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Case Number

W.P Nos. 2477 and etc. of 1981

Attorney(S)

For the Appellant: V. Jagannadha Rao, Advocate.
For the Respondent: Advocate General, K. Janardhana Rao, Advocate.

Judges

Gangadhara Rao, J.

Acts

provisions of s. 129a of the hyderabad municipal corporation act, 1955 and the provision
provision similar to article 213
rule. (26) Rule 3

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Smart Summary

Structured Summary of the Opinion: Hyderabad Municipal Corporation — Pre-Qualification for High-Value Tenders

Factual and Procedural Background

The municipal corporation of Hyderabad (the corporation) adopted a practice of prescribing pre-qualification for contractors bidding for contract works whose estimated cost was fifty lakhs of rupees or more. The corporation's stated objective (from the affidavit of the special officer) was to ensure that only contractors with relevant experience, equipment and personnel tender for large and complex projects so as to secure timely and satisfactory execution.

On 2-4-1981 the corporation published a pre-qualification notice inviting applications for a number of major projects (multi-storeyed buildings, commercial complexes, auditoriums, a road over bridge) with estimated costs ranging from Rs. 50 to 160 lakhs. Thirty-four applications were received. The special officer asked the State Government to constitute a committee to scrutinise applications; the government formed a tender committee of three chief engineers which met on 23-5-1981 and selected 11 contractors. The government approved that selection by G.O. Rt. No. 627 dated 3-6-1981, and notices to submit tenders were issued on 15-6-1981 to the selected contractors.

Multiple writ petitions challenged the pre-qualification notice, the constitution and selections of the tender committee, and subsequent rules and ordinances. Interim directions and status quo orders were given in some petitions. The government later promulgated Andhra Pradesh Ordinance No. 24 of 1981 (Hyderabad Municipal Corporation (Second Amendment) Ordinance, 1981) dated 6-8-1981 (deemed to come into force on 1-3-1981) inserting section 129-A into the Hyderabad Municipal Corporation Act, 1955; rules (including Rule 3-A) were notified by G.O. Ms. No. 975 (973) dated 27-8-1981. Further pre-qualification notice was issued on 27-8-1981 for four works.

Legal Issues Presented

Whether the Andhra Pradesh Ordinance No. 24 of 1981 (inserting section 129-A) was validly promulgated under Article 213 of the Constitution (i.e., whether the Governor’s satisfaction that immediate action was necessary was justiciable and whether conditions for promulgation were satisfied).
Whether the Ordinance required prior instruction or assent of the President because of perceived repugnancy with central law (the Indian Contract Act) or because the parent Act had earlier received the President's assent.
Whether section 129-A (and the retrospective operation attributed to it) was a colourable exercise of legislative power and whether retrospectivity was permissible.
Whether Rule 3-A (prescribing pre-qualification criteria) was validly made, including whether prior publication in the Gazette (as required by section 585(3) of the Hyderabad Municipal Corporation Act) was necessary.
Whether the operation of the pre-qualification notice, the constitution and selections of the tender committee, and the exclusion of certain petitioners violated Articles 14 and 19(1)(g) (and related fundamental rights) or amounted to blacklisting without opportunity to be heard.

Arguments of the Parties

Petitioners' Arguments

The Andhra Pradesh Ordinance No. 24 of 1981 was unconstitutional because the conditions in Article 213 were not satisfied and the President's assent had not been obtained.
Section 129-A (inserted by the Ordinance) was a colourable piece of legislation, improperly retrospective and lacking guiding standards.
Rule 3-A was invalid because it had not been previously published (as allegedly required by section 585(3) of the Act).
The elimination (non-selection) of the petitioners amounted to blacklisting without opportunity to be heard and violated Articles 14 and 19(1)(g) of the Constitution.

Respondents' (Corporation/Government) Position as Described in the Opinion

The corporation's past experience showed contractors without adequate experience had been awarded large contracts and performed poorly, causing loss and delay; pre-qualification was necessary to ensure quality and timely execution of large projects.
The Ordinance and rule-making were within legislative power; the Governor's satisfaction for promulgation was recorded and the circumstances (need for immediate action to avoid delay and cost escalation) justified immediate legislation.
There was no repugnancy between section 129-A and the Indian Contract Act; thus, presidential assent was not required.
Rule 3-A provides concrete pre-qualification guidelines (financial status, experience, equipment, personnel qualifications, list of major works, etc.), and the tender committee (comprising senior engineers) is an appropriate and impartial body to evaluate applications; reasons need not be given by the committee because it is not discharging a quasi-judicial function.
The retrospective operation was directed to validate procedural steps (pre-qualification notices, committee constitution and recommendations) and was within legislative competence.

Table of Precedents Cited

Precedent	Rule or Principle Cited For (as stated in the opinion)	Application by the Court (how the opinion used or distinguished it)
R. Sultan v. Government of Andhra Pradesh, ILR (1970) Andhra Pra 1075	Held (per division bench) on facts that subjective satisfaction of the Governor is not justiciable but court may examine existence and relevance of circumstances.	The court observed this decision and noted it purported to permit some judicial inquiry; but the present court rejected that approach as incorrect and did not follow it as laying down the correct law.
Lakhi Narayan Das v. Province of Bihar, AIR 1950 FC 59	Interpreting a provision similar to Article 213, the Federal Court held the Governor's satisfaction as to necessity of ordinance is for the Governor alone and is not justiciable.	The court followed this authority to hold that the Governor’s satisfaction is not justiciable and that the Governor alone must be satisfied as to the necessity for immediate action.
Jnan Prosanna v. Province of West Bengal, AIR 1949 Cal 1 (FB)	Authority supporting that the executive's satisfaction under provisions like Article 213 is not subject to judicial inquiry.	The court relied on this decision alongside Lakhi Narayan Das to support non-justiciability of the Governor's satisfaction.
S. K. G. Sugar Ltd. v. State of Bihar, AIR 1947 SC 1533	Held that the necessity of immediate action and promulgation of an ordinance is a matter for the Governor’s subjective satisfaction and not justiciable.	The court cited this Supreme Court authority to reinforce the proposition that the Governor's satisfaction is not justiciable and is a subjective exercise.
Barium Chemicals Ltd. v. Company Law Board, (1967) AIR 1967 SC 295 (citation in opinion)	Referenced in discussion of judicial review of executive satisfaction (as a case purportedly followed by R. Sultan).	Mentioned as part of authorities that R. Sultan purported to follow; the present court nevertheless held the approach of R. Sultan to be incorrect and did not rely upon it as dispositive.
Rohtas Industries Ltd. v. S. D. Agarwal, AIR 1969 SC 707	Referenced in the same group of authorities related to ordinance promulgation and executive satisfaction.	Not relied upon to alter the court's view; mentioned as part of materials R. Sultan referenced, but the court preferred earlier authorities holding non-justiciability.
Durga Rice and Baba Oil Mills Co. v. State of Andhra Pradesh, AIR 1964 Andhra Pra 266	Held that not every amendment or provision requires the President's assent merely because the parent Act was reserved for assent; amendments must be tested for whether assent is required.	The court relied on this case to support the proposition that the President's assent is not automatically required for every amendment to an Act that originally received assent; the court applied it to hold presidential instruction was not necessary here absent repugnancy.
Hanuman Dall and General Mills v. State of Haryana, AIR 1976 Punj & Har 1	Referenced for the principle that not every amendment to a parent Act requires prior presidential assent.	Used as supporting authority alongside Durga Rice to buttress the court's conclusion on presidential assent not being required in this case.
Achiah Chetti v. State of Mysore, AIR 1962 Mys 218 (and State of Mysore v. Achiah Chetti, AIR 1969 SC 477)	Cases relied upon by petitioners to argue for invalidity where presidential assent or other formalities affected validity.	The court found facts distinguishable and held those cases did not establish a different legal proposition applicable to the present facts; they did not change the court's conclusion on assent/repugnancy.
Gwalior Rayons Silk Mfg. (WVG) Co. v. Government of Kerala, AIR 1979 Ker 56	Invoked by petitioners as supporting their plea regarding invalidity arising from procedural/formal defects.	The court treated the factual matrix as distinguishable and did not accept those authorities as decisive for petitioners' case.
Narayan Das v. Province of Bihar (same as Lakhi Narayan Das), AIR 1950 FC 59	Authority on non-justiciability of the Governor's subjective satisfaction (cited again).	The court cited this authority when concluding no need for prior instruction of the President in absence of repugnancy.
Ramana v. I.A. Authority of India, AIR 1979 SC 1628	Upheld a condition of eligibility imposed in a tender as an objective test (hotelier experience requirement); the court observed eligibility conditions are valid provided they are objective.	The court relied on this decision by analogy to support the validity of pre-qualification conditions for tenders over Rs. 50 lakhs and treated the eligibility test as an objective criterion.
Kasturi Lal v. State of Jammu & Kashmir, AIR 1980 SC 1992	Held that governmental action in awarding contracts is subject to tests of reasonableness and public interest; courts presume government action reasonable but challengers bear heavy burden.	The court applied the principle from Kasturi Lal to evaluate section 129-A and Rule 3-A, concluding the prescribed procedure was reasonable and in the public interest; petitioners had not discharged the heavy burden to rebut the presumption of reasonableness.
E.E. & C. Ltd. v. State of West Bengal, AIR 1975 SC 266	Authority concerning blacklisting and exclusion of contractors.	The court distinguished this authority, holding the petitioners were not blacklisted (they were permitted to apply) and that the case was not applicable.
Sri Rama Engg. Contractors v. Dept. of Space, Government of India, AIR 1981 Andhra Pra 165	Referenced for the proposition that a tender committee need not give reasons for rejecting applications when not performing quasi-judicial functions.	The court relied on this authority to support the view that the tender committee was not obliged to provide reasons for rejecting an applicant and that absence of reasons did not demonstrate arbitrariness.
State of Orissa v. Bhupendra Kumar, AIR 1962 SC 945	Authority on legislative power to validate past actions by retrospective law.	The court cited this authority to support the view that legislatures may enact retrospective provisions to validate prior actions when within power to do so.

Court's Reasoning and Analysis

The court's analysis proceeds in a stepwise fashion addressing the principal challenges raised by the petitioners.

1. Validity of promulgation under Article 213 — justiciability of Governor's satisfaction.

The court surveyed conflicting authorities. While noting a division bench decision (R. Sultan) that allowed some degree of judicial inquiry into the circumstances leading to promulgation, the court concluded that earlier precedents (Lakhi Narayan Das, Jnan Prosanna, S.K.G. Sugar Ltd.) correctly state the law: the Governor's satisfaction about the existence of circumstances necessitating immediate action is a matter for the Governor alone and is not justiciable. The opinion states that even if the Governor's satisfaction were treated as justiciable, the burden to show absence of requisite circumstances lies on the petitioners, and they failed to discharge it. The court accepted the corporation's contention that works such as the Begumpet road over bridge and other public infrastructure projects were of pressing public importance and could not brook delay (cost escalation, urgency of execution), justifying immediate action.

2. Requirement of Presidential assent / repugnancy with central law.

The court analysed the constitutional scheme (Articles 246 and 254) and recognised that contracts are in the Concurrent List (Item 7 of List III) while local government matters are in the State List (Item 5 of List II). The central question was whether section 129-A (inserted by the Ordinance) was repugnant to any law made by Parliament (specifically the Indian Contract Act) such that presidential assent would have been required. The petitioners did not demonstrate any such repugnancy. The court observed that the Contract Act deals with calling and acceptance/rejection of tenders but does not prohibit pre-qualification; accordingly, no repugnancy was shown and presidential instruction or assent was unnecessary. The court relied on authorities (including Durga Rice) to hold that not every amendment to a parent Act that had received Presidential assent requires fresh assent for every subsequent provision.

3. Retrospectivity and claim of colourable legislation.

The court acknowledged that the Ordinance and section 129-A were deemed to come into force on 1-3-1981 and that subsection (4) of section 129-A permitted rules to be given retrospective effect. The court accepted that the retrospective effect was used to validate the pre-qualification notice (issued 2-4-1981), the constitution of the tender committee and its recommendations. The petitioners’ assertion that the retrospective provision was a colourable device meant to save particular private selections was rejected because the process began with 34 applicants and the eleven selected were not shown to have any improper connection with officials; there was no material showing interested persons among officials or committee members. The court held that legislatures can enact retrospective laws to validate prior actions and that the power under section 585 (and as amended by a later ordinance) allowed retrospective rules for carrying out section 129-A.

4. Validity of Rule 3-A and prior publication.

The petitioners argued Rule 3-A was invalid because it was not previously published in the Gazette as required by section 585(3). The court noted that Andhra Pradesh Ordinance No. 11 of 1981 had amended the Municipalities Act and the Hyderabad Municipal Corporation Act substituting section 585 so that the prior-publication requirement (subsection (3)) was omitted; thus, prior publication in the Gazette was no longer required and only laying before the State Legislature was necessary. Accordingly, Rule 3-A was validly made.

5. Alleged arbitrariness, discrimination and violation of Articles 14 and 19(1)(g).

The court analysed section 129-A and Rule 3-A and found specific pre-qualification criteria listed in Rule 3-A (name, financial status, experience in similar works, equipment and machinery, qualifications of personnel, list of major works, and other relevant information). The court concluded that these provide objective guidelines and that the tender committee — composed of three chief engineers, including the Chief Engineer of the Municipal Corporation and two other departmental Chief Engineers — constituted an expert and impartial body to scrutinise applications. The court emphasised that registration as a Class I contractor did not automatically imply capacity to execute every type of complex work; pre-qualification was a reasonable, public-interest measure to ensure competence for high-value, specialized projects. Applying Kasturi Lal, the court noted the presumption of reasonableness in government policy and held petitioners failed to discharge the heavy burden to prove unreasonableness. The court also held that the tender committee was not exercising quasi-judicial functions; thus, it was not required to give reasons for rejecting applications (relying on Sri Rama Engg. Contractors).

6. Procedural relief and interim directions.

After upholding the Ordinance, Rule 3-A and the earlier pre-qualification process and selections, the court nevertheless granted limited equitable relief: for those petitioners who had not applied in response to the pre-qualification notice dated 27-8-1981 owing to pendency of writs, the court allowed them to apply on or before 15-10-1981 and directed the tender committee to consider the new applications along with those already received.

Holding and Implications

Holding: The court rendered the following dispositive rulings.

DISMISSED the writ petitions challenging the validity of Andhra Pradesh Ordinance No. 24 of 1981 (inserting section 129-A), Rule 3-A (as framed by government notification/G.O. Ms. No. 973 dated 27-8-1981), the pre-qualification notice dated 2-4-1981, the constitution of the tender committee, the committee's selections, the government's approval and the notices issued to the eleven persons to submit tenders. (Paragraph 37)
The court vacated the interim directions maintaining status quo that had been ordered in interlocutory proceedings. (Paragraph 40)
The court permitted petitioners who had not applied pursuant to the pre-qualification notice dated 27-8-1981 to apply on or before 15-10-1981 and directed the tender committee to consider those applications. (Paragraph 38)
The writ petitions were dismissed "without costs" in the circumstances. (Paragraph 39)

Implications:

The opinion validates the use of pre-qualification criteria for high-value municipal contracts (Rs. 50 lakhs and above) where specialized experience, machinery and personnel are relevant to public interest and timely execution.
The court affirmed that where the Governor has recorded satisfaction for promulgating an ordinance under Article 213, that satisfaction is not justiciable (as per the authorities the court followed), and petitioners bear the burden to negate the existence of circumstances justifying immediate action.
The decision clarifies that presidential assent is not required absent a demonstrated repugnancy between the State provision and a central law; mere presence of contract-related matters in a parent Act that had earlier received presidential assent does not automatically mandate fresh assent for every subsequent state amendment.
The judgment recognises the legislature's competence to make provision for retrospective validation of rules and procedural steps, and that rule 3-A's pre-qualification criteria provide objective standards for selection by a technical committee; exclusion from selection does not equate to blacklisting in the absence of a prohibition on applying.
No new broad constitutional principle was laid down beyond application of existing precedent to these facts; the immediate effect was to validate the Ordinance, Rule 3-A, the prior pre-qualification process and selections, dismiss the petitions, vacate status quo directions, and permit limited additional time for applicants to apply.

This summary is strictly confined to the conclusions, findings, authorities and facts as presented in the provided opinion and does not add or infer material beyond that text.

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Aga Constructions v. Chief Engineer, Municipal Corporation Of Hyderabad And Another

(1) The pre - qualification prescribed for tenders for contract works for over fifty lakhs of hyderabad municipal corporation are questioned in this writ petitions. Contract works of the municipal corporation were giving under ss. 124 to 129 of the hyderabad municipal corporation act , 1955 (herein after called the municipal corporation act) and the municipal corporation of hyderabad tender rules ,1970. From the affidavit of the special officer, municipal corporation of hyderabad field in this writ petitions , it appears that the past experience of the corporation has shown that whenever tender were called for , contractors of the different status were participating quoting tender and in certain cases contract with out having sufficient experience to tackle the jobs of required magnitude procedure the work and subsequently it was found by the municipal corporation of hyderabad that their experience was much below the expected standard and they spoil the important prestigious project. In order to avoid the unhealthy competition among the contractors propose to have pre - qualification for the contractors and also to get the best result , the corporation proposed to have pre - qualification for the contractors. The object of stipulating pre - qualification for the tendering for the work of large magnitude to estimate to cost rupee fifty and more was to ensure that contractors who were experienced in the works of similarly magnitude in the construction work of similar magnitude involving similarly skills and who have the necessary equipment, machinery and men in handling such jobs only will tender for such works so that the taken up are completed in time, according to the specifications, and the municipal corporation of hyderabad derives the best result on the investment made on the works.

(2) The corporation has undertaken works of large magnitude such has road over bridge at begumpet , commercial complexes and auditoriums requiring considerable expertise in the relevant field. Therefore on 2 - 4 - 1981 the municipal corporation of hyderabad issued a pre - qualification notice stating that they wanted to put up a number of multi - storeyed buildings, commercial complex , auditorium and road over bridge at hyderabad. Then the salient feature of the schemes were indicated. The approximate cost of each schemes were range from rupees fifty to 160 lakhs. It was stated in that notice that works were to be carried out and the necessary internal water supply, sanitary, electrical fittings, lifts and fire fittings equipment are also be taken up by the same agency. Then the interested agencies were invited to furnish the following date to enable the chief engineer. Municipal corporation of hyderabad to appraise their qualification for the above works 1. Identification. 2. Financial data 3. Relevant experience or performance 4. Equipment and machinery 5. Any other relevant information 6. The agencies who had carried out such and similar jobs of equal value of each works only can apply. Replies in sealed cover had to be addressed to the chief engineer, municipal corporation of hyderabad so as to reach him 20 - 04 - 1981. This notice was published in the news papers. In response to that notice 34 persons including the petitioners in all this writ petitions made application giving the necessary particulars regarding their qualifications, experience etc. , subsequent to the receipt of those application with a view to have a benefit of getting an impartial selection of contractors who have the experience and capacity to do the work proposed , the special officer wrote a letter dated 24 - 4 - 1981 to the state government to constitute a committee who would scrutinise the replies submitted by various contractors in pursuance of the pre - qualification notice issued by the corporation. Pursuant his letter, the government constituted a tender committee consisting of the chief engineer, municipal corporation of hyderabad, chief engineer , pochampadu, and chief engineer , roads and buildings to scrutinise the applications received in response to pre - qualification notice and prepare a list of contractors to whom the tender schedules could be issued. That the committee met on 23 - 5 - 1981 in the office of the chief engineer, roads and buildings , went through the replies given by the 34 contractors and found that 11 contractors were suitable for the constructions proposed by the municipal corporation of hyderabad. The proceedings of the tender committee selecting the 11 contractors were forwarded tot the government for approval for issuing the tender schedules to those selected contractors as mentioned in the proceedings of the tender committee. In g. O rt. No 627 dated 3 - 6 - 1981 the government approved the selection of the 11 contractors made by the tenders committee. On 15 - 6 - 1981 notice were issued to the 11 persons selected by the tender committee to submit tender for three works.

(3) While so even on 17 - 4 - 1981, writ petition 2477 of 1981 was field questioning the pre - qualification notice issued on 2 - 4 - 1981. An interim direction was given by this court to receive the reply of the petitioner therein without insisting on qualification for similar work of equal value. When the government approved the list of the 1 contractors in g. O rt 627 dated 3 - 6 - 1981 writ petition no 4258 of 1981 writ petition were filed by some contractors questioning that order. In the interlocutory application field in those writ petition this court director that status quo should be maintained.

(4) On 20 - 6 - 1981 government issued g. O ms no 710 m. A introducing rule 3 - a according to the rule in case of work whose estimated cost exceeds rupees a pre - qualification notice inviting application and requiring the application to furnish along with their applications details of : (a) the status of the applicant, (b) solvency of the applicant, (c) experience in the field of executing works of the value of rupees fifty lakhs and above , (d) technical ability to execute the work of the value of rupees fifty lakhs and above in the terms of men machinery and (e) any other relevant in formation. The notice shall be published in at least three daily newspaper of nation wide circulation. After receipt of nation wide circulation. After receipt of the applications, the applications shall be placed before a committee consisting of such members as may appointed by the government from time to time. The committee shall scrutinise the applications placed before it and select the applicants for issue of tender schedules relevant to the works to be awarded. Tender schedule shall be issued to the selected applicant after approval by the government. The committee shall also scrutinise the tender received and make recommendations to the commissioner who shall deal with the tenders in accordance with the provisions of the act.

(5) Thereafter the government consulted the advocate general , who opined that the rule without amending the act. If questioned, may be declared invalid. Then the andhra pradesh legislative assembly was not in session. Therefore andhra pradesh ordinance no 24 of 1981 was promulgated by governor on 6/08/1981 under clause (1) of article 213 of the constitution of india. That ordinance is called the hyderabad municipal corporation (second amendment) ordinance, 1981. It shall be deemed to have come in to force on 1 - 3 - 1981. By section 2 of that ordinance, section 129 - a had been inserted section 129 of the hyderabad municipal corporations act, 1955. That section reads as follows:

"129 - a. (1) in respect of any work the estimated cost of which is rupees fifty lakhs or more, the commissioner shall give notice , by advertising in the news papers in the prescribed from persons who satisfy the pre - qualification specified in such notice. (2) the government may appoint, or authorise the corporation to appoint, a committee, consisting of such members as they or it may deem fit, for the purpose of scrutinising and evaluating the notice issued under sub - sec. (1) , and for making as recommendations to the commissioner as to the suitability or otherwise of persons to whom tender schedules may be issued in respect of the work. (3) the committee shall, after considering the recommendations of the committee and with the prior approval of the government, accept any of the tenders or applications so recommended which appears to him upon a view of all circumstances, to be thereupon issue the tender schedules in respect of the work to the persons whose tender or application is so accepted. (4) the government may, by notification in the andhra pradesh gazette make rules for carrying out the purpose of this section, and any rule made under this section may be made so as to have retrospective effect."

(6) Therefore notification was issued in g. O. Ms no 975 (9737) dated 27 - 8 - 1981 under sub - s. (1) of s. 585 read with sub sec. (4) of s. 129 a of the hyderabad municipal corporation act, 1955 amending shall be deemed to have come into effect on 1 - 3 - 1981 for rule 3 - a , the following rules was substituted. It read as follows:

"3 - a (1) in respect of any work the estimated cost of which is rupees fifty lakhs or more, the commissioner shall give notice specifying the following pre - qualification : - - (a) name of the contract or firm: (b) financial status: (c) details of experience in the execution of work of similar nature: (d) equipment and machinery possessed (e) qualification of personnel employed including the technical personnel; (f) list of major works of similar nature completed by the agency or under execution. (g) any other relevant qualification."

The notice shall be published in at least three daily newspapers of nationwide circulation. (2) after receipt of the applications, the application shall be placed before a committee consisting of the three members of whom one shall been an offer of the rank of a chief engineer. The committee shall scrutinise and evaluate the application placed before it and select the applicant for issue for tender schedules relevant to the work to be awarded. The committee shall also scrutinise who shall deal with the tenders in accordance with the provisions of the act. "

(7) Subsequently on 27 - 8 - 1981 another pre - qualification notice was issued by the municipal corporation of hyderabad calling for application for four works. Sixteen persons including the petitioners in w. P. Nos 2477/81 , 4317/81 and 4318/81 have applied. Questioning the ordinance and rule 3 - a and the noticed dated 27 - 8 - 1981 issued by the municipal corporation of hyderabad.

(8) In all these writ petitions sri upendralal waghary and sri vedula jagananadha rao, the counsel for the petitioners, have made the following sub - missions; (1) the a. P ordinance 24 of 1981 is unconstitutional, for the conditions laid down in art. 213 of the constitution are not satisfied and also the assent of president of india was not obtained. (2) section 129a introduces by the ordinance is a colourable piece of legislation for it is given retrospective effect and also does not lay down any guidelines. (3) rules 3 - a was not previously published therefore is invalid. (4) the elimination of the petitioners amount to blacklisting and it was done without giving them an opportunity and it also violates the fundamental rights of the petitioners under arts. 14 and 19 (1) (g) of the constitution of india.

(9) First i take up the contention whether the a. P. Ordinance 24 of 1981 had been validly promulgated. Art 213 (1) of the constitution of india reads as follows;

"if at any time except when the legislative assembly of a state is in session, or where there is a legislative council in a state , except when both houses of the legislature are in session , the governor is satisfied that circumstances exit which render it necessary exit which is satisfied that circumstances exit which render it necessary for him to take immediate action, as the circumstances appear to him to require; provided that the government shall not, without instruction from the president, promulgate any such ordinance if - (a) a bill containing the same provisions would under this constitution have required the previous sanction of the president for the introduction therefore into the legislature; or (b) he would have deemed it necessary to reserve a bill containing of the same provisions for the consideration of the president; or (c) an act of the legislature of the state containing the same provision would under this constitution have been invalid unless, having been reserved for the consideration of the president, it had received the assent of the president."

(10) Basing on this article, two argument are advanced. First, an ordinance can be promulgated by the governor, provided he is satisfied that circumstances exit which render it necessary for him to take immediate action. It is stated that in this case there are no such circumstances which render is necessary for him to take immediate action by promulgating the ordinance. Secondly , the hyderabad municipal corporation act, 1955 has received the assent of the president of india on 14 - 2 - 1956, while the present ordinance did not receive the present ordinance did not receive any such as sent. It is argued that s. 129a relates to contractors , which is in the concurrent list and therefore the assent of the president of india should have been obtained for the ordinance.

(11) It is not dispute that the legislature was not in session, when the ordinance was issued. It is true that under art. 213 (1) the governor can promulgated an ordinance only when he is satisfied that circumstances exist which it necessary for him to take immediate action by promulgating such an ordinance. The question is whether those condition are justiciable. The learned counsel for the petitioners relying upon r. Sultan v. Government of andhra pradesh , ilr (1970) andhra pra 1075 submitted that the satisfaction of the is open to judicial scrutiny. In that decision a division bench of this court consisting of rao j. Hold that the subjective satisfaction of the governor is not justiciable , that he is not bound to expound the reason for this satisfactory or the circumstances which existed , nor is he bound to prove affirmatively in a court of law that the a state of emergency did actually exist and the court cannot go into the question of validity of an ordinance made by the governor on the ground that there were no sufficient reason for promulgating the ordinance even were the governor states his reasons for his satisfaction. At the same time they held that it does not mean that the court is powerless or has no jurisdiction to consider whether the ordinance based on such subjective formula is valid. They observed that it is open to the court to firstly sea whether there existed certain circumstances and secondly such circumstances are relevant to the purpose of issuing ordinance on a particular subject and for the formation of opinion that they render it necessary to take an immediate action. In this connection they purported to follow - barium chemicals ltd. V. Company law board , (1996) 2 scj 623: (air 1967 sc 295) ; rohtas industries limited v. S. D. Agarwal, air 1969 sc 707.

(12) I am afraid, the learned judges did not laydown the correct law. In lakhi narayan das v. Province of bihar, air 1950 fc 59 while interpreting section 88 (1) of the government of india act (1935) , a provision similar to article 213 of the constitution of india, the federal court held that the governor alone has to satisfy himself as to the existence of the circumstances necessitating the promulgation of an ordinance and the existence of such necessity is not a justiciable matter. Which the court could be called upon to determine by applying an objective test. See also jnan prosanna v. Province of west bengal , air 1949 cal 1 (fb). In s. K. G sugar ltd. V. State of bihar, air 1947 sc 1533 the supreme court held that the necessity of immediate action and of promulgating an ordinance is a matter purely for the subjective satisfaction of the governor, that he is the sole judge of the circumstances necessitating the making of an ordinance, that his satisfaction is not justiciable and it cannot be questioned on ground of error of judgement or otherwise in court.

(13) In view of these decision i hold that the opinion formed by the governor with regards to the existence of circumstances, which render it necessary for him to take immediate action is not justiciable. In fact in the preamble of the ordinance 24 of 1981 it is stated

"where as the legislature of the state is not in session and the governor of andhra pradesh is satisfied that circumstance exits which render it necessary for him to take immediate action"

. Even assuming for the government is justiciable, still in my opinion the burden is upon the petitioned to show that the conditions mentioned in art. 213 do not exist. And they have failed to discharge it. If at all the facts are against them. Railway over bridge at begumpet , public etc. , are work of public importance. They cannot brook any delay. Pre - qualification notice was issued on 2 - 4 - 1981. To remedy the legal defects, ordinance was promulgated on 6 - 8 - 1981. The state legislature was not in session. It is common knowledge that as days pass by cost of construction escalates. Therefore there were certainly circumstances which necessitated the immediate promulgation of the ordinance. I, therefore , reject this contention.

(14) The hyderabad municipal corporation act 1955, has received the assent of the president on 14 - 2 - 1956. The question is whether the a. P. Ordinance no 24 of 1981 cannot be promulgated without obtaining the prior instructions of the president.

(15) Proviso to art 213 provides that the governor shall not without instruction from the president promulgate any ordinance if (a) a bill containing the same provision would under the constitution have required the previous sanction of the president for the introduction therefore in to the legislature , or (b) he would have deemed it necessary to reserve a bill containing the same provision for the consideration of the president ; or (c) act of legislature of the state containing the same provisions would under the constitution have been invalid unless having been reserved for the consideration of the president, it had received the assent of the president.

(16) According to art 246 of the constitution the parliament has exclusive powers to make laws with respect to any of the matters enumerated in list i in the seventh schedule (union list) ; the legislature of any state exclusive power to make laws with respect to any of the matters enumerated in list ii in the seventh schedule (state list) ; and the parliament as well as the legislature of state have power to make laws with respect to any of the matter enumerated in list iii in the seventh schedule (concurrent list).

(17) Art 254. (2) provides that where a law made by the legislature of a state with respect to one of the matters enumerated the concurrent list contains any provision on repugnant to the provision of an earlier law made by parliament or an existing law with respect to that matter, then, the law so made by legislature of such state shall, if it as been reserved for the consideration of the president and has received his assent, prevail in the state.

(18) Contract is item 7 of list iii in the seventh schedule. Item 5 of list ii in the seventh schedule relates to local government. Since contract is in concurrent list both the parliament as well as the state legislature can make laws with respect to that item. But any law made by a state legislature if it contains any provision repugnant to the provision of an earlier law made by parliament or an existing law, then the law so made by the legislature of such state shall, if it had been reserved for the consideration of the president and has received his assent prevails in that state. Therefore , what is necessary to see is whether there is repugnancy between the provisions of s. 129a of the hyderabad municipal corporation act, 1955 and the provision of the contract act. If there is repugnancy since instructions of the president were not obtained, it will be invalid. If there is no repugnancy, there is no need to obtain the instruction of the president. The learned counsel for the petitioners, has not placed before me the reason as to why the main act was reserved for the assent of the president. It was submitted that, the act was reserved for the assent of the president. It was submitted that, that act was reserved for the assent of the president, because there are certain provision in that act relating to contracts, it is true ss. 124 to 129 of the hyderabad municipal corporation act relate to contract. But it is not shown to me that those provision are repugnant to the provisions on the indian contract act and therefore it was reserved to the president of india. Therefore it is more a matter of guess as to why that act was reserved for the assent of the president. There are certain provisions in the municipal corporation act, which may come into conflict with the provision of certain central acts. For instance, ss. 384 and 385 relate to acquisition of lands and buildings. Ss 252 and 256 relate to octroi duty. Ss 516 and 520 relate to factories. They may come into conflict with the land acquisition act, art 304 of the constitution and the factories act. Therefore may be the assent of the president was obtained for the main act. The learned counsel for the petitioners have not shown to me any repugnancy between s. 129a of the a. P ordinance and the provision of the contract act. The contract act provides for calling for tenders and accepting or rejecting them. It does not say that while calling for tender a pre - qualification should not be scrutinised. Therefore i hold that there is no repugnancy between s. 129a (as inserted by?) the ordinance and the provisions of the contract act, an existing law made by the parliament. If so , there is no need to obtain the prior instructions of the president before promulgating the ordinance. See narayan das v. Province of bihar (air 1950 fc 59).

(19) In durga rice and baba oil mills co. V. State of andhra pradesh, air 1964 andhra pra 266 it has been held by division bench of this court that it is not every amendment that should be submitted for the assent of the president irrespective of whether the amendment involves anything which call for the assent of the president, merely because the main act was referred to for his assent. It was observed that often the parent act by a state legislature may contain same provisions which deal with a matter coming under list iii and it is only to save a law made by such a legislature from challenge on the plea of repugnancy between it and an existing law or a parliament law that the device of obtaining the presidents assent is resorted to. See also - jnan prosanna v. Province of west bengal (air 1949 cal 1) (fb) and hanuman dall and general mills v. State of haryana, air 1976 punj and har 1.

(20) The learned counsel for the petitioners referred to achiah chetti v. State of mysore ,air 1962 mys 218; gwalior rayons silk mfg. (wvg) co. V. Government of kerala air 1979 ker 56; state of mysore v. Achiah chetti, air 1969 sc 477 to substantiate their plea. The facts in those cases are distinguishable. They have not laid down any different proposition of law. It is not shown to me by the learned counsel for the petitioners that s. 129a is repugnant to any of the provision of the contract act. Therefore the provision instruction of the president need not be obtained before promulgating the ordinance. Consequently i reject the contention.

(21) Next it was submitted by the learned counsel for the petitioners that the ordinance is a colourable piece of legislation, for retrospectivity is given to section 129a from 1 - 3 - 1981 and sub - clause (4) of that section empowers the government to make rules with retrospective effect. It is argued that the ordinance has been given retrospective effect not to save any rule or notification, but to save any rule or notification , but to save the eleven persons that were selected by the tender committee. It was also contended that no public interest is involved so as to make the ordinance retrospective and also to empowers the government to make rules with retrospective effect.

(22) It is true that the ordinance is deemed to have come into force on 1 - 3 - 1981. It is also true that sub - sec. (4) of s. 129a provides that the government can make rules for carrying out the purpose of section and any rule made under that section may be made so as to have retrospective effect. There is on doubt of the fact that the ordinance was given retrospective effect in order to validate the pre - qualification notice that was issued on 2 - 4 - 1981 the constitution of the tender committee and the recommendations made by them. But that is different from saying that the ordinance was given retrospective effect in order to save the eleven persons that were selected by the tender committee. Here it should not be forgotten that pursuant to the pre - qualification notice that was issued by the municipal corporation of hyderabad, thirty - four persons including the petitioners had applied and eleven persons were selected by the tender committee. If the petitioners were selected, they would have had no grievance. In the arguments advanced before me by the learned counsel for the petitioners, it is not suggested that the special officer of the municipal corporation of hyderabad or the three chief engineers that constituted the tender committee or the secretary of the municipal administration or the minister for municipal administration were in any way interested in the eleven applicants that were selected by the selection committee or they had any axe to grind against the present petitioners, who were not selected by the committee. Therefore, i do not agree with the learned counsel for the petitioners that the ordinance is a colourable piece of legislation. It was also submitted by the learned counsel for the petitioners that section 585 (1) of the hyderabad municipal corporations act does not empower the government to make rules with retrospective effect and it is rather odd that sub - sec. (4) of s. 129a should give them such a power. S. 585 of the act empowers the government to make rules for purposes of carrying into effect all or any of the provisions of the act. Government to make rules with retrospective effect. But it does not mean that the legislature cannot prescribe that the government can make rules with retrospective effect for carrying out purposes of s. 129a, obviously retrospectivity was given in order to bright rule 3 - a into effect from 1 - 3 - 1981; when the ordinance came into effect i. E. On 1 - 3 - 1981. It is not shown to me by the learned counsel for the petitioners that the legislature cannot pass an ordinance with retrospective effect much less it cannot provide in the act itself to make rules with retrospective effect. Legislature has power to validate actions by passing laws to that effect. See of orissa v. Bhupendra kumar, air 1962 sc 945.

(23) It was submitted by the learned counsel for the petitioners that s. 129a is arbitrary and discriminatory as it offends arts. 14 and 19 (1) (g) of the constitution of india. Let us see s. 129a. It say that in any respect of work the estimated cost of which is rupees fifty lakhs or more, the commissioner shall give notice by advertisements in the newspapers in the prescribed manner, inviting tenders or application from person who satisfy the pre - qualification specified in such notice. Then the government can appoint or authorise the corporation to appoint a committee for scrutinising and evaluating the pre - qualification of the tenderers or applicants and for making its recommendations to the commissioner as to the suitability or otherwise of the persons to whom tender schedules may be issued in respect of the work. After considering the recommendation of the committee and with the prior approval of the government, the commissioner shall accept any of the tenders or applications so recommended, which appears to him upon a view of all the circumstances to be the most advantageous and thereupon issue the tender schedules in respect of the tender is so accepted.

(24) It is not shown to me as to how the procedure prescribed in this section is not in the public interest or is not germane to the object of the act or is discriminatory. From the counter - affidavit field by the special officer it is evident that it has been the sad experience of the municipal corporation of hyderabad during all these years that contracts given to some of the persons were not carried out promptly and properly and thereby the corporation was sustaining losses and the public were suffering great inconvenience. Apart from that, it was leading to unhealthy competition among the contractors. The pre - qualification are prescribed in order to get the work done by contractors who has the necessary experience, expertise and the resources to carry out the work. It is true that the petitioners are registered as class i contractors. But that does not by itself mean that they are capable of handling all types of work involving different categories of skills. A class i contractors handling earth work jobs will not necessarily have the experience in the construction of high rise buildings and fly over or sanitary works. Similarly a class i contractors who has experience in high building will not have experience in sewage treatment works or sewer system of large magnitude. The municipal corporation of hyderabad has taken up works of large magnitude such as the road over bridge at begumpet, commercial complexes and auditoriums requiring considerable expertise in the relevant field. It is in these circumstances the government through it proper that for works whose estimated cost is 50 lakhs or more pre - qualification should be prescribed. The application received are scrutinised and evaluated by a committee of three persons. Here the committee consisted of three chief engineers, one of whom is the chief engineer of municipal corporation of hyderabad. The other two chief engineer belong to two other departments. They are certainly experts in the line and they are proper persons to scrutinise and evaluate the qualifications as to the suitability of the applicant to do the contract works, it is definitely an impartial body. Even then it is not as if those applicant are straightway given the contracts. They are only given the tender schedules. Those tender schedules may be accepted or may not be accepted. It only means that they can tender for the work. It is only after considering the recommendations of the committee, and with the prior approval of the government, the commissioner could accept any of the tender or application only if upon a view of all the circumstances he considers it to be most advantageous to the corporation. Iam of the opinion that these safeguards are eminently reasonable and provided in the public interest to get the work done by the best contractors in the best manner possible and without delay.

(25) It was submitted by the learned counsel for the petitioners that no guidelines are provided in the section. It is stated that the pre - qualification that have to be satisfied in the notice are not mentioned in the section. It is argued that the basis on which on the committee has to scrutinise and evaluate the qualification of the tenderers or applicants is not mentioned. I find it difficult to accept this argument. The pre - qualification are pre - scribed in rule 3 - a. The tender committee evaluates the tender in accordance with the pre - qualification mentioned in that rule.

(26) Rule 3 - a provides that in respect of any work the estimated that cost of which is rupees fifty lakhs or more, the commissioner shall give notice specifying the following pre - qualifications. " (a) name of the contractors or firm; (b) financial status; (c) details of experience in the execution of work of similar nature; (d) equipment and machinery possessed; (e) qualification of personnel employed including the technical personnel; (f) list of major works of similar nature completed by the agency or under execution; (g) any other relevant information.

(27) These clauses provided guidelines on the basis of which the tender committee can select the applicants.

(28) It was also submitted by the learned counsel for the petitioners that the tender committee did not give any reason for rejecting the applications of the petitioners. In my opinion there is no need for them to give reasons. They are not discharging any quasi - judicial functions. They are only a committee for scrutinising the applications. It is not the case of the petitioners that the tender committee have arbitrarily selected the eleven applicants ignoring the just claims of the petitioners. In fact to satisfy my self i have gone through the proceedings of the tender committee. I cannot say that they should not choose the best persons out of all the applicants.

(29) The learned counsel for the petitioners relying upon kasturi lal v. State of jammu and kashmir, air 1980 sc 1992 submitted that the government while entering into contracts cannot act arbitrarily at its sweet will and their actions in that regard is liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid. It is true the government cannot give the contracts as a private party does. It cannot arbitrarily choose the contractors at its sweet will and pleasure. It has to act reasonably and fairly and in the public interest while giving contracts. The question for consideration is whether the procedure prescribed by section 129a is unreasonable and contrary to public interest. As stated by me already it is eminently reasonable and in the public interest. I therefore hold that section 129a is neither arbitrary, nor discriminatory and it does not offend article 14 or 19 (1) (g) of the constitution.

(30) Here i may add that no persons has a fundamental rights to carry on business with the government. All that he can claims is that the government should be reasonable and fair in giving its contracts and it must be in the public interest. While selecting persons for giving tenders, certain conditions to experience etc. , can be prescribed.

(31) In ramana v. I. A. Authority of india , air 1979 sc 1628 a notice was issued notifying tenders. The airport authority has stipulated a condition of eligibility by providing that a person submitting a tender must be a second class hotelier having at least five years experience. The supreme court observed that the condition of eligibility has to be satisfied by ever person submitting a tender and if in any respect of any person this condition was not satisfied his tender was ineligible for being considered it observed that the test of objective test and not a subjective one. Thus the condition of eligibility in that case was upheld by the supreme court. On principle do not find any difference when a pre - qualification is pre - scribed for making an application for contracts over fifty lakhs. Evidently those qualification are probed to see whether they have the requisite experience to do the work. The contract work cannot be given to each and every one particularly when lakhs and lakhs of public monies and public interest are involved and when the works have to be executed within the prescribed period and properly.

(32) In kasturi lal v. State of jammu and kashmir (air 1980 sc 1992) while holding that a contract given by the government can be tested on the object of reasonableness and public interest, it was observed: (para 14)

"there may be an infinite variety of considerations which may have to be taken into account by the government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the government in taking a particular action, that the court would have to decide whether the action of the government is reasonable and in public interest. But one basic principle which must guide the court in arriving at its determination on this question is that there is always a presumption that the governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the court by proper and adequate material. The court cannot lightly assume that the action taken by the government is unreasonable or without public interest because, as we said above, there are a large number of policy considerations which must necessarily weigh with the government in taking action and therefore the court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied, it would be the plainest duty of the court under the constitution to invalidate the governmental action. This is one of the most important functions of the court and also one of the most essential for preservation of the rule of law."

(33) I hold that the petitioners have failed to make out that s. 129 - a constitution of india.

(34) It was submitted by the learned counsel for the petitioners that r. 3a is invalid for there was no prior publication in the gazette, as enjoined by s. 585 (3) of the hyderabad municipalities act. It is true that under sub - secs. (1) and (2) shall be subject to the condition of previous publication and shall be laid before legislative assembly. What is argued is that r. 3a that was promulgated in the notification published in g. O. Ms. No. 973 dt. 27 - 8 - 1981 was not previously published in the gazette under sub - sec. (3) of s. 585. But the learned counsel for the respondents had placed before me a. P. Ordinance no. 11 of 1981. That ordinance had amended the a. P. Municipalities act, 1965 and the hyderabad municipal corporations act, 1955. It came into force on 16/06/1981. Under that ordinance s. 505 is now substituted. Sub - sec. (3) is omitted. Under s. 585, as now substituted there is no need for the previous publication of the rules in the gazette. All that is necessary is that every rule made under the act should be laid before each house of the state legislature. Therefore it is not necessary to make prior publication of r. 3a.

(35) It was contended by the learned counsel for the petitioners that the elimination of the petitioners that the elimination of the petitioners who are already registered as class i contractors with the municipal corporation amounts to black listing and my attention is invited to e. E. And c. Ltd. V. State of west bengal, air 1975 sc 266. I do not agree that the petitioners are black listed. If they are black listed, they will not be permitted to apply at all, even if they have the pre - qualifications. In fact every one of the petitioners has applied pursuant to the pre - qualification notice issued by the commissioner. Therefore this is not really a case of black listing consequently the decision in e. E. And c. Ltd. V. State of west bengal (air 1975 sc 266) is not relevant.

(36) Even is the petitioners have the eligibility to apply at the most they could only claim the their applications should be considered fairly and impartially. They cannot claim the contract as of right. Equally they cannot complain that their fundamental rights under art. 14 or 19 (1) (e) are violated merely because their applications were rejected by the tender committee. The tender committee need not give any reasons for rejecting an application. In this connection i may refer to sri rama engg. Contractors v. Dept. Of space, government of india, air 1981 andh pra 165.

(37) Consequently i hold that the a. P. Ordinance no. 24 of 1981, rule 3a that was promulgated g. O. Ms. No. 973 dated 27/08/1981, the pre - qualification notice dated 2/04/1981 issued by the municipal corporation of hyderabad, the constitution of the tender committee, the selections made by the selection committee, the approval given by the government and the notice issued to the 11 persons to submit their tenders, are valid.

(38) After the ordinance was promulgated and r, 3a was framed, on 27 - 8 - 1981 the municipal corporation of hyderabad has issued a pre - qualification tender notice for execution of four works. The last date for submitting the applications was 21 - 9 - 1981. I am informed that there was 16 applicants including the petitioners in w. Ps. 2477/81, 4317/81 and 4318/81. The learned counsel for the petitioners submit that the other petitioners did not apply in view of the pendency of the writ petitions, that they what to apply and since the date for the receipt of the applications has expired by 21 - 9 - 1981 i should give them some time to make applications. This request is reasonable. Accordingly i give time for those petitioners that have not applied pursuant to the pre - qualification notice dated 27/08/1981 to apply on or before 15 - 10 - 1981 and it is for the tender committee to consider their applicants that are already received.

(39) In the result i dismiss these writ petitions but in the circumstances of the case without costs.

(40) The direction given in the interim - petitions that status quo should be maintained, is vacated.

(41) Order accordingly.

Aga Constructions v. Chief Engineer, Municipal Corporation Of Hyderabad And Another

Structured Summary of the Opinion: Hyderabad Municipal Corporation — Pre-Qualification for High-Value Tenders

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioners' Arguments

Respondents' (Corporation/Government) Position as Described in the Opinion

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Aga Constructions v. Chief Engineer, Municipal Corporation Of Hyderabad And Another

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