DIRECTORATE OF EDUCATION AND ORS. versus EDUCOMP DATAMATICS LTD. AND ORS.

Citation: [2004] 2 S.C.R. 1010 · Decided: 10-03-2004 · Supreme Court of India · Bench: R.C. LAHOTI · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
DIRECTORATE OF EDUCATION AND ORS. 
v. 
EDUCOMP DAT AMA TICS LTD. AND ORS. 
MARCH 10, 2004 
[R.C. LAHOTl AND ASHOK BHAN, JJ.] 
Constitution of India-Article 226-Policy decision by Government to 
invite firms having financial turnover of minimum Rs. 20 croresfor setting up 
C computer labs in Government Schools-Writ Petitions challenging the 
requirement of the financial turnover-High Court struck down the financial 
requirement as being arbitrary-Judicial review-Correctness of-Held, the 
terms of Government tenders are not subject to judicial review unless it is 
arbitrary and discriminatory-On facts, decision not arbitrary. 
D 
Appellant-Government initially invited tenders for the years 2000-
2001 and 2001-2002 from firms having a financial turnover of Rs.2 crores 
for providing computer hardware for establishing computer labs in 
Government Schools. The lowest tenderers in both the years were not able 
to implement the entire project. Therefore, the Government was compelled 
to distribute the entire project amongst the remaining tenderers at the rate 
E quoted by the lowest tenderer. For the year 2002-2003, the Government 
took a policy decision to deal with a single company having financial 
capacity to take up the entire project solely. Accordingly, the Government 
decided to invite tenders from firms having a financial turnover of Rs.20 
crores or more for the last three financial years for establishing computer 
F fabs in Government Schools. The respondents filed Writ Petitions before 
High Court challenging the tender clause requiring the financial turnover 
of the bidding firms to be Rs.20 crores. The High Court stuck down the 
te~der clause as being arbitrary and had nothing to do with computer 
education. 
G 
In appeal to this Court, the Government contended that the High 
H 
Court, under Article 226 of the Constitution of Iridia, cannot transgress 
into the field of policy decisions taken by the Government and hem:e the 
terms of tender prescribing the eligibility criteria are not subject to judicial 
review. 
1010 
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DIRECTORATE OF EDUCATION'" EDUCOMP DAT AMA TICS LTD. 
10 l J 
The respondents contended that the High Court was right in striking A 
the tender clause of the Government as being arbitrary; and that fresh 
tenders should be invited because of the fall in price in the computer 
hardware for the year 2002-2003. 
Allowing the appeals, the Court 
HELD: 1.1. The Courts can scrutinise the award of the contracts by 
the Government or its agencies in exercise of its 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. 
B 
11015-CI C 
1.2. The terms of the invitation to tender are not open to judicial 
scrutiny, the same being in the realm of contract. 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 D 
administrative policy decision only if it is arbitrary, discriminatory, ma/a 
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, E 
discriminatory or mala fide. [1017-A-C) 
1.3. The Government introduced the criteria of turnover of Rs. 20 
crores to enable the companies with real competence having financial 
stability and capacity to participate in the tender particularly in view of 
the past experience. This Court does not agree with the view taken by the F 
High Court that the term providing a turnover of at least Rs. 20 crores 
did not have a nexus with either the increase in the number of schools or 
the quality of education to be provided. Due increase in the number of 
schools the hardware cost itself went upto Rs. 40-50 crores. The total cost 
of the project was more than 100 crores. A Company having a turnover G 
of Rs. 2 crores may not have the financial viability to implement such a 
project. As a matter of policy, the Government took a conscious decision 
to deal with one firm having financial capacity to take up such a big project 
instead of dealing with multiple smal

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