Darpa Narayan Ghosh v. The Chief Medical Officer Of Health, Hooghly & Ors.

The judgment of the Court was as follows:

1. The writ petitioner complains of the arbitrary conduct on the part of the respondent authorities in declining to accept the more favourable commercial terms offered by the writ petitioner and preferring the private respondent's bid. The writ petitioner claims that an irrational basis was adopted by the respondent authorities in choosing the eighth respondent's offer ahead of the petitioner's.

2. The State-respondents invited offers for installation of CT scan facilities at the Hooghly Imambara Sadar District Hospital on a joint venture basis. The tender documents provided that private parties who qualified on technical and cost grounds would be assessed on a quality and cost-based basis. By June 12, 2008 both the petitioner and the eighth respondent put in their revised papers expressing interest. Both commercial bids were divided into two columns, with rates set out for Government Hospital patients and private patients. There were no other offers received pursuant to the notice. The bids put in by the petitioner and by the eighth respondent were as follows:—

The petitioner:

Sl. No. Type/Part of body to be scanned Rate of Govt. Hospital Patients Rate for private Patients 1 Brain 590/- 1200/- 2 Whole Body 1950/- 4200/- a) Thorax 1250/- 2850/- b) Upper Abdomen 1275/- 2850/- c) Lower Abdomen 1275/- 2850/- d) Dorsal spine 1290/- 2950/- e) Lumber spine 1290/- 2950/- f) Cervical spine etc. 1290/- 2950/- 3 CT guided FNAC 800/- 1300/-

The Respondent No. 8:

Sl. No. Type/Part of body to be scanned Rate for Govt. Hospital Patients Rate for Private Patients 1 Brain 580/- 1000/-to 1400/- 2 Whole Body (Thorax, 1300/- 2500/- to 3500/- Upper Abdomen, 1300/- 2500/- to 3500/- Lower Abdomen, 1300/- 2500/- to 3500/- Dorsal spine, 1600/- 2500/- to 3500/- Lumber spine, 1300/- 2500/- to 3500/- Cervical spine etc.) 1200/- 2500/- to 3500/- 3 CT guided FNAC 500/- 800/- to 1000/-

3. The petitioner says that subsequent to June 12, 2008, the petitioner was invited to lower the rates already offered and, accordingly, the petitioner revised the commercial terms relating to brain scan, cervical spinal scan and CT guided FNAC. The petitioner relies on a writing dated June 20, 2008 issued by him which records that a “verbal discussion” had taken placed between the petitioner and the Chief Medical Officer of Health, Hooghly District (CMOH), on June 19, 2008 following which the reduced rates in the three cases were being offered. The petitioner says that the negotiations with the CMOH were pursuant to a resolution of the Rogi Kalyan Samity of the district hospital and the ultimate rates offered by the petitioner were better than those quoted by the eighth respondent. The petitioner questions the rationale of the executive committee-the body that was authorised to select the appropriate party - in setting an irrational benchmark for weighing the rival bids. The petitioner says that there is nothing to disclose how the selection committee arrived at the opinion that the rates that the eighth respondent had offered were better in respect of the more commonly prescribed diagnostic measures.

4. The relevant extract from the minutes of the meeting of the executive committee records as follows:—

“In a Note-sheet on 01.09.08 The CMOH, Hooghly, Superintendent District Hospital, Radiologist of District Hospital were requested by the Sabhadhipati, Hooghiy to submit their technical view. They have given their technical view in the Note-sheet.

“The matter on today 29.12.08 has thoroughly been discussed in the EC meeting and the thorough checking of all relevant papers it reveals that the negotiations between CMOH, Hooghly and Sri Darpanarayan Ghosh as directed by RKS of District Hospital on 16.06.08 was beyond the power and scope of authority of the RKS District Hospital. It reveals from the technical report of the Superintendent of District Hospital that the rate offered by the New United Diagnostic Pvt. Ltd. is acceptable on the ground that the items for which New United Diagnostic Pvt. Ltd. offered less are commonly prescribed. Therefore, the committee resolved that the rate offered by New United Diagnostic Pvt, Ltd. is acceptable.”

5. In particular, the petitioner says that the Selection Committee compared apples with oranges as the petitioner had given firm figures in respect of both Government hospital patients and private patients while the eighth respondent had given firm figures for only Government hospital patients but had indicated a price band for private patients. The private respondent retorts that there was sufficient transparency in the decisionmaking process and once it was recognised that the petitioner's attempt to better its rates subsequent to June 12, 2008 could not be accepted, it would be apparent that it was the private respondent's quotations in respect of the more commonly prescribed tests that were better than the petitioner's. The State has produced a copy of the note-sheet prepared by the CMOH and the radiologist of the concerned district hospital that is referred to in the minutes of the meeting of the executive committee. The State says that it was the radiologist's opinion that the private respondent had offered better rates for the more widely prescribed tests.

6. The private respondent says that the meeting of the executive committee was attended by 22 persons including more than ten doctors and if it was the considered collective view of the body that the private respondent's offers in respect of the commonly prescribed tests were more attractive, the Court in exercise of its power of judicial review should not tinker with the decision. The private respondent relies on a judgment reported at 1994 (6) SCC 651 (Tata Cellular v. Union Of India.) and places the tests laid down at Paragraph-94 of the report:—

“94. The principles deducible from the above are:—

(1) The modern trend points to judicial restraint in administrative action.

(2) The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made.

(3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through, several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

Based on these principles we will examine the facts of this case since they commend to us as the correct principles.”

7. Another judgment reported at 1997 (1) SCC 738 (Asia Foundation and Construction Ltd. v. Trafalgar House Construction (I) Ltd.) is relied upon by the eighth respondent for the principle that is recognised at Paragraph-10 of the report:—

“10. Therefore, though the principle of judicial review cannot be denied so far as exercise of contractual powers of Government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest or if it is brought to the notice of the Court that in the matter of award of a contract power has been exercised for any collateral purpose. But on examining the facts and circumstances of the present case and on going through the records we are of the considered opinion that none of the criteria has been satisfied justifying Court's interference in the grant of contract in favour of the appellant. We are not entering into the controversy raised by Mr. Parasaran, learned Senior Counsel that the High Court committed a factual error in coming to the conclusion that respondent No. 1 was the lowest bidder and the alleged mistake committed by the consultant in the matter of bid evaluation in not taking into account the customs duty and the contention of Mr. Sorabjee, learned Senior Counsel that it has been conceded by all parties concerned before the High Court that on corrections being made respondent No. 1 was the lowest bidder. As in our view in the matter of a tender a lowest bidder may not claim an enforceable right to get the contract though ordinarily the authorities concerned should accept the lowest bid. Further we find from the letter dated 12.7.1996 that Paradip Port Trust itself has come to the following conclusion:

“The technical capability of any of the three bidders to undertake the works is not in question. Two of the bids are very similar in price. If additional commercial information which has now been provided by bidders through Paradip Port Trust, had been available at the time of assessment, the outcome would appear to favour the award to AFCONS.”

8. The private respondent says that implicit in the selection committee's acceptance of the private respondent's offer is the pinning down of the private respondent to the starting points in the price bands for different categories of scans indicated for private patients. It is submitted that once it is accepted that the lower ends of the price bands would be the applicable rates for private patients and the rates quoted for brain scan, cervical spine scan and CT guided FNAC are found to be lower than the petitioner's respective quotations, there would be no anomaly in the decision or the decision-making process.

9. Though the tender documents permit negotiations being conducted with the offerers, it appears from the papers that the revised bids were to be put in by the two contestants by June 12, 2008. The more attractive rates that the petitioner offered subsequent to June 12, 2008 appear to be behind the back of the eighth respondent who was not accorded a similar invitation by the concerned CMOH. But what is significant in the reduced quotations of the petitioner is that the rates for only three items were revised thereby. Even such reduced rates were appreciably higher than the corresponding rates offered by the eighth respondent for two of the items and marginally lower in respect of brain scan. Ironically, the tender committee compared the rates offered by the two parties on June 12, 2008 in respect of the same three items and it was this which, in the ultimate analysis, tilted the scales in the private respondent's favour. Implicit in the petitioner's reduction of the rates in respect of the three items was the acknowledgement that these were to be the crucial rates.

10. Upon the petition being received, an order was made on January 29, 2009 to the effect that despite the private respondent having been issued the work order, the supply of the equipment should not be begun without previous leave of Court. The private respondent claims to have expended substantial sums preparatory to the installation of the equipment and says that there is nothing shocking that the petitioner has been able to demonstrate for this Court in exercise of its jurisdiction under Article 226 of the Constitution to be minded to interfere with the process.

11. Since the private respondent accepts that the lowest rates in its price bands in respect of private patients would be the applicable rates and since such rates are lower than the firm rates in the same category quoted by the petitioner, it is the private respondent's offer which is the better in respect of private patients. There also appears to be sufficient basis in the selection committee finding that for Government hospital patients the private respondent's offers in respect of the commonly prescribed tests were more attractive.

12. While the State or any instrumentality answering to the description of “other authority” within the meaning of Article 12 of the Constitution has to adopt a fair and transparent process in the matter of selecting a buyer or a seller or a service-provider pursuant to a notice inviting tender, the State and its instrumentalities are not to be more unfavourably placed than other persons not answering to the description of State or other authority within the meaning of Article 12. The State and its instrumentalities have the freedom to choose the best party to deal with, subject to there being transparency in the process of selection and a by and large objective procedure being followed. The writ Court has scarcely the wherewithal to assess the rival bids and it is undesirable that the Court would place itself in the position of the tender committee without having the requisite expertise. That is not to suggest that an expert body can do as it pleases, but it is only the obvious cases of irrational and arbitrary decision-making process that can be questioned and undone in proceedings of the present nature.

13. Whether it is by the tests recognised at Paragraph-94 of Tata Cellular or the Wednesbury yardstick of reasonableness, the impugned decision-making process passes muster and does not call for any interference.

14. W.P No. 869 (W) of 2009 is dismissed. There will be no order as to costs. The eighth respondent will only be bound by its understanding that the lowest rates in its price bands relating to private patients would be the applicable rates in that segment in respect of the work contemplated under the contract that may now be signed in its favour. Subject to the above, the interim order stands vacated.

15. Urgent certified photostat copies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities.

S.K.G