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Law on the subject of scope of judicial review in the matters of Contract is no more res integra: The High Court of Jammu & Kashmir and Ladakh At Srinagar

Courts are expected to exercise judicial restraint in interfering with the administrative action, particularly in the matter of tender or contract. Ordinarily, the soundness of the decision taken by the tender issuing authority ought not to be questioned, but the decision-making process can certainly be subject to judicial review. The soundness of the decision may be questioned, firstly, if the decision made is so arbitrary and irrational that the Court can say that the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached or; second, if the process adopted or decision made by the authority is malafide or intended to favour someone or; third, if the public interest is affected. The aforesaid has been established by The High Court of Jammu & Kashmir and Ladakh At Srinagar while adjudicating the case of M/S Valley Security Agency v. Union Territory of JK & Ors. [WP(C) No. 1633/2021; CM No. 5466/2021] which was decided by the single judge bench comprising Justice Ali Mohammad Magrey on 20th August 2021.

Respondents, by incorporating the condition in the impugned NIT to the effect that any firm claiming exemption under Aatmanirbhar Bharat Rozgar Yojana (ABRY) should submit the requisite registration certificate and that any firm not claiming the exemption under ABRY should give certificate/ declaration that he has neither claimed employer’s share of EPF/EPS contributions nor received nor shall claim or receive in future under the contract if registered under ABRY Scheme, has deprived most of the Contractors in participating in the process who are already registered with the EPF Organization, thereby resulting in reduction of competition. It is further submitted that the aforesaid condition has seriously prejudiced the rights and interests of the Petitioner and that the same has been done only with a view to give benefit to some blueeyed Contractors. By medium of the instant Petition, the Petitioner has challenged the validity of e-tender No. 36 of 2021 dated 3rd of August, 2021 issued by Respondent No.3 under endorsement No. NIT/e-SS/36 of 2021 dated 3rd of August, 2021 with regard to outsourcing of Security services for Government Medical College and its associated Hospitals, Srinagar. A direction is also sought in the name of the Respondents to issue fresh tenders for annual contract for Security services at the Government Medical College and its associated Hospitals, Srinagar or to drop the impugned conditions from the aforesaid e-tender.

The court perused the facts and arguments presented. it was of the opinion that “public authorities must be left with the same liberty as they have in framing the policies, even while entering into contracts because many contracts amount to implementation or projection of policies of the Government. But it cannot be overlooked that unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the Constitution of India in many cases for years. It is for this reason that the Courts have impressed that even in contractual matters the public authority should not have unfettered discretion. In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons keeping an eye on the augmentation of the revenue. But, even in such matters, they have to follow the norms recognized by Courts while dealing with public property. It is not possible for the Courts to question and adjudicate every decision taken by an authority because many of the Government Undertakings, which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi-judicial authority while awarding contracts. Under some special circumstances, a discretion has to be conceded to the authorities who have to enter into contract by giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bonafide manner, although not strictly following the norms laid down by the Courts, such decisions are upheld on the principle laid down by Justice Holmes that Courts, while judging the constitutional validity of executive decisions, must grant certain measure of freedom of ‘play in the joints’ to the executive.”

It thus declared that “From a bare perusal of the pleadings placed on record, it is more than apparent that the decision taken by the Respondents in fixing the terms and conditions with respect to the impugned NITs was certainly not irrational in any manner whatsoever or intended to favour anyone. For the foregoing reasons, I do not find any merit in this Petition. It entails dismissal and is, accordingly, dismissed, along with the connected CM(s).”

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