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Autotronic Elevator ... v. Electrical Engineer ...
Structured Summary of the Opinion
Factual and Procedural Background
The petitioner sought a writ of mandamus (or any other appropriate writ) restraining respondents 1 to 3 from entrusting comprehensive maintenance of 19 OTIS lifts on a nomination basis to the manufacturers (fourth respondent) and prayed for a direction to follow the tender system for comprehensive maintenance as had been done for the years 1983-1984 and 1984-1985.
Facts as stated in the opinion: the petitioner was the lowest tenderer for maintenance contracts for 1983-84 and 1984-85. After the contract period expired on 31-3-1985 and pending a decision on whether to continue the tender system, the petitioner was permitted to continue maintenance on a monthly nomination basis at his earlier tendered rate. The Chief Engineer (third respondent) subsequently nominated the fourth respondent (Otis Elevators Co. (I) Ltd.) to perform maintenance at rates 35% higher than the petitioner's rates.
The petitioner alleged that three successive Electrical Engineers and the Superintending Engineer had recommended continuation of tendering, but the Chief Engineer disregarded that process and chose nomination, which the petitioner challenged as arbitrary and violative of Article 14 of the Constitution. Respondents filed counter-affidavits admitting some factual points (e.g., petitioner was previously lowest tenderer and there were no complaints about his work) but defending the nomination as a policy decision to secure better service, avoid risk, and rely on the original manufacturer for specialized maintenance and spare parts.
Legal Issues Presented
- Whether the system of awarding maintenance on a nomination basis (instead of calling tenders) is valid in law.
- Whether this Court can interfere with that administrative decision under Article 226 of the Constitution.
Arguments of the Parties
Petitioner's Arguments
- The petitioner was the lowest tenderer for the maintenance contracts in 1983-84 and 1984-85 and was continued on a monthly nomination basis at his tendered rate pending decision.
- The Chief Engineer nominated the fourth respondent at rates 35% higher than the petitioner's rates, bypassing the tender system despite recommendations from successive Electrical Engineers and approval by the Superintending Engineer.
- This act of nominating the fourth respondent was arbitrary and discriminatory in breach of Article 14, preventing equally eligible persons (like the petitioner) from participating in the tender process and securing the contract.
Respondents' (including Fourth Respondent) Arguments
- Admitted that the petitioner was the lowest tenderer previously and that the fourth respondent quoted higher rates (35% higher), and that there were no complaints against the petitioner's maintenance.
- Contended that maintenance was entrusted to the fourth respondent to ensure quality, better service and to avoid risk to lift users; this was a policy decision within the discretion of the Chief Engineer.
- Argued that the fourth respondent was the manufacturer and that some spare parts may not be available in the open market, making their engagement appropriate; maintenance of lifts is specialized work and not suitable for miscellaneous contractors.
- Maintained that the petitioner has only contractual rights (not a fundamental right) and therefore cannot claim a right to the contract under Article 226; policy decisions on technical functions are beyond writ jurisdiction.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Rasbihari Panda v. State of Orissa, AIR 1969 SC 1081 | Government schemes that limit offers to a selected class (thereby shutting out other traders) are discriminatory and can violate Article 19(1)(g) and Article 14 when they give rise to monopolies and unreasonable restrictions on carrying on trade. | The Court relied on the principle that selecting a limited class for government largess or contracts can be discriminatory. It applied that principle to find that nomination of the fourth respondent created an effective monopoly and discriminatory treatment against the petitioner and others similarly placed, thus contravening Articles 19(1)(g) and 14. |
Court's Reasoning and Analysis
The court framed the core question as whether nomination (i.e., selecting a party without calling tenders) was valid and if interference under Article 226 was proper. The analysis proceeded in these main steps, as expressed in the opinion:
- Constitutional framework: the court emphasised that when the State deals with the public—by awarding contracts or other largess—it cannot act arbitrarily. Such governmental action must conform to standards or norms that are not arbitrary, irrational or irrelevant and must meet tests of reason and relevance. The doctrine of equality under Article 14 requires fairness and non-discrimination when the State enters into relationships.
- Tendering as a norm: calling for tenders was identified as a well-accepted mode for distribution of state contracts to secure minimum public expenditure and to permit fair participation. While acknowledging that some works may require special skill or expertise, the court treated tendering as the default, legitimate method to allocate contracts unless a sound, relevant reason justified a departure.
- Application to the facts: the court noted that the petitioner had been the lowest tenderer for the relevant years and had continued maintenance on a monthly nomination basis at the tendered rate pending decision. The fourth respondent's quoted rates were admitted to be 35% higher than the petitioner's. The respondents' justification—assurance of better service, manufacturer's involvement, and alleged non-availability of spare parts—was examined against the factual assertion in the reply-affidavit that spare parts (except certain Crompton parts) were freely available in the market.
- Reliance on precedent: the court invoked Rasbihari Panda to underline that governmental selection of a limited class or favoritism (even if based on past performance) can be discriminatory and violate Articles 19(1)(g) and 14. The court analogised the Chief Engineer's nomination to the impermissible selection described in that precedent.
- Conclusion of arbitrariness and discrimination: the court found the Chief Engineer's conduct—nominating the fourth respondent despite higher rates and despite recommendations favouring tendering—to be arbitrary, creating monopoly and discriminatory treatment. The assurance of better service by the fourth respondent was characterized as insufficient and possibly a ruse to favour that party. Because the governmental action produced unreasonable restriction and undue burden on the exchequer, it was held to be ultra vires Articles 19(1)(g) and 14.
Holding and Implications
Holding: The writ petition was allowed. The court ordered relief in favour of the petitioner and awarded costs (Advocate's fee Rs. 250). The opinion concludes with the explicit notation: Petition allowed.
Implications:
- Direct effect: The decision quashes the administrative course of action that had nominated the fourth respondent in preference to a tendering process and grants the petitioner the relief sought in the petition (as recorded: petition allowed and costs awarded).
- Broader principle applied: The court reaffirmed that the State must adhere to non-arbitrary standards (including fairness and equality under Article 14) when allocating contracts and that unwarranted nomination that creates monopoly or discriminatory exclusion can violate Articles 19(1)(g) and 14.
- Limitations: The opinion does not purport to lay down a new scope of law beyond applying established principles; it applies existing constitutional doctrine and precedent to the facts before it. No separate or novel precedent-creating pronouncement is recorded beyond this application.
Order: Writ petition allowed with costs. Advocate's fee fixed at Rs. 250.
This summary is drawn exclusively from the provided opinion and does not add facts or inferences beyond that text.
1. The petitioner is seeking a writ of Mandamus or any other appropriate writ forbearing the respondents 1 to 3 from entrusting comprehensive maintenance of 19 lifts (OTIS LIFTS) on the nomination basis to the manufacturers and for a direction to follow the system of tender to attend the comprehensive maintenance of the lifts as was done from the year 1983 to 1985.
2. The case of the petitioner is that the respondents are having number of lifts of which 19 lifts were manufactured and installed by the fourth respondent Otis Elevators Company (I) Ltd. For the years 1983-1984 and 1984-1985 tenders were called for. The petitioner is the lowest tenderer to effect maintenance. After the expiry of two years with effect from 31-3-1985 and pending taking decision whether a tender system should be continued or not the petitioner was permitted to carry on maintenance on monthly nomination basis on the same rate which he tendered. When he has been continuing, the third respondent, Chief Engineer, P.W.D Roads and Buildings now decided to give the maintenance work to fourth respondent on nomination basis at a rate 35% higher than the rates at which the petitioner is offering. It is his case that three successive Electrical engineers have recommended for giving on tender basis and it is also approved by the Superintendenting Engineer. But the third respondent, Chief Engineer for his own reasons, has given a go by to the tender system and has fallen back on the nomination basis. This action of respondents is arbitrary under Art. 14 of the Constitution preventing equally eligible persons like petitioner to participate in the tender and be one of the successful tenderers in effecting the repairs.
3. A counter has been filed by one A. Gopala Kishanrao, Electrical Engineer on behalf of the respondents. He admitted that the petitioner is the lowest tenderer in the previous years. The tender offered by the fourth-respondent was high, therefore, the petitioner was preferred and he continued as Maintenance Engineer of the lifts for two previous years and for this year he continued up-to-date on nomination basis. It is admitted that there was no complaint against the petitioner with regard to the maintenance effected by the petitioner. It is also admitted that the rates quoted by the fourth respondent is 35% higher than what was offered by the petitioner. It is also stated in the counter-affidavit that from the year 1975 to 1983 the fourth respondent was attending to the maintenance of the lifts and due to labour trouble the fourth respondent discontinued and thereafter the petitioner was given on tender basis. It is further contended that with a view to effect quality, better service and to avoid risk to the users of the lift, it was decided that the maintenance work of the lifts be given to the fourth respondent. It is further pleaded that it is a policy decision and is at the discretion of the Chief Engineer as to whom the work has to be entrusted for maintenance. The fourth respondent is manufacturer, the spare-parts are not available in the open market. The petitioner has no right under Art. 226 of the Constitution. It is only a contractual right. He has no legal right to the contract and has not been infringed. The policy of the Government in the matter of technical function is outside the writ jurisdiction of this Court. Maintenance of lifts is a specialised work and it cannot be entrusted to sundry organisation. It is for the department to formulate a policy and it is not open to the petitioner to assail the policy of the department. The fourth respondent filed a counter practically on the line of defence taken by A. Gopal Kishanrao Electrical Engineer on behalf of the respondents. It is further stated that the work has already been entrusted to the fourth respondent.
4. The only question that arises in this writ petition is whether the system of nomination basis is valid in law and whether this Court can interfere under Art. 226 of the Constitution. It is now well settled law that where the Government is dealing with public, whether by way of giving jobs or entering into contracts or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and like a private individual deals with it, but its action must be attuned to some standard or norms which is not arbitrary, irrational or irrelevant. The governmental action must be based on some principles which meets the test of reason and relevance. A citizen, though has no fundamental right to insist upon the Government to enter into favourable relations with him, has a fundamental right to be fairly considered and has a “privilege” or “legitimate expectation of a right” to enter into contractual relations with the Government or the local authority or instrumentality of the State. Though the State need not deal with any one, but if it do chooses, its action must be in conformity with the law or policy. A citizen has a fundamental right under Art. 19(1)(g) of the Constitution to carry on any trade or occupation or business. Calling for tenders is one of the well accepted mode of distribution of the largess of the State by way of contract. But undoubtedly each work differs from its very nature, content and the purpose. In some cases it may require special skill or expert knowledge.
5. The Government when it deals with the public, whether by way of giving jobs or entering into contracts or granting other forms of largess, (the Government) cannot act arbitrarily at its sweet will and like a private individual deals with it, but its action must be attuned to some standard or norm which is not arbitrary, irrational or irrelevant. The Government action must not be arbitrary or capricious, but must be based on some principles which meets the test of reason and relevance. The doctrine of equality enshrined in Art. 14 assures to every citizen, though the State is entitled to refuse to enter into relationship with any one, yet if it does so, the State cannot arbitrarily choose any person it likes for entering into a relationship and discriminate between persons similarly circumstanced. Privilege is a form of liberty as opposed to duty. The activities of the Government have a public element and therefore there should be fairness and equality. Articulation of equality clause even in contractual area ensures to every citizen not merely in participation to enter into favourable relations with the Government justice and fair treatment is accorded but also keeps a check on the Governmental agencies committing arbitrary, capricious or irrational acts or actions which have lasting stains of infamy and blemish on the fountains of rule of law. The rule of law for functional success must run close to the rule of life. Therefore, the action of the State must be in conformity with the cherished principle of equity enshrined under Art. 14 of the Constitution. The question is whether this equity has been meted out to the petitioner. As stated earlier, the Government have been giving maintenance of the lifts on tender basis during the years 1983-1984 and 1984-1985 and the petitioner happened to be the lowest tenderer and in those two years the fourth respondent offered higher rates and the higher rates were not accepted and the lowest rates of the petitioner were accepted and the petitioner was given contract. It is stated that the fourth respondent has assured the Chief Engineer, that he would offer better services, therefore, even though he offered 35% higher rates than what the petitioner is doing on contract on nomination basis the contract was accorded to the fourth respondent on nomination basis. The question is whether this action of the third respondent is justified.
In Rasbihari Panda v. State of Orissa, AIR 1969 SC 1081 Shah, J. (as he then was) speaking for the Constitution Bench in para 17 held that:
“Validity of the schemes adopted by the Government of Orissa for sale of Kendu leayes must be adjudged in the light of Art. 19(1)(g) and Art. 14. Instead of inviting tenders the Government offered to certain old contractors the option to purchase kendu leaves for the year 1968 on terms mentioned therein. The reason suggested by the Government that these offers were made because the purchasers had carried out their obligations in the previous year to the satisfaction of the Government is not of any significance.
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The right to make offers being open to a limited class of persons it effectively shut out all other persons carrying on trade in kendu leaves and also new entrants into that business. It was ex facie discriminatory, and imposed unreasonable restrictions upon the right of persons other than existing contractors to carry on business. In our view, both the schemes evolved by the Government were violative of the fundamental right of the petitioners under Art. 19(1)(g) and Art. 14 because the schemes gave rise to a monopoly in the trade in kendu leaves to certain traders, and singled out other traders for discriminatory treatment.”
In that case, the Government have selected a class of persons who performed satisfactorily on the previous years and that consideration was found foul in the grinding teeth under Art. 19(1)(g) and under Art. 14 of the Constitution. In this case also the same principle applies. The Chief Engineer has chosen person of his liking on nomination basis. He can take into consideration the experience, specialised knowledge, service knowledge available from other quarters like the petitioner from competing with the 4th respondent by offering of the tenders to enter into contractual relations with the Government. As stated earlier, calling for tenders is one of the well accepted mode of distribution of the largess of the State by way of contract so as to secure the minimum expenditure to the State. It is stated in the reply-affidavit that spare-parts are available in the open market and it is also stated that except spare parts of the Crompton Company with regard to other companies all the parts are freely available in the market. The rate quoted by the 4th respondent is admittedly 35% higher than what was quoted and being worked out by the petitioners. The exchequer is unduly burdened thereby. Mere assurance of better service by the 4th respondent is only a ruse to extend arbitrary favour to the 4th respondent. The discrimination is writ large. The action created monoply in favour of the 4th respondent by the executive action without authority of law. It is an unreasonable restriction. The action is ultra vires of Arts. 19(1)(g) and 14 of the Constitution. Under these circumstances, I find that there is justification in the complaint of the petitioner that he and similarly placed persons are singled out by the arbitrary and discriminatory action of the Chief Engineer-3rd respondent in choosing the 4th respondent on nomination basis. It is open to the Government or the third respondent-Chief Engineer to evaluate suitable scheme by calling for tenders and then accept the same according to rules. The writ petition is accordingly allowed with costs. Advocate's fee Rs. 250/-.
Petition allowed.
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