HARMINDER SINGH ARORA versus UNION OF INDIA & ORS.

Citation: [1986] 3 S.C.R. 63 · Decided: 09-05-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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A 
HARMINDER SINGH ARORA 
v. 
UNION OF INDIA & ORS. 
B 
j 
[R.S. PATHAK, R.B. MISRA AND G.L. OZA, JJ.] 
MAY 9, 1986 
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Constitution of India, Arts. 32 and 226--Government Contracts 
by calling tenders-Whether can be assailed in writ proceedings as in-
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fringing fundamental rights. 
)., . 
Government Contracts by tenders-Variation of terms of tender-
Whether notice to parties obligatory. 
The appellant is carrying on the business of bulk supply of milk 
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and milk products for the last twenty years. He has a plant for pasteuri-
zation at Pone. On July 16, 1985 the officer-in-charge of the Military 
Farms-respondent No. 2, issued tender notice for the supply of pure 
fresh buffalo and cow milk. The appellant being eligible and already on 
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the approved list of the respondent authority, submitted a tender offer-
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ing fresh buffalo milk of the specified fat content and gravity giving a 
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rate of Rs. 421 per 100 litres. The General Manager, Government Milk 
Scheme, Pune---repondent No. 4, also submitted a tender for the supply 
of pasteurized milk, an item not contemplated by the tender notice, at 
Rs.400 per 100 litres. Tenders were opened on August 23, 1985 and the 
appellant was found the lowest bidder. 
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The Military Officer concerned submitted a report to the higher 
authority stating that the appellant was not only the lowest .,idder but 
also that the purchase of milk from him would be profitable, while the 
purchase of milk from respondent No. 4 would result in serious loss to 
the extent of rupees ten lakhs or so. But all the same, the respondent 
authority accepted the higher bid of respondent No. 4, in preference to 
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the lower bid of the appellant contrary to the terms of the notice inviting 
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tender. Feeling aggrieved by the rejection of his tender, the appellant 
challenged the order by filing a writ petition in the High Court which 
was dismissed in limine. 
In this appeal by special leave on behalf of the appellant it was 
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64 
SUPREME COURT REPORTS 
[1986] 3 S.C.R. 
A 
contended that even in the matter of contracts, the Government has to 
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act fairly and justly and the failure of the Government to do so gives a 
right to the citizen to approach the court for justice, that the authority 
concerned in rejecting his tender had acted contrary to the principles of 
law, unfairly, arbitrarily and discriminately, that the tender submitted 
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by respondent No. 4 was uot in consonance with the tender notice and it 
should have been ignored, and that if the authority wished to alter the 
conditions of the tender notice it was obligatory and mandatory for it to 
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call him for negotiation. It was further contended that the IO per cent 
price preference given to respondent No. 4 contrary to the terms of the 
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tender notice was illegal and discriminatory. 
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On behalf of the respondents it was contended that respondent 
No. 4 being the Government agency was rightly awarded the contract as 
per the policy of the Government of India laid down in notification 
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dated August 13, 1985. 
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Allowing the appeal, the Court, 
HELD: I. The Government may enter into a contract with any 
person but in so doing the State or its instrumentalities cannot act 
arbitrarily. It is open to the State to adopt a policy different from the 
one in questim, but once the authority or the State Government chooses to 
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invite tenders then it must abide by the result of the tender. [75 C-D; 770 -El 
2. The High Court was not justified in dismissing the writ petition 
in limine by saying that the question relates to the contractual obliga-
ti on and the policy decision cannot be termed as unfair or arbitrary. [ 77 E] 
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There was no question of any policy decision in the instant case. 
The notification dated August 13, 1985 laying down the policy came in 
after July 16, 1985 when respondent No. 2 issued tender notice. The 
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instrumentalities of the State having invited tenders for the supply of 
fresh buffalo and cow milk, these were to be adjudged on their intrinsic 
merits in accordance with the terms and conditions of the tender notice. 
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The contract for the supply of milk was to be given to the lowest bidder 
under the terms of the tender notice and the appellant being the lowest 
bidder, it should have been granted to him. The authority acted caprici-
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ously in accepting a bid which was much higher and to the detriment of 
the State. 175B-D; 770-FI 
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3. Where the tender form submitte

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