ASIA FOUNDATION AND CONSTRUCTION LTD. versus TRAFALGAR HOUSE CONSTRUCTION (I) LTD. AND ORS.

Citation: [1996] SUPP. 10 S.C.R. 209 · Decided: 17-12-1996 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

-·. 
ASIA FOUNDATION AND CONSTRUCTION LTD. 
A 
v. 
TRAFALGAR HOUSE CONSTRUCTION (I) LTD. AND ORS. 
DECEMBER 17, 1996 
B 
[S.C. AGRAWAL AND G.B. PATTANAIK, JJ.) 
Judicial Review-In the area of contractual Jurisdiction-It it not within 
the pennissible limits of interference for a Co wt of law, in the absence of any 
allegation of malice or ulterior motive or finding by the court of any malafide C 
or favouritism in the grant of a contract. 
For construction of a wharf intended for mechanised handling 
facility of coal at Paradip Port, Asian Development Bank at Manila agreed 
to give loan. A prequalified notice was issued inviting offers and the 
pre-qualification documents received were sent to the Committee of con- D 
sultants for evaluation. The Consultants submitted their evaluation report 
recommending six firms including the appellant and the respondent No. 1 
for the const1uction of the wharf. The tender committee of the Port Trust 
reviewed the evaluation made by the consultants and recommended all six 
firms. The Board of Trustees of the Paradip Port Trust approved the said E 
six firms and invited bids. Out of the six firms, only three submitted their 
bids, namely the appellants, respondent No. 2 and one Mahibba Engineer-
ing (M) BHD Malaysia. The bids were sent to the consultant for evaluation 
report. The consultants concluded that the first respondent's bid was the 
lowest. Tender Committee accepted the recommendations of the consult-
ants and submitted the same to Asian Development Bank for approval. 
F 
Asian Development Bank, by its communication dated 23.4.1996 
intimated that they were unable to support the bid evaluation report and 
cannot accept the proposed bid change in quantity. The Bank came to the 
conclusion that the lowest evaluated substantially responsive bidder was G 
the appellant and recommended the contract of the construction of the 
. wharf be awarded to the appellant. The special tender committee formu-
lated its view and communicated the same to Asian Development Bank. 
Bank indicated that the suggestions given were on due consideration of the 
practicability of mobilising finance quickly. The tender committee called H 
209 
·210 
SUPREME COURT REPORTS[1996] SUPP.10 S.C.R. 
A the appellant for some clarifications. The project manager addressed a 
letter stating that in view of the additional information available there was 
no technical barrier or commercial disincentive to award the contract to 
B 
· the appellant. 
Even before the contract was awarded respondent No. 1 approached 
the High Court. After the contract was finally awarded in favour of the 
appellant by Board resolution, the writ petition was amended seeking the 
relief of quashing the award. The appellant filed their counter affidavit. 
The High Court took note of several clauses in the bid documents and 
came to the conclusion that the award of contract should be made to the 
C bidder whose bid has been determined to the lowest evaluated bid and who 
meets the appropriate standards of capability and financial responsibility. 
The High Court came to the conclusion that it would be in the public 
interest to quash the award in favour of the appellant and accordingly 
quashed the award. Hence this appeal. 
D 
Allowing this appeal, this Court 
HELD : 1.1. It is not for the court to determine whether a particular 
policy or particular decision taken in the fulfil~ent of that policy is fair. 
ltis concerned with the manner in which those decisions have been taken. 
E The administrative action which is subject to control by judicial review, 
can be classified into (1) illegality, (2) irrationality, (iii) procedural im-
propriety. Principle of Judicial Review is intended to prevent arbitrariness 
or favoritism and in the matter of award of contract, if power had been 
exercised for any collateral purpose, Judicial Review is exercised in the 
F larger public interest. (217-G-H; 218-A-D] 
G 
1.2. In the matter of tender, the lowest bidder may not claim any 
enforceable right to get the contract though ordinarily the authorities 
should accept the lowest bids. [218-F] 
1.3. Court cannot lose sight of the fact of escalation of cost on 
account of delay and the time involved. In a coordinated project if one 
component is not worked out the entire project gets delayed and will cost 
enormously on that score if rebidding is done. High Court lost sight of this 
fact. In the facts and circumstances of this case rebidding would be gro

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