benefit was contemplated under the terms of the tender notice. If the appellant had known that 10 per cent price preferene to Government undertaking was to be given to respondent No. 4 the appellant would have taken every precaution while submitting the tender. In support of his contentions, Shri S.N. Kacker, appearing for the appellant strongly relied upon Ramana Dayaram Shetty v. The International Airport Authority of India and Ors. (supra). In that case, the first respondent by a public notice invited tenders for putting up and running a Second Class Restaurant and Two Snack Bars at the International Airport at Bombay. The notice, inter alia, stated in paragraph 1 that sealed tenders in the prescribed form were invited from Registered Second Class Hoteliers having at least five years experience for putting up and running a Second Class Restaurant and two Snack Bars at the Bombay Airport for a period of three years. Paragraph 8 stated that the acceptance of the tender would rest with the Airport Director who does not bind himself to accept any te....
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....nd enter into direct negotiations with the 4th respondents for awarding the contract. The process of awarding a contract by inviting tenders was not terminated or abandoned by the 1st respondent by rejecting all the tenders but in furtherance of the process, the tender of the 4th respondents was accepted by the 1st respondent. The contract was not given to the 4th respondents as a result of direct negotiations. Tenders were invited and out of the tenders received, the one submitted by the 4th respondents was accepted and the contract was given to them." This Court quoted with approval the following observations of Mathew J., in V. Punnan Thomas v. State of Kerala, AIR 1969 Kerala 81: "The Government is not and should not be as free as an individual in selecting the recipients for its largess. Whatever its activity, the Government is still the Government and will be subject to restraints, inherent in its position in a democratic society. A democratic Government cannot lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal." Shri Anil Dev Singh, appearing for the respondents, has contended that respondent No. 4 being the State Gove....
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....there is a violation of Article 14, because the Government must necessarily be entitled to make a choice. But that does not mean that the choice be arbitrary or fanciful. The choice must be dictated by public interest and must not be unreasoned or unprincipled." Next reliance was placed on Viklad Coal Merchants, Patiala, etc. etc. v. Union of India & others, AIR 1984 SC 95. In that case this Court had to construe section 27A and 28 of the Railways Act and the Court observed: "Section 28 forbids discrimination by giving undue or unreasonable preference or advantage in respect of any particular traffic to any particular person or any railway administration but this general prohibition against discrmination is subject to the overriding power conferred on Central Government under section 27A. If while giving effect to the orders of the Central Government issued under Section 27A, priority is accorded in the matter of transport of goods consigned to Central or State Government or class of goods specified in the general or special order issued in this behalf, the action of the railway administration in complying with such special or general order could not be said as tentamounti....