JAGDISH MANDAL versus STATE OF ORISSA AND ORS.

Citation: [2006] SUPP. 10 S.C.R. 606 · Decided: 11-12-2006 · Supreme Court of India · Bench: G.P. MATHUR · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
JAGDISH MANDAL 
v. 
STA TE OF ORISSA AND ORS. 
DECEMBER 11, 2006 
[G.P. MA THUR AND RV. RA VEENDRAN, JJ.] 
Contracts-Tenders-Issue of-Rejection of tender-Show cause 
notice-Requirement of-Decision of tender committee-Judicial review-
C Scope, power and ambit of-Tender invited for construction of canal in two 
stretches-Rates quoted by a contractor, being the lowest, recommended for 
acceptance-The said contractor furnished Earnest Money Deposit (EMD) 
by pledging a postal Term Deposit of Rs. /, 70,000-A written complaint was 
received by the Water Resources Department that the contractor had made 
a postal deposit of Rs. 7,000 and had defrauded the Department by altering 
D the figure in the passbook as Rs. 1, 70,000-0n enquiry, the Superintendent 
of Post Offices sent a reply stating that the said Term Deposit Account for Rs. 
/, 70,0001- submitted by the contractor should not be taken into account for 
any official requirement-The tender committee held that the EMD submitted 
by the contractor was invalid and recommended the acceptance of the next 
E lowest valid tender-Contractor filed a writ petition challenging the decision 
of the High Court-High Court directed to file a complaint against the 
contractor-But the police investigation showed that the passbook produced 
by the contractor was genuine-Thereupon, the High Court allowed the writ 
petition holding that the offer of work of the contractor was arbitrarily 
rejected by the tender committee-Correctness of-Held: Judicial review of 
F administrative action is intended to prevent arbitrariness, irrationality, 
unreasonableness, bias and mala tides and not to check whether the choice 
or decision is 'sound'-Tender committee rightly rejected the tender of the 
contractor as it was not accompanied by a valid EMD-No show cause 
notice is required for rejection of the tender-High Court judgment set 
aside--Orissa Public Works Department Code, Clause 3.5.18. 
G 
H 
Contracts-Tenders-Rates-Unduly low rate-Quoting of-Ejfect-
Tenders invited for construction of canal in two stretches-Rates quoted by 
a contractor, being the lowest recommended for acceptance-On scrutiny, 
tender committee found such unduly low rate in respect of a large and last 
606 
JAGDISH MAND AL v. STA TE OF ORI SSA 
607 
item of work was likely to jeopardize the completion of the work~Hence, A 
tender committed rejected the tender of the contractor and recommended 
acceptance of the next lowest valid tender-High Court allowed the writ 
petition of the contractor-Correctness of-Held: Unduly low and unworkable 
rate or rates is a ground for rejection of tenders-The Committee has applied 
its mind and rejected the tender by assigning a reason which is neither B 
irrational nor arbitrary-High Court judgment set aside. 
CA No. 5699 of 2006 
The second respondent, acting on behalf of the Water Resources 
Department, invited tenders for 'construction of Right Extension Main Canal' C 
(first stretch) by a tender notice. The offer of the fifth respondent was the 
lowest and that of the appellant was the second lowest The Executive Engineer 
recommended the acceptance of the tender of the fifth respondent 
The fifth respondent furnished the Earnest Money Deposit (EMD) by 
pledging a postal Term Deposit of Rs. 1,70,000/-. A written complaint was D 
received by the Department alleging that the fifth respondent had made a postal 
deposit of only Rs. 7,000/- and had defrauded the Department by altering the 
figure in the passbook as Rs. 1,70,000/-. On enquiry, the Superintendent of 
Post Offices sent a reply stating that the said Term Deposit Account for Rs. 
1,70,000/- submitted by the fifth respondent should not be taken into account 
for any official requirement. 
E 
The tender committee held that the EMD submitted by the fifth 
respondent was invalid and recommended the acceptance of the next lowest 
valid tender of the appellant. 
The respondent filed a writ petition challenging the rejection of his F 
tender. On directiOns of the High Court a complaint was filed against the fifth 
respondent However, the investigation report submitted by the police showed 
that the passbook was genuine as Rs. 1,70,000/- had actually been deposited 
by the fifth respondent. The High Court allowed the writ petition filed by the 
fifth respondent holding that the offer of the fifth respondent was arbitrarily G 
rejected by the tender committee. Hence the appeal. 
CA No. 5700 of 2006 
Tenders were also invited in regar

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