STATE OF ASSAM AND ANR. versus M/S. ABHINANDAN TRADING (P) LTD. AND ANR.

Citation: [2006] SUPP. 8 S.C.R. 704 · Decided: 08-11-2006 · Supreme Court of India · Bench: G.P. MATHUR · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
ST A TE OF ASSAM AND ANR. 
v. 
M/S. ABHINANDAN TRADING (P) LTD. AND ANR. 
NOVEMBER 8, 2006 
[G.P. MATHURANDALTAM<\.SKABIR, JJ.] 
Contract-Contract of supply of potable alcohol/rectified spirit (Gr.I) 
to excise warehouse of State-Notice inviting tender-Specifying basis for 
C viable range of price-Contract given to the party whose quotation was 
below the viable range-Two tenderers challenged grant of contract in Writ 
Petition-Contract set aside by Single Judge of High Court-Order of Single 
Judge upheld in Writ Appeal-Potable spirit kept being supplied to the 
Government on the basis of agreement-On appeal, held: The contract was 
rightly granted though the procedure adopted by the State for fixing viable 
D price range may not be prudent as the same is amenable to misuse to favour 
a particular applicant-But in absence of such a/legation, decision of State 
cannot be held wrong-It may be more prudent for the Government to adopt 
a different procedure in future-But it has to be left to the Government to 
resort to such procedure-Court cannot express any -opinion as to what 
E procedure Government should adopt-It will not be in the interest of the 
Government or the people to prevent the supply-Assam F.xcise Rules, 1945-
Rule 91. 
Tenders were invited by the State of Assam under Rule 91 of Assam 
Excise Rules, 1945 for grant of exclusive ::>rivilege of supplying potable 
F alcohol/rectified spirit (Gr. I). Clause 28 of Notice Inviting Tender specified 
that the contract would be given to the tenderer found suitable from the 'viable 
range' which was to be determined on the basis of analysis of the cost price, 
export duty, transport cost etc. Five tenders were forwarded to the State 
Government for consideration. Commissioner af Excise worked out the viable/ 
reasonable rate for supply of the pota'.Jle alcohol/rectified spirit at Rs.18.23 
G per London Proof Litre (LPL). The rate was worked out after taking into 
~onsideration various factors referred to in Clause 28 of the Notice Inviting 
Tenders (NIT). The Ccmmissioner and Secretary to the Government of Assam, 
Excise Department were of the view that viable rate should be Rs. 24/- per 
LPL. However, it was recommended that the lower rate from amongst the rate 
H 
704 
, 
ST ATE OF ASSAM v. ABHINANDAN TRADING (P) LTD. 
705 
offered by recommended firms within the viability range of Rs. 17.11 to Rs. A 
18.95 per LPL be considered because rate of Rs. 24/- would cause the prices 
to go up and cause hardship to the consumer. Thus the contract was awarded 
in favour of 'R' at the offered rate of Rs. 17.11 per LPL. Other two teriderers 
'S' and 'A' whose quotations were Rs. 15.10 per LPL and Rs. 18.95 per LPL 
respectively, challenged the grant of tender to 'R' by filing Writ Petitions. 
Writ Petitions were allowed by Single Judge of High Court setting aside the B 
grant of the contract on the ground that such grant did not disclose any logical, 
acceptable or reasonable basis. The judgment was challenged in writ Appeals. 
The same was dismissed by Division Bench of High Court holding that 
stipulation contained in Clause 28 of NIT had not been complied with as a 
viable rate of Rs. 18.23 per LPL was fixed instead of determining the viable C 
price range. Hence the present appeals. 
Allowing the appeals, the Court 
HELD: I. It is no doubt true that there is scope of the concept of 
"viability range" being misused to favour a particular applicant, but there is D 
no such allegation in the instant case, nor has any ma/a fides been attributed 
to the action taken by the authorities in awarding the contract to 'R' whose 
offer was much lower than the fixed rate. (714-A-B) 
2. Although, doubts were expressed by this Court '.n Dutta Associates 
regarding the concept of "viability range", its necessity or its real purpose, E 
the decision afthe Government of Assam to resort to such a procedure has to 
be left to the Government of Assam itself. Unless, it can be shown that the 
said procedure had been misused to favour any particular individual, which is 
not so in the instant case, it would not be proper for this Court to express any 
opinion as to the procedure the Government should adopt except to say that 
whatever procedure is adopted should be open, fair and transparent. 
F 
[714-C-E) 
3. In the instant case, the methodology adopted for fixing the viable price 
range, indicates that even if the said method may not be the ideal method for 
I 
granting of contracts, a
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