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The reasons for administrative decisions cannot be mala fide, arbitrary, extraneous, illegal, and whimsical as it would violate the Wednesbury principle of Reasonableness and fall foul of Article 14 of the Constitution of India. The question as to importance of providing good reasons for administrative decisions was examined by High Court of Delhi, consisting Justice Vipin Sanghi in the matter of Inituform Pipeline Rehabilitation Private Limited vs. New Delhi Municipal Council [W.P.(C) 6752/2021] on 07.01.2022.

The facts of the case are that the petitioner was a provider of trenchless technology-Cured in Placed Pipeline, (“CIPP”). The petitioner was working with organisations like Delhi Jal Board, Delhi Metro Rail Corporation, Uttar Pradesh Jal Nigam and Hyderabad Metropolitan Water Supply and Sewerage Board. On 20.08.2020, the Sewage Maintenance Division, Civil Engineering department of the respondent NDMC issued the NIT inviting bids from “Specialised Agencies” in the field of rehabilitation of old sewer lines by structural lining method. Three bidders, including the petitioner, participated in the tender process, and as per the minutes of Technical Evaluation Sub-Committee held on 08.09.2020, post-technical evaluation, only 2 bidders, namely, the petitioner and Gypsum Structural India Pvt. Ltd. were found eligible and qualified for the next level, i.e. financial bid comparison. The bid of the third bidder, namely, Onsite India Pvt. Ltd. (Onsite), was disqualified by the respondent as, on scrutiny of the EMD documents uploaded by Onsite, it was found that the entire EMD was deposited by Onsite in the shape of Bank Guarantee, which was in breach/noncompliance of technical qualifications. On the recommendation of the Technical Evaluation Sub-Committee of the respondent, financial bids were opened on 10.09.2020 and the petitioner emerged as the lowest bidder. The petitioner, after being declared as the successful bidder, was waiting for the issuance of the work order to commence rehabilitation work. However, on 04.01.2021 the Sewage Maintenance Division (Civil Engineering Department) of the respondent issued a fresh notice inviting tenders, calling for fresh bids in relation to the same project with identical scope of work, and terms and conditions.

The Counsel for petitioner contended that the reasons recorded in the minutes of the meeting of 21.05.2021– prompting the Council to cancel the tender, are mala fide, arbitrary and whimsical. It is argued that the tender document clearly required specialised agencies to bid, and it was a specialised work. The Finance Department, as well as the NDMC deliberated the bid of the petitioner and found that the Petitioner’s financial bid to be eligible for the award of the contract, especially since the Respondent has been awarding contracts to entities/ institutions for similar works where the variation is within the permissible limit of 5% of justified rates. It has further been argued by the petitioner that the entire decision making process stands vitiated as one of its members i.e. Mr. Kadian openly had a bias in favour of the disqualified bidder, and against the qualified bidders. It is submitted that Shri Kadian had his way as he succeeded in ensuring cancellation of the tender on completely frivolous grounds.

The Counsel for respondent contended that the Council duly applied its collective mind, deliberated the issue and, thereafter, a conscious decision was taken to reject the bids received under the tender in question, and recall the tender. It was contended that the decision to accept or reject the bids, by the tender inviting authority is within the exclusive domain of that authority, and ought not to be interfered by the Court until the same is arbitrary, whimsical or mala fide also the respondent is not bound to accept the lowest bid. It was submitted by respondent that the Council consisted of 13 members, all of whom have collectively taken the decision to cancel the tender and to re-tender the works. Mr. Kadian was only one of the 13 persons and hence, had a miniscule role in the decision making, if at all.

The High Court of Delhi held that the Council is not bound in all cases to accept the recommendation on the file made by the concerned authorities. However, it was necessary for the Council to record its reasons as to why the recommendation of the Finance Department and the Executive Engineer concerned was being differed from. The reason, which seemed apparent to Court, was the influence of Mr. Virender Singh Kadian, the member of the Council. It is evident that Mr. Virender Kadian, one of the members of the Council, had a pre-conceived mindset of rejecting the Petitioner’s bid on account of his declared interest in the disqualified bidder Onsite. He had openly written a letter supporting Onsite, and if Onsite could not be declared technically qualified, to seek recall of the tender. In this background, in all fairness, he should have refrained from participating in the Council meeting held on 26.12.2020. Therefore the reasons for rejection of the Petitioner’s bid and cancellation of the tender process are mala fide, arbitrary, extraneous, illegal, whimsical, it violates Wednesbury principle of Reasonableness and thus, cannot be sustained. Validity of any administrative decision is to be judged on the basis of reasons existing on record. The Public authority cannot be permitted to supplant reasons at a later stage, especially if those reasons never existed before. Moreover, reasons are the life blood of every administrative decision, and every administrative decision has to be informed by good reason. It cannot be whimsical or capricious. Otherwise, the administrative decision would fall foul of Article 14 of the Constitution of India. By looking at the past conduct of the Council, the Court directed that in case the decision taken is against the petitioner, the respondent shall not take any precipitative action at least for a period of ten days from the date of actual communication of the decision to the petitioner. The writ petition stood disposed of in the aforesaid terms.

Judgment reviewed by Shristi Suman. Read Judgment