Case Note & Summary
The dispute arose from the rejection of a tender submitted by the appellant, a long-time supplier of milk, in favor of a higher bid from a government agency. The appellant had been supplying milk for over twenty years and was on the approved list of the respondents. In July 1985, the Military Farms issued a tender notice for the supply of fresh buffalo and cow milk. The appellant submitted a tender at a rate of Rs. 421 per 100 liters, while the government agency submitted a tender for pasteurized milk at Rs. 400 per 100 liters, which was not in accordance with the tender notice. Despite being the lowest bidder, the appellant's tender was rejected, and the higher bid was accepted, leading to the appellant filing a writ petition that was dismissed by the High Court. The Supreme Court, upon appeal, found that the government had acted arbitrarily and capriciously by not adhering to the tender conditions and failing to provide the appellant an opportunity to negotiate or resubmit his tender under changed conditions. The court emphasized that the government must act in accordance with the principles of fairness and justice, particularly in public contracts. The appeal was allowed, the High Court's decision was set aside, and the authorities were directed to accept the appellant's tender, reaffirming the necessity for adherence to tender conditions and fair treatment in government contracts.
Headnote
A) Government Contracts - Tender Process - Fairness in Awarding Contracts - Constitution of India, Article 14 - The government must act fairly and justly in awarding contracts, and cannot act arbitrarily. The court held that the rejection of the lowest bid in favor of a higher bid was arbitrary and unjustified, requiring the acceptance of the appellant's tender. (Paras 75-77).
Issue of Consideration
Whether the rejection of the appellant's tender in favor of a higher bid was arbitrary and violated principles of fairness in government contracts.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court's order, and directed the authorities to accept the appellant's tender.
Law Points
- Government contracts
- tender process
- arbitrary action
- fundamental rights
- fair and just action
