Precedents Cited

The judgment references several pivotal cases that shape the understanding of administrative discretion and constitutional rights in the context of public contracts:

• Venkateswar Rao v. State of Andhra Pradesh - Expanded the concept of "aggrieved person," allowing individuals adversely affected by administrative actions to seek judicial remedies.
• Manjula Manjari Dei v. M.C. Pradhan - Addressed the limits of administrative discretion in neglecting to follow procedural fairness.
• Erusian Equipment and Chemicals Ltd. v. State of West Bengal - Emphasized that public authorities cannot act arbitrarily and must provide cogent reasons when deviating from established norms.
• R.D. Shetty v. International Airport Authority - Reinforced that executive actions must adhere to the rule of law and be free from arbitrariness.
• P.R. Quenim v. M.K. Tandel - Discussed the discretionary powers of the government in accepting or rejecting tenders without violating Article 14, although this was later nuanced by other cases.

These precedents collectively underscore the judiciary's stance against arbitrary administrative actions and the imperative for transparency and reasoned decision-making in public dealings.

Legal Reasoning

The court meticulously analyzed the tender process outlined in the original notice, highlighting that no provisions or guidelines existed restricting the acceptance of tenders beyond a certain threshold. The District Diet Committee's resolution to accept only those tenders offered at 25% below the scheduled rates was deemed extraneous and not rooted in the tender notice. This deviation constituted a departure from the established procedure, leading to the arbitrary rejection of the lowest tenderer.

Furthermore, the court scrutinized the assertion that respondent Narayan Roy was a bona fide contractor. The absence of prior experience did not, in itself, justify the rejection of a lower tender unless explicitly stated in the tendering guidelines. The lack of transparency and absence of a hearing before rejecting Sinha's tender were found to violate the principles of natural justice.

By referencing Article 14, the court underscored that equality before the law mandates non-discriminatory practices in public contracts. The acceptance of a higher tender without valid reasoning undermined this constitutional guarantee, necessitating judicial intervention.

Impact

This judgment sets a significant precedent in administrative and constitutional law, particularly concerning public procurement processes. It reinforces the obligation of public authorities to:

• Adhere strictly to the procedures and guidelines outlined in tender notices.
• Provide transparent and cogent reasons when deviating from established tendering norms.
• Ensure that discretionary powers are exercised within the bounds of reasonableness and fairness.
• Uphold constitutional principles, especially the right to equality under Article 14, in all administrative actions.

Future cases involving public tenders and contracts will reference this judgment to challenge arbitrary decisions, thereby promoting fair competition and accountability in the allocation of public resources.

Article 14 of the Constitution of India

Article 14 ensures "Equality before the law" and "Equal protection of the laws" within the territory of India. It mandates that no person should be denied the same protection of the law as is enjoyed by others in similar circumstances. In the context of this case, it implies that all tenderers should be treated equally without any discrimination or arbitrary favoring of one party over another.

Principles of Natural Justice

Natural justice refers to legal principles that act as safeguards against arbitrary denial of justice. The two main pillars are:

• Right to a Fair Hearing: Every individual has the right to present their case and respond to any allegations against them.
• Audi Alteram Partem: No person should be judged without a fair hearing where they have the opportunity to be heard.

In this judgment, the lack of a hearing before rejecting the petitioner's tender was a breach of these principles.

Discretionary Powers

Discretionary powers refer to the authority granted to public officials to make decisions based on their judgment within the framework of the law. However, such discretion is not absolute and must be exercised reasonably, fairly, and without bias. The court in this case emphasized that discretionary decisions, especially those involving public contracts, must adhere to established guidelines and not be exercised arbitrarily.