Supreme Court of India
SHIMNIT UTSCH INDIA PVT. LTD. & ANR.versusWEST BENGAL TRANSPORT INFRASTRUCTURE
- Citation
- 2010 INSC 313
- Decided
- 12 May 2010
- Disposal
- Dismissed
- Bench
- R V RAVEENDRAN
Holding
A change in government policy, including alteration of tender conditions, is permissible if material circumstances have changed and the change satisfies the Wednesbury reasonableness standard, thus the states may lawfully dispense with the earlier essential conditions.
Summary
The appeals concerned the validity of the West Bengal and Orissa governments' decision to cancel earlier Notices Inviting Tenders (NIT) for High Security Registration Plates (HSRP) and to issue new NITs that omitted the conditions of foreign experience and minimum turnover, which had been upheld as essential in Association of Registration Plates v. Union of India. The petitioners argued that the Supreme Court's earlier judgment bound the states to retain those conditions, while the states contended that changed circumstances justified a new policy in the public interest. The Court examined the principles of judicial review, including Wednesbury reasonableness, legitimate expectation, and arbitrariness, and held that a government may alter its policy when material facts have changed, provided the change is reasonable and not mala‑fide. It observed that the earlier judgment did not freeze the conditions for all time and that the states' discretion to broaden competition was exercised within the bounds of law. Consequently, the Court dismissed both appeals, affirming the states' right to modify the tender conditions.
Issues considered
- The applicability of the Association of Registration Plates judgment to subsequent NITs issued by West Bengal and Orissa.
- Whether a change in tender conditions amounts to an unlawful departure from a court‑declared essential requirement.
- Whether the change complies with the Wednesbury reasonableness test, legitimate expectation, and is free from arbitrariness or mala‑fide.
- Whether the cancellation of the first NIT and issuance of a second NIT can be upheld on public‑interest grounds.
Legislation cited
Subjects
government policypolicy changejudicial reviewWednesbury reasonablenesslegitimate expectationpublic interesthigh security registration platestender conditionsadministrative discretion
Judgment
[2010] 6 S.C.R. 1110
A SHIMNIT UTSCH INDIA PVT. LTD. & ANR.
v.
·WEST BENGAL TRANSPORT INFRASTRUCTURE
DEVELOPMENT CORPORATION LTD. & ORS.
(Civil Appeal No. 4441 of 2010)
B
MAY 12, 2010
[R.V. RAVEENDRAN, R.M. LODHA AND
C.K. PRASAD, JJ.]
C Government policy - Alteration/change in policy -
Permissibility - Judicial intervention - Scope of - Held: The
government has a discretion to adopt a different policy or alter
or change its policy calculated to serve public interest and
make it more effective - Where the circumstances changed
D in some material respects, departure from the earlier policy
cannot be held to be legally flawed, particularly when there is
no challenge to the changed policy on the ground of
Wednesbury reasonableness or principle of legitimate
expectation or arbitrariness or irrationality- Administrative law
E - Principle of legitimate expectation - Wednesbury
reasonableness - Judicial review.
Government contract - Contract for manufacture and
supply of High Security Registration Plates (HSRP) for motor
vehicles - Notices Inviting Tenders (N/Ts) issued by various
F States for award of contract - In Association of Registration
Plates's case*, conditions of experience in the field of
registration plates in foreign countries and a minimum annual
turnover from such business were upheld as essential
conditions in the NIT - Whether in the light of this decision, it
G was necessary for the State Governments to continue with
these conditions or it was permissible for them to do away with
such conditions - Held: The decision in Association of
Registration Plates* did not create any impediment for the
States to alter or modify the conditions in the NIT if the
H 1110
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1111
INFRASTRUCTURE DEVE. CORPN. LTD.
circumstances changed in material respects by lapse of time A
- Though the State or its tendering authority is bound to give
effect to essential conditions of eligibility stated in a tender
document and is not entitled to waive such conditions but that
does not take away its administrative discretion to cancel the
entire tender process in public• interest provided such action B
is not actuated with ulterior motive or is otherwise not vitiated
by any vice of arbitrariness or irrationality or in violation of
some statutory provisions - It is always open to the State to
give effect to new policy which it wished to pursue keeping in
view 'overriding public interest' and subject to principles of c
Wednesbury reasonableness - Central Motor Vehicles
Rules, 1989 - r.50 - Motor Vehicles (New High Security
Registration Plates) Order, 2001 - Motor Vehicles (New High
Security Registration Plates) [Amendment] Order, 2001.
In Association of Registration Plates's case*,. the D
conditions of experience in the field of registration plates
in the foreign countries and a minimum annual turnover
from such business were upheld by this .Court as
essential conditions in the Notices Inviting Tenders (NIT)
for award of contract for manufacture and supply of High E
Security Registration Plates (HSRP) for motor vehicles.
Except West Bengal and Orissa, all other States
followed the essential conditions approved by this Court
in the case of Association of Registration Plates*. The
said two States issued fresh NITs (second NITs) for
manufacture and supply of HSRP in respect of motor
vehicles, in which conditions pertaining to experience in
foreign countries and the minimum prescribed turhover
from such business were done away with.
G
Before this Court, it was contended by the appellant
that in Association of Registration Plates*, after
considering the scheme of HSRP including the
guidelines issued by the Central Government and the
conditions in the NIT pertaining to experience in the H
1112 SUPREME COURT REPORTS [2010] 6 S.C.R.
A foreign countries and the turnover from the said
business, the Supreme Court had held that these are
essential conditions of the tender aimed to ensure that
the manufacturer selected would be technically and
financially competent to fulfill the contractual obligations
B keeping in view the magnitude of the job and the huge
investment required in the project. It was further
contended that these conditions, having got the seal of
approval from the Supreme Court, could not have been
done away with in second NIT, and if for any reason the
C State Government thought of cancelling the first NIT and
decided to issue fresh NIT dispensing with the
conditions of experience in foreign countries and
prescribed minimum turnover from such business, they
ought to have approached this Court for an appropriate
direction.
0
The question that arose for consideration in the
present appeals was, whether after the decision of this
Court in Association of Registration Plates*, it was
necessary for the State Governments to continue with
E these conditions or it was permissible for them to do
away with such conditions.
Dismissing the appeals, the Court
HELD: 1. Once a particular matter relating to
F conditions in NIT has been finally decided by the highest
Court, the State Government, which was party to the
litigation, ought to have proceeded accordingly but, in a
case such as the present one, where the circumstances
changed in some material respects, departure from the
G earlier policy cannot be held to be legally flawed,
particularly when there is no challenge to the changed
policy reflected in second NIT on the ground of
Wednesbury reasonableness or principle of legitimate
expectation or arbitrariness or irrationality. In the present
H
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1113
INFRASTRUCTURE DEVE. CORPN. LTD.
case, the High Court had recorded a finding that reasons A
stated by the State Government for departure from the
conditions in the first NIT did exist and accepted the
contention of the State Government that by increasing the
area of competition, greater public interest would be sub-
served because of financial implications. The B
government policy can be changed with changing
circumstances and only on the ground of change, such
policy would not be vitiated. The government has a
discretion to adopt a different policy or alter or change
its policy calculated to serve public interest and make it c
more effective. Choice in the balancing of the pros and
cons relevant to the change in policy lies with the
authority. But like any discretion exercisable by the
government or public authority, change in policy must be
in conformity with Wednesbi.Jry reasonableness and free D
from arbitrariness, irrationality, bias and malice. [Para 46]
[1144-8-G]
1.2. The judgment of this Court in Association of
Registration Plates* cannot be read as prescribing the
conditions in NIT for manufacture and supply of HSRP. E
Rather this Court examined legality and justification of the
impugned conditions within the permissible parameters
of judicial review and recognized the right of the States
in formulating tender conditions. There is no justification
in denying the State authorities latitude for departu're F.
from the conditions of the NIT that came up. for
consideration before this Court in larger public interest
to broaden the base of competitive bidding due to lapse
of time and substantial increase in the number' of
persons having Type of Approval Certificates (TAC) from G
the approved institutes without compromising on the
quality and specifications of HSRP as set out in Rule 50
of the Central Motor Vehicle Rules, 1989; the Motor
Vehicles (New High Security Registration Plates) Order,
2001 and the Motor Vehicles (New High Security· H
1114 SUPREME COURT REPORTS [2010] 6 S.C.R.
A Registration Plates) [Amendment] Order, 2001. [Para 47]
[1145-E-H]
1.3. In the case of Association of Registration Plates*,
this Court did not find any fault with the controversial
conditions in the NIT and overruled all objections raised
8
by the petitioners therein in challenge to those
conditions. The impugned conditions of NIT in that group
of cases were not held to be arbitrary, discriminatory or
irrational nor amounted to creation of any monopoly as
alleged. The declaration of law by this Court in Association
C of Registration Plates* is that in the matter of formulating
conditions for a contract of the nature of ensuring supply
of HSRP, greater latitude needs to be accorded to the
State authorities. It is difficult to hold that by virtue of that
judgment the impugned conditions were frozen for all
D times to come and the States were obliged to persist with
these conditions and could not alter them in larger
interest of the public. The decision in Association of
Registration Plates* did not create any impediment for the
States to alter or modify the conditions in the NIT if the
E circumstances changed in material respects by lapse of
time. [Para 50] [1147-B-E]
1.4. As regards the State of West Bengal, the bids
pursuant to the second NIT were evaluated by West
F Bengal Transport Infrastructure Development
Corporation Limited (WBTIDCL). The lowest bid per
HSRP unit for a vehicle was Rs. 469/- while the offer made
by appellant was of about Rs. 1200/-. Such a huge
difference in the rate per HSRP unit shows that the action
G of the State Government in doing away with the
conditions of experience in foreign countries and
prescribed turnover from such business has been in
larger public interest without compromising on safety,
security and quality or sustainable capacity. As regards
the State of Orissa, it is an admitted position that the first
H
SHIMNIT UTSCH INDIA PVT: LTD. v. W:B. TPT 1115
INFRASTRUCTURE DEVE. CORPN. LTD.
NIT issued inviting bids for. the manufacture and suppty. A
of HSRP in respect of the existing motor vehicles and
vehicles to be registered in the State of Orissa was not
taken to logical conclusion and a fresh NIT was issued
on BOO basis. In that NIT, inter alia, eligibiiity criteria has
been provided that bidder should have experience of B
working inthe field of HSRP having used the security
features as mentioned· in Ru le 50 of 1989. Rules. However,
NIT does not insist on conditions like experience in the
foreign countries and minimum prescribed turnover from .
the said business. No case for< judicial review or. c
intervention is made out in the said NIT. [Paras 52 and.
55] [1149-B•C; 1150-C.~E]
., 1.5. It is true that the State or its tendering authority
is bound to give effect to essential conditions of eligibility
stated in a tender document and is not entitled to waive D ·
such conditions but that does not take away its
administrative discretion to cancel .the entire tender
process in public interest provided such action is not
actuated with ulterior motive or is otherwise not vitiated
by any vice of arbitrariness or irrationality or in violation E
of some statutory provisions. It is always open to the
State to give effect to new policy which it wished to
pursue keeping in view 'overriding. public interest' and .
subject to principles of Wednesbury reasonableness.
[Para 541 [1149-F-Hl, F
·. . .
*Association of Registration Plates .v. Union of India and
Ors. (2005) 1 SCC 679, explained... .
Real Mazon India Ltd. v. State df Assam and Ors. 2008
(1) GLT
.. ·.
1020,
..
'
disapproved
. . . . ..· G
Mohd. Fida Karim andAnr. v. State of Bihar & Ors. (1992)
2 SCC 631; Sterling Computers Limited v. Mis. M and N
Publications Limited and Ors. (1993) 1 SCC 445; ·Tata·
Cellular v. Union of India (1994) 6 SCC 651; Raunaq H
...
1115 SUPREME COURT REPORTS [2010] 6 S.C.R.
A International Ltd. v. I. V.R. Construction Ltd. & Ors. (1999) 1
SCC 492; Punjab Communications Ltd. v. Union of India &
Ors. (1999) 4 SCC 727; Monarch Infrastructure (P) Ltd. v.
Commissioner., Ulhasnagar Municipal Corporation & Ors.
(2000) 5 SCC 287; Union of India and Anr. v. lnt.emational
B Trading Co. and Anr. (2003) 5 SCC 437; Directorate of
Education and Ors. v. Educomp Datamatics Ltd. and Ors.
(2004) 4 SCC 19; Bannari Amman Sugars Ltd. v.
Commercial Tax Officer & Ors. (2005) 1 SCC 625; Global
Energy Limited & Anr. v. Adani Exports Ltd. and Ors. (2005)
C 4 SCC 435; Master Marine Services (P) Ltd. v. Metcalfe &
Hodgkinson (P) Ltd. & Anr. (2005) 6 SCC 138 and S. Nagaraj
& Ors. v. State of Karnataka & Anr. 1993 Suppl. (4) SCC 595,
referred to.
,...
Hughes v. Deptt. of Health and Social Security 1985 AC
D 776; State of New South Wales v. Quin 1990 64 ALJR 327
and State for Transport, Ex parte Richmond upon Thames
London Borough Council & Ors. (1994) 1 All E.R. 577,
referred to.
E Case Law Reference:
(2005) 1 sec 679 explained Para 3
1985 AC 776 referred to Para 32
1990 64 ALJR 327 referred to Para 33
F
(1994) 1 All E.R. 577 referred to Para 34
(1992) 2 sec 631 referred to Para 35
(1993) 1 sec 445 referred to Para 36
G
(1994) 6 sec 651 referred to Para 37
(1999) 1 sec 492 referred to Para 38
(1999) 4 sec 121 referred to Para 39
H
,:. :.
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1117
INFRASTRUCTURE DEVE. CORPN. LTD.
(2000) 5 sec 287 referred to Para 40 A
(2003) 5 sec 437 referred to · ·.. Para 41
(2004) 4 sec 19 referred to Para 42
(2005) 1 sec 625 referred to Para 43 B
(2005) 4 sec 435 referred to Para 44
(2005) s sec 138 referred to Para 45
1993 Suppl. (4) SCC 595 referred to Para 48
c
2008 (1) GLT 1020 disapprove~ Para 54
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4441 of 2010.
From the Judgment and order dated 27.06.2006 of the D
High Court at Calcutta in APOT No. 84 of 2006, GA No. 545
of 2006 & WP No. 2083 of 2005.
WITH
C.A. No. 4442 of 2010. E
F.S. Nariman, R.F. Nariman, Bhaskar Raj Pradhan,
Arunabh Chowdhury, Anupam Lal Das, Ruby Singh Ahuja,
Raktim Gogoi, Arpit Gupta and Sunil Fernandes, for the
Appellant. F
Shyam Divan, S.K. Bazaria, S. Ganesh, L ·Nageswara
Rao, S. Udaya Kumar Sagar, Bina Madhavan (for Lawyer's Knit
& Co.), S. Kirpal, Bijoy Kumar Jain, AK. Jain, P. Jain, Jagjit
Singh Chhabra, Bijan Kumar Ghosh, Manik Das, Manash Das,
Dr. Kailash Chand, Avijit Bhattacharjee, Bikas Kargupta, G
Shibashish Misra, Joydeep Pal, Praneet Pranav, Ashok
Panigrahi, Satya Mitra Garg ans Y. Mohanty, for the
. Respondent.,
H
1118 SUPREME COURT REPORTS [2010] 6 S.C.R.
A The Judgment of the Court was delivered by
R.M. LODHA, J. 1. Leave granted.
2. Of the two appeals by special leave, one has been
preferred by Shimnit Utsch India Private Limited (for short,
B 'Shimnit') being aggrieved by the judgment dated June 27,
2006 of the Calcutta High Court whereby the Division Bench
dismissed their appeal and affirmed the order dated February
20, 2006 of the Single Judge dismissing their writ petition and
the other at the instance of Mis Tohnjes Eastern Security
C Technologies Private Limited (for ·short, 'Tonnjes') challenging
the order dated March 23, 2010 whereby the Division Bench
of Orissa High Court dismissed· their writ petition. ·
The Issue
3. The common question that arises for consideration in
D the two appeals is, whether after decision of this Court in
Association of Registration Plates v. Union of India and Ors1.
wherein the conditions provided for experience in the field of
registration plates in the foreign countries and a minimum
annual turnover from such business were upheld as essential
E conditions in the Notices Inviting Tenders (NIT) for award of
contract for manufacture and supply of High Security
Registration Plates (HSRP) for motor vehicles, it is necessary
for the State Governments to continue with these conditions or
it is permissible for them to do away with such conditions.
F Factual and legal background in Association of
Registration Plates
4. The Motor Vehicles Act, 1988 (for short, '1988 Act')
came into force on July 1, 1989. Chapter -IV thereof deals with
G registration of motor vehicles as defined in Section 2(28). Sub-
section (6) of Section 41 provides that the registering authority
shall assign to the vehicle, for display thereon, a distinguishing
mark (registration mark) consisting of one of the groups of such
of those letters and followed by such letters and figures as are
H 1. (2005} 1 sec 679.
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B~ TPT 1119
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
allotted to the State by the Central Government from time to A
time by notification in the Official Gazette. Pursuant thereto a
Notification came to be issued by the Central Government on
July 1, 1989 allocating group of letters to various States. The
Central Motor Vehicles Rules, 1989 [for short, '1989 Rules')
were framed by the Central Government in exercise of its B
powers under Section 64 and other relevant provisions of 1988
Act. Rule 50 of 1989 Rules provides for form and manner of
display of registration marks on the motor vehicles. The said
Rule 50 has been amended from time to time and new system
of HSRP thereunder is now to come into effect from June 1, c
2010.
5. Under sub-section (3) of Section 109,of 1988 Act, the
Central Government issued Motor Vehicles (N'ew High Security
Registration Plates) Order, 2001 (for short, '0.rder, 2001'). On
October 16, 2001, the Central Government further issued Motor D
Vehicles [New High Security Registration Plates (Amendment)]
Order, 2001 (for short, 'Amendment Order, 2001 '). Amendment
Order, 2001 provided for certain standards in respect of the
new system of HSRP for motor vehicles and the process used
by a manufacturer or vendor for manufacturing or supplying such E
plates. ·
6. On March 6, 2002, a communication laying down
guidelines for incorporating necessary conditions in the NIT to
be issued by the various States and Union Territories (UTs) was
circulated by the Central Government to all States and UTs. The F
guidelines, inter alia, provided; (i) the tender document would
specify whether the appointment of the vendor is for the. whole
State or for certain parts; (ii) the tender document would speCify ·
the terms of the bank guarantee; (iii) the tender document would
require a report back on certain aspects on 'a periodic and G
regular basis' and (iv) the bidder must furnish proof of past
experience/expertise in this area or proof of the same with the
collaborator. By further communication dated June 14, 2002 the
aforenoticed NIT guidelines were modified by the Central
_Government and it was suggested that the bidders may be H
1120 SUPREME COURT REPORTS [2010] 6 S.C.R.
A asked to provide details about the experience/capability of its
collaborator to the satisfaction of the State authorities. By
another communication dated November 13, 2002, the Central
Government clarified to the States and UTs that the guidelines
are suggestive in nature and left the discretion to the States
B and UTs in the matter of issuing NIT but reiterated security
concern.
7. In the light of the guidelines suggested by the Central
Government, several States/UTs issued NIT which, inter alia,
included conditions, namely, (i) experience in the field of
C registration plates i.e., bidder should be working at least in five
countries for licence plates and in a minimum of three countries
with licence plates having security features worldwide; (ii) the
bidder must have had a minimum annual turnover equivalent
to INR 30 crores immediately preceding last year; at least 25%
D of this turnover must be from the licence plate business and (iii)
the contract will be for a period of 15 years.
8. The NIT containing the aforenoticed conditions issued
by several States led to filing of writ petitions before various
High Courts. Few writ petitions were filed directly before this
E Court. Since the controversy was common, writ petitions filed
before High Courts were transferred to this Court and taken up
along with writ petition filed by Association of Registration
Plates1. It was argued on behalf of the petitioners before this
Court that these conditions in NIT have been tailored to favour
F companies having foreign collaboration and aimed at excluding
indigenous manufacturers from the tender process; there are
not more than one or two companies that could satisfy the
stringent eligibility conditions laid down in NIT; Indian
manufacturers are fully competent to be involved for the
G implementation of the scheme of HSRP but the condition
concerning experience in foreign countries has obviated any
chance of their participating in the bidding process; fixing high
turnover from such business is only for the purpose of advancing
the business interest of a group of companies having foreign
H links and support and that it is impossible for any indigenous
SHIMNIT UTSCH INDIA PVT. LTO. v. W.B. TPT . 1121
INFRASTRUCTURE DEVE. CORPN. LTD. [RM. LODHA, J.]
manufacturer of security plates to have a turnover .of A
approximately 12.5 crores from the HSRP which are sought to
be introduced in India for the first time and the implementation
of the project has not yet started in any of the States.
9. The States who had issued NIT defended the impugned
tender conditions before this Court. Insofar as the State of West 8
Bengal is concerned, a counter affidavit was filed through West
Bengal Transport Infrastructure Development Corp9ration Ltd.
(WBTIDCL). It was stated in the counter affidavit that impugned
conditions in NIT are intended to achieve the high objective of
public safety involved in the implementation of HSRP. The C
relevant averments in the counter affidavit are reproduced below
" ......... The State Governments realizing the importance
of the project came out with various conditions in the
Tender which are primarily related to seeing the
0
experience and the capacity of the manufacturer to
undertake such a huge task concerning the manufacturing
and supp.ly of HSRPs in the State. The State Government
therefore came out with conditions to insure that the
· manufacturer who supplied the HSRPs in the State is not
fly-by-night operator but is personally experienced enough E
and capable enough to carry out such an activity ....... .
. . . . . . . .. . . . . . .The power therefore is wide enough to include
aspects, which may not have been provided specifically
elsewhere in the Act. The Central Government is well within
F
its powers to prescribe the fact that the State Government
has the power to select the manufacturer of HSRPs as it
is State Government which understood its specific
requirements and needs and has to be satisfied about the
competence of the manufacturer that whom it has to work
jointly in order to ensure that the objective b~hind the G
HSRPs scheme is not deviated. In the absence of si.Jch a
provision the whole scheme of HSRPs which means
towards achieving public safety and security by ensuring
that there is issuing control and supervision ofHSRPs by
H
1122 SUPREME COURT REPORTS [2010] 6 S.C.R.
A the State Government will get deviated .
.. .. .. .. .. .. The State under the Tender wishes to choose a
person who is already worked in connection with HSRPs
rather than chose a person who merely claims that it can
deliver. Surely in a project of such a large scale concerning
B public safety and security the State cannot be justified to
employ the hit and trial method .
.. .. .. .. .. .. .The objective by no means can be lost of or
given an improper degree of attention. The objective is to
ensure highest levels of public safety and security
c
established in the wake of the uncertain times that people
are subject to these days. Consequently, the introduction
of HSRPs mandates adherence to highest standards both
in supply of manufacturing quality of products, required
supply of the quantity of the project and above al mandates
D
coordination with the State will have the general control
and supervision over the issuance of these number plates.
The fact is mentioned are by no means exhaustive but are
only given to illustrate the basis tenets of the whole
business of HSRPs. The State Government by no means
E can adopt a hit and trial method in a project of such a vast
nature. It has been no necessarily ensured that the
manufacturer is selected by a fair, competitive and
transparent means of selection, which is the Tender
process. The selection necessarily has to happen amongst
F the TAC holders. The State Government has to be
· satisfied to the extent to leaving no scope of doubt with
regard to the expertise and capability of the selected
manufacturer of HSRPs the State Government has to be
satisfied that the company concerned will be able to meet
G the requirement both on the qualitative and quantitative
basis and in bare commercial terms the company chosen
is the best company amongst the TAC holders. The
scheme envisages constant cooperation and coordination
amongst the supplier and the State. Any brake at any point
H of time in the system as envisaged will deviate the
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1123
INFRASTRUCTU~E DEVE. CORPN. LTD. [RM. LODHA, J.)
objective which is sought to be achieved. It is in this A
background that the challenge/grievances of the petitioner
must be viewed."
Decision in Association of Registration Plates
10. This Court dismissed the entire group of writ petitions s
on November 30, 2004, .The tender conditions relating to
experience in foreign countries, prescribed percentage of
turnover from such business and term of 15 years were not held
·to be arbitrary, discriminatory or mala fide; rather these
conditions were held in public interest. This Court observed :
c
The State as an implementing authority has to
ensure that the scheme of HSRPs is effectively
implemented. Keeping in view the enormous work
involved inswitching over to new plates within two
years for existing vehicles, resort to "trial-and-error" o
method.would prove hazardous.
The State Government's right to get the right and
most competent person cannot be questioned.
The State G''overnment has to eliminate
E
· manufacturers who have developed recently just to
enter into the new field.
The insistence of the State to search for an
experienced manufacturer with sound financial and
technical capacity cannot be misunderstood. F
The terms and conditions in N!Ts are so formulated
to enable the State to adjudge the capability of a
particular tenderer who can provide a fail-safe and
sustainable delivery capacity.
G
Only such tenderer has to be selected who can take
responsibility for marketing, servicing and providing
continuously the specified plates for Vehicles in
large numbers, firstly in the initial two years, and
annually in the next 13years. ·
H
1124 SUPREME COURT REPORTS (2010) 6 S.C.R.
A Capacity and capability are the two most relevant
criteria for framing suitable conditions of any
notices inviting tenders and the conditions of
experience and turnover incorporated as essential
conditions are to ensure that the manufacturer
B selected would be technically and financially
competent to fulfill the contractual obligations,
which, looking to the magnitude of the job, requires
huge investment qualitatively and quantitatively.
facts post 30.11.2004
c (A) West Bengal
11. After the decision of this Court in Association of
Registration Plates1 on November 30, 2004, the Government
of West Bengal evaluated the bids already submitted in
D accordance with the NIT and the bid of Shimnit was.cleared at
the prequalification stage. One M/s. Pramuk Hoffman
International Ltd., ('Promuk' for short) was also declared
qualified. Shimnit challenged the pre-qualification of Promuk by
filing a writ petition (468/2005) before Calcutta High Court on
E the ground that they did not have requisite international
experience. On March 11, 2005, the Single Judge of Calcutta
High Court by an interim order stayed the finalization of tender.
12. On April 27, 2005, however, the Government of West
Bengal (Transport Department) issued a Notification canceling
F its NIT for supply and fitment of HSRP for motor vehicles issued
earlier. The said Notification reads as follows :
"Government of West Bengal
Transport Department
G Writers' Building
No. 2672 WT/3M-56/2003 PL Ill Dated 27.04.2005
NOTIFICATION
WHEREAS Notice Inviting Tender (NIT) was issued and
H
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1125
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
published in various newspapers on 03.07.2003 & A
04.7.2003 respectively, fixing 06.08.2003 as the last date
for submission of such \ender papers for supply and.
fitment of High Security Registration Plates for Motor
Vehicles, by the West Bengal Transport Infrastructure
Development Corporation Limited (A Government of West B
Bengal Undertaking) on behalf of the Government of West
Bengal under instructions from the Transport Department;
AND WHEREAS only 4 (four) nos. of Bidders participated
in the said tender process which was subsequently stayed
as per orders of the Hon'ble Supreme Court in Writ C
Petition (Civil) No. 41 of 2003 and the other connected
cases;
AND WHEREAS the Hon'ble Supreme Court of India by
an order dated 30.11.2004 disposed of the said Writ
Petition (Civil) No. 41 of 2003 and other connected cases D
with certain observations, holding inter alia, that the
concerned State Governments are legally competent to
determine the terms and conditions for implementation of
the scheme for High Security Registration Plates for Motor
Vehicles in conformity with the provisions of the Motor E
Vehicles Act, 1989 and Rules framed thereudner;
AND WHEREAS the Technical Bids submitted by those
Bidders could not yet be processed, evaluated and
finalized and whereas due to such non-evaluation of the
F
Technical Bids the Financial Bids as submitted by those
Bidders could not also be opened.
AND WHEREAS it has come to the notice of the State
Government *~µt subsequent to issue of the said NIT a
consider~_,9,!e number of Manufactures of such High G
Security R?!§istration Plates have obtained the requisite
Type Approval Certificates from the Institution approved by
the Central Government as per provisions of the Motor
Vehicles Act, 1989 and Rules framed thereunder;
H
1126 SUPREME COURT REPORTS [2010] 6 S.C.R
A AND WHEREAS due passage of time and consequent
change in the relevant field due to coming up of a very
good number of duly approved manufacturers as aforesaid
and keeping in view the observations of the Hon'ble
Supreme Court of India in Writ Petition (Civil) No. 41 of
B 2003 and other connected cases as stated hereinabove,
the Governor deems it fit that in greater public interest and
also in the interest of public safety & security the terms and
conditions of the said Notice Inviting Tenders (NIT) for
supply and fitment of High Security Registration Plates for
Motor Vehicles be reviewed and determined afresh.
c
NOW, THEREFORE, the Governor is pleased to direct
that the entire tender process so far followed pursuant to
the aforesaid Notice Inviting Tenders (NIT) for supply and
fitment of High Security Registration Plates for Motor
0 Vehicles as issued by the West Bengal Transport
Infrastructure Development Corporation Limited on behalf
of the State Government be cancelled and fresh process
for inviting such bids be commenced after due
determination of the terms and conditions thereof in the
E light of what has been stated herein above. The Governor
is further pleased to direct that the Bidders (four numbers)
who had participated in the previous tender process to be
initiated hereafter, if they so desire and the Earnest Money
Deposit (EMO) made by them be returned forthwith.
F This order shall come into effect immediately.
By Order of the Governor.
Sd/-
Sumantra Choudhury,
G
Principal Secretary,
to the Government of West Bengal."
13. Shimnit was also informed by WBTIDCL vide
communication dated April 27, 2005 that the bidding process
H
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1127
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
in terms of earlier NIT has been cancelled and requested them A
to collect the refund of their earnest money.
14. On October 4, 2005, a fresh NIT (hereinafter referred
to as 'second NIT') came to be issued by WBTIDCL for
manufacture and supply of HSRP, inter alia, to the following
effect: B
"BID
FOR
NOTICE
c
INVITING BIDS FOR HIGH SECURITY REGISTRATION
PLATES
The Transport Department, Government of West Bengal
has decided to implement through WBTIDC Ltd. the
revised Rule 50 of Central Motor Vehicle Rules, 1989 as D
modified by the Government of India, Ministry of Roads,
Transport and Highway vide Notification issued from time
to time for implementation of High Security Registration for
all existing registered vehicles and also new vehicles to
be registered in West Bengal for a period of 1O years. E
Now, on behalf of the Transport Department, Government
of West Bengal, The Managing Director/West Bengal
Transport Infrastructure Development Corporation Limited
(WBTIDC), invites bids for selection of eligible bidders
having Type Approval from authorized agencies of F
Government of India and adequate financial resources to
undertake the production of High Security Regulation
Plates in conformity with the specifications. A panel of
Bidders will be finally selected to implement and operate
in two designated zones of the States on Build, Operate G
and Transport (BOT) basis.
The intending Bidders which may be single firm, Joint
Venture or a Consortium should have in addition to above
a minimum annual average Turnover of Rs. 50 crores and
H
1128 SUPREME COURT REPORTS [2010] 6 S.C.R.
A net worth of Rs. 20 crores as per audit balance sheet of
2003-04.
Bid documents containing detail scope of work and other
terms and conditions may be purchased from the office of
the Managing Director, WBTIDC, between 04.10.2005 and
B 20.10.2005 both days inclusive during office hours, but
excluding holidays, by paying a non-refundable cost of the
same amount of Rs. 50,000/- (Rupees Fifty Thousand only)
for each set of two copies of Bid Documents, in the form
of Demand Draft drawn in favour of "West Bengal
c Transport Infrastructure Development Corporation Ltd."
payable in Kolkata.
Bid must be accompanied with the Earnest Money Deposit
(EMO) of Rs. 25,00,000/- (Rupees Twenty five lacs only)
in the form as specified in bid documents. No exemption
D certificate in this regard will be accepted.
Bids completed in all respect must be submitted in a
sealed cover super scribed Bid for HSRP, WB at the office
of the Managing Director, WBTIDC Ltd. on or before 14.00
hrs on 14.11.. 2005 and will be opened as per schedule
E indicated in the Bid Document. In case the date of
receiving the Bids happens to be a holiday, bids will be
received on the next working day.
WBTIDC Ltd. reserves the right to reject any or all bids or
F annual bidding process without assigning any reason,
thereof .......... "
15. In the second NIT, clauses pertaining to experience in
the foreign countries and the minimum prescribed turnover from
such business were done away with; the period was also
G reduced from 15 years to 1O years.
16. Pursuant to the second NIT, Shimnit submitted its
tender on November 21, 2005 and simultaneously filed a writ
petition before Calcutta High Court challenging the conditions
of second NIT, principally on the ground that the essential
H
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1129
INFRASTRUCTURE DEVE. CORPN. LTD. [RM. L,ODHA, J.]
conditions pertaining to experience in foreign countries and the A
prescribed turnover from such business having been approved
by the Supreme Court could not have been done away with.
Shimnit also prayed for interim order during the pendency of
writ petition. The controversy relating thereto reached this Court
and by an order dated January 5, 2006, this Court while B
disposing of SLPs direGted that the interim order that contract
shall not be awarded tJntil further orders will continue to operate
till the matter is decided by the Single Judge. The Single Judge
by his judgment dated February 20, 2006 dismissed Shimnit's
writ petition. An intra court appeal was preferred by Shimnit c
before the Division Bench in which the interim order of status
quo was passed. The Division Bench ultimately dismissed the
intra court appeal vide judgment dated June 27, 2006 giving
rise to the present appeal by special leave.
(8) Orissa D
17. On April 11, 2007, the Government of Orissa issued
NIT inviting bids for the manufacture and supply of HSRP in
respect of the existing motor vehicles and the vehicles to be
registered in the State of Orissa. The eligibility criteria provided
therein did not contain conditions like experience in the foreign E
countries and minimum_prescribed turnover from the said
business, although, the tender document did lay down that
bidder should have experience of working in the field of HSRP
having used the security features as mentioned in Rule 50 of
1989 Rules. F
18. After issuance of NIT dated April 11, 2007, Tonnjes
submitted representations to the Government of Orissa on May
9, 2007 and May 15, 2007 requesting for amendment/
modification of the tender conditions so as to bring it in G
conformity with the conditions approved by this Court in
Association of Registration Plates1.
19. On May 16, 2007, a Corrigendum-Ill was issued by the
Transport Commissioner-cum-Chairman, State Transport
Authority, Government of Orissa extending the due date beyond H
1130 SUPREME COURT REPORTS [2010] 6 S.C.R.
A May 24, 2007. It is the case of Tonnjes that no further steps were
taken by the Government of Orissa in pursuance of the said NIT.
20. On July 6, 2009, a fresh NIT was issued by the
Government of Orissa for manufacture, distribution and
affixation of HSRP at a Build Own Operate (BOO) basis.
B Tonnjes again made a representation to the Government of
Orissa for bringing the terms and conditions of the fresh NIT in
conformity with the decision of this Court in Association of
Registration Plates1. When nothing was heard from the
Government of Orissa, Tonnjes filed a writ petition before the
C Orissa High Court for quashing that NIT. The High Court, by way
of an interim order, directed that the bids pursuant to the said
NIT may be permitted to be filed by the bidders as per the
tender rules but no further action shall be taken without leave
of the Court.
D
21. The Division Bench of the Orissa High Court heard the
arguments and by its judgment dated March 23, 2010
dismissed the writ petition filed by Tonnjes.
Writ Petition (Pill by Maninderjit Singh Bitta
E 22. One Maninderjit Singh Bitta filed a writ petition before
this Court in public interest seeking implementation of the
judgment by this Court in Association of Registration Plates1.
It was urged that though in the aforesaid judgment norms were
fixed and the desirability of having HSRP has been highlighted
F but nothing concrete has been done by the States and UTs.
This Court disposed of writ petition on May 8, 2008 and gave
time of six months to States and UTs to take decision as to
whether there is need for giving effect to the amended Rule 50
and the scheme of HSRP and the modalities to be followed.
G 23. Maninderjit Singh Bitta filed an Interlocutory Application
No. 5 before this Court seeking clarification of the order dated
May 8, 2008. The said application was disposed of by this
Court on May 5, 2009 by the following order :
"It is made clear that there was no discretion given to the
H
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1131
INFRASTRUCTURE DEVE. CORPN. LTD. [RM. LODHA, J.]
States/UTs not to give effect to the amended Rule 50 and A
the claim of HSRP and the modalities to be followed. It is
stated by learned counsel for the petitioner that in some
cases no action has been taken by the concerned States
and the UTs within the period of six months as was given.
Needless to say that if same is the position, the directions 8
shall be carried out immediately and not later than three
months from today."
24. On August 26, 2009, the Government of India, Ministry
of Road Transport and Highways addressed a letter to the
States and UTs requesting them to take all necessary steps C
for implementation of HSRP scheme by the end of 2009. In the
. said letter the Government of India brought to the notice of the
States and UTs the order of this Court dated May 5, 2009 and
also informed them to keep in view the judgment of this Court
in Association of Registration Plates1. o
25. On September 11, 2009, a further letter was sent by
the Government of India to the States and UTs informing them
that a committee has been constituted by the Ministry to review
the progress of implementation of HSRP and other related
issues. The States and UTs were requested to implement the E
scheme of HSRP as early as possible.
26. On behalf of Union of India, few applications came to
be filed (I.A. Nos. 6-9) before this Court in disposed of writ
petition no. 510 of 2005 (Maninderjit Singh Bitta) for extension
of time to ensure compliance with the directions contained in F
order dated May 5, 2009. These applications were disposed
of by this Court on December 15, 2009 by extending time upto
May 31, 2010.
Contentions G ,
27. Mr. F.S. Nariman, learned senior counsel appearing
for Shimnit submitted that in Association of Registration
P/ates1, after considering the scheme of HSRP including the
guidelines issued by the Central Government and the
H
1132 SUPREME COURT REPORTS (2010] 6 S.C.R.
A conditions in the NIT pertaining to experience in the foreign
countries and the turnover from the said business, this Court
held that these are essential conditions of the tender aimed to
ensure that the manufacturer selected would be technically and
financially competent to fulfill the contractual obligations keeping
8 in view the magnitude of the job and the huge investment
required in the project. He submitted that these conditions
having got the seal of approval from this Court could not have
been done away with in second NIT and if for any reason the
State Government thought of cancelling the first NIT and
C decided to issue fresh NIT dispensing with the conditions of
experience in foreign countries and prescribed minimum turn
over from such business, they ought to have approached this
Court for an appropriate direction. Mr. F.S. Nariman submitted
that inAssociation of Registration Plates, the case pertaining
to the State of West Bengal was treated as a lead case and
D the State of West Bengal vehemently defended the conditions
in the first NIT before this Court and now doing away with
essential conditions in the second NIT flies in the face of the
law laid down by this Court. Learned senior counsel submitted
that it was unfortunate that the State of West Bengal did not
E consider itself bound by the law of land declared by the highest
Court of the country in a decision to which it was a party. He
also contended that the second NIT was designed to favour
some of the bidders and was clearly ma/a fide as the Shimnit
had challenged the prequalification of Promuk by filing a writ
F petition before the Calcutta High Court and an interim order was
passed therein by the Single Judge staying the finalization of
tender. He, thus, submitted that the High Court was not correct
in dismissing Shimnit's writ petition.
28. Mr. R.F. Nariman, learned senior counsel for Tonnjes
G adopted the arguments of Mr. F.S. Nariman and also invited
our attention to the fact that as of now, except West Bengal and
Orissa, all other States have followed the essential conditions
approv_ed by this Court in the case of Association of
....
H
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1133
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
/
Registration Plates in the NIT. A
29. On the other hand, Mr. S. Ganesh, learned senior
counsel appearing for State of West Bengal and Mr. I .
Nageshwar Rao, learned senior counsel for State of Orissa
submitted that the conditions in the NIT issued by these two
States respectively are in the public interest and do not violate B
constitutional or any other provision of law. They submitted that
the whole idea of not .having the experience in the foreign
countries and the prescribed turnover from the said business
is to make available HSRP of the specifications as notified to
the motor vehicles in these States at reasonable rates with6ut C
in any manner compromising on safety, security, quality or
sustainable delivery capacity. Mr. S. Ganesh extensively read .
· the reasoning given by the Division Bench of the Calcutta High .
- Court in the impugned order and submitted that no interference
was called for in that order. D
30. Mr. F.S. Nariman, learned senior counsel, in rejoinder
vehemently contended that the judgment of this Court in
Association of Registration Plates1 must be read as read by
this Court subsequently in Maninderjit Singh Bitta's case. He
would contend that acquisition of Type of Approval Certificates E
(TAC) does not mean that such manufacturers are commercially
competent to manufacture HSRP as TAC have limited efficacy.
Learned senior counsel also submitted that if public interest
could be served by the fulfillment of conditions in first NIT, then
how by deleting these essential conditions, public interest could F
be achieved.
Tenders. Government contracts and change in policy :
Judicial Review
31. Before we refer to some of the important decisions of G
this Court dealing with the aspects of judicial review in the
matters of government contracts, tenders and change in policy,
it is appropriate to notice the observations made in a couple
of English decisions and one Australian case on judicial review
in the matters of change in administrative policy. H
1134 SUPREME COURT REPORTS [2010] 6 S.C.R.
A 32. In Hughes v. Deptt. of Health and Social Security2,
Lord Diplock, J. said:
" .... Administrative policies may change with changing
circumstances, including changes in the political
complexion of governments. The liberty to make such
B changes is something that is inherent in our constitutional
form of government. .... "
33. In Attorney-General for the State of New South Wales
v. Quin 3, Mason C.J. (majority view, Australian High Court)
C observed:
"Once this is accepted, I am unable to perceive how a
representation made or an impression created by the
Executive can preclude the Crown or the Executive from
adopting a new policy, or acting in accordance with such
D a policy, in relation to the appointment of magistrates, so
long as the new policy is one that falls within the ambit of
the relevant duty or discretion, as in this case the new
policy unquestionably does. The Executive cannot by
representation or promise disable itself from; or hinder
E itself in, performing a statutory duty or exercising a statutory
discretion to be performed or exercised in the public
interest, by binding itself not to perform the duty or exercise
the discretion in a particular way in advance of the actual
performance of the dul1 or exercise of the power. ...... "
F 34. In R. v. Secretary of State for Transport, Ex parte
Richmond upon Thames London Borough Council & Ors4 .
while laying down that the Wednesbury reasonableness test
alone was applicable for finding out if the change from one
policy to another was justified, Laws, J. stated :
G 'The court is not the Judge of the merits of the decision-
maker's policy .... the public authority in question is the
2. 1985 AC 776.
3. 1990 64 ALJR 327.
H 4. (1994) 1 ALL E.R. 577.
SHI MN IT UTSCH INDIA PVT. LTD. v. W.B. TPT 1135
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
Judge of the issue whether 'overriding public interest' A
justifies such a change in policy .... But this is no more than
to assert that a change in policy, like any discretionary
decision by a public authority, must not transgress
Wednesbury principles ..... "
35. Now, we consider the decisions of this Court. In Mohd. B
Fida Karim and Anr. v. State of Bihar & Ors 5., while dealing
with a case of change in Government policy for licence under
Bihar Excise Act, this Court held thus :
" ...... The new policy of adopting the method of auction- C
cum-tender is certainly a change of policy. The reason for
change of policy given by the Government is that it realised
that making settlement for five years would give rise to
monopolistic tendency, which will not be in public interest,
at the same time the interest of revenue was not fully
·protected in the former policy. This clearly goes to show D
that the Government wanted to adopt a new policy in public
interest to be made applicable from the year 1991-92.
Learned Counsel appearing on behalf of the State of Bihar
submitted in clear terms that the earlier policy was wrong
and the Government realised its mistake and thus adopted E
a new policy to augment its revenue and to avoid
monopolistic tendency. We do not find anything wrong in
taking such view by the State Government and to change
its policy considering the same to be in public
interest. ................. " F
36. This Court in Sterling Computers Limited v. Mis. M &
N Publications Limited & Ors. 6, while dealing with judicial
review in a matter relating to publication of telephone
directories of Mahanagar Telephone Nigam Limited (a G
Government of India Undertaking) made the following
observations :
"12. At times it is said that public authorities must have the
5. (rn92) 2 sec 631.
6. (1993) 1 sec 445. H
1136 SUPREME COURT REPORTS [2010] 6 S.C.R.
A 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
B they commit the authority which may be held to be a State
within the meaning of Article 12 of the Constitution in many
cases for years. That is why the courts have impressed that
even in contractual matters the public authority should not
have unfettered discretion. In contracts having commercial
c 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 recognised by courts while dealing with public
property. It is not possible for courts to question and
D
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
E 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 giving them liberty to assess the overall
situation for purpose of taking a decision as to whom the
F contract be awarded and at what terms. If the decisions
have been taken in bona fide 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
G executive decisions must grant certain measure of
freedom of "play in the joints" to the executive."
37. In the case of Tata Cel/u/arv. Union of lndia7 , a three-
Judge Bench of this Court extensively considered the English
H 7. (1994) a sec 651.
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1137
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
decisions as well as the previous decisions of this Court in the A
matter of judicial review and scope relating to government
contracts and tenders and deduced the legal principles in
paragraph 94 of the report thus :
"(1) The modern trend points to judicial restraint in
administrative action. 8
(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 c
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 D
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 E
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
F
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 G
must be free from arbitrariness not affected by
bias or actuated by mala tides.
(6) Quashing decisions may impose heavy
H
1138 SUPREME COURT REPORTS [2010] 6 S.C.R
A administrative burden on the administration and
lead to increased and unbudgeted expenditure."
38. That the award of a contract, whether it is by private
party or by a public body or the State is essentially a commercial
transaction was highlighted by this Court in Raunaq
B International Ltd. v. I. V.R. Construction Ltd. & Ors8. In that case,
this Court spelt out the following considerations that weigh in
making a commercial decision :
"(1) the price at which the other side is willing to do the
work;
c
(2) whether the goods or services offered are of the
requisite specifications;
(3) whether the person tendering has the ability to deliver
the goods or services as per specifications. When large
D works contracts involving engagement of substantial
manpower or requiring specific skills are to be offered, the
financial ability of the tenderer to fulfil the requirements of
the job is also important;
(4) the ability of the tenderer to deliver goods or services
E
or to do the work of the requisite standard and quality;
(5) past experience of the tenderer and whether he has
successfully completed similar work earlier;
(6) time which will be taken to deliver the goods or
F services; and often
(7) the ability of the tenderer to take follow-up action, rectify
defects or to give post-contract services."
39. Again in the case of Punjab Communications Ltd. v.
G Union of India & Ors. 9, a two-Judge Bench of this Court
elaborately examined the principles of legitimate expectation
and a change in policy by the Government. While dealing with
second question formulated by the Court ·:iz., whether if
a. (1999) 1 sec 492.
H 9. (1999) 4 sec 727.
SHI MN IT UTSCH INDIA PVT. LTD. v. W.B. TPT 1139
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
essentially the Government decided to fund the proposed A
contract for Eastern U.P. from its own resources, it was
permissible for the Government to change its policy into one
for providing telephones for rural areas in the entire country and
whether 'legitimate expectation' of the appellant in regard to the
earlier notification required the Court to direct that a notification 8
for Eastern U.P. should be continued, this Court held in
paragraph 45 of the report thus :
"45. It will be noticed that at one stage when the ADB loan
lapsed, the Government took a decision to go ahead with
the project on its own funds. But later it thought that the C
scheme regarding telephones in rural areas must cover
not only the villages in Eastern U.P. but also in other
backward rural areas in other States. The statistics given
in the counter-affidavits of the Union of India to which we
have already referred, show that there are other States in D
the country where the percentage of telephones is far less
than what it is in Eastern U.P. The said facts are the reason
for the change in the policy of the Government and for
giving up the notification calling for bids for Eastern U.P.
Such a change in policy cannot, in our opinion, be said to E
be irrational or perverse according to Wednesbury ·
principles. In the circumstances, on the basis of the clear
principles laid down in ex p Hargreaves and ex p
Unilever, the Wednesbury principle of irrationality or
perversity is not attracted and the revised policy cannot be
F
said to be in such gross violation of any substantive
legitimate expectation of the appellant which warrants
interference in judicial review proceedings."
40. In the case of Monarch Infrastructure (P) Ltd. v.
Commissioner., Ulhasnagar Municipal Corporation & Ors. 10 , G
this Court was concerned with the question relating to NIT
issued by Ulhasnagar Municipal Corporation for appointment
of agents for collection of octroi and revision of terms and
conditions thereof. This Court held :
10. (20ooi 5 sec 2a1. H
1140 SUPREME COURT REPORTS [2010) 6 S.C.R.
A " ..... The High Court had directed the commencement of a
new tender process subject to such terms and conditions,
which will be prescribed by the Municipal Corporation. New
terms and conditions have been prescribed apparently
bearing in mind the nature of contract, which is only
B collection of octroi as an agent and depositing the same
with the Corporation. In addition, earnest money and the
performance of bank guarantee are insisted upon;
collection of octroi has to be made on day-to-day basis
and payment must be· made on a weekly basis entailing,
in case of default, cancellation of the contract. We cannot
c say whether these conditions are better than what were
prescribed earlier for in such matters the authority calling
for tenders is the best judge. We do not think that we should
intercede to restore status quo ante the conditions arising
in clauses 6(a) and 6(b) of the Tender Booklet and the bid
D offered much earlier by Konark Infrastructure (P) Ltd.
should be accepted, for it filed a writ petition, which was
allowed with a direction for calling for fresh
tenders ........ , ... "
E 41. In Union of India and Anr. v. International Trading Co.
and Anr. 11 , this Court held that non-renewal of permit by the
Government to a private party on ground of change in its policy
cannot be faulted if such change is founded on Wednesbury
reasonableness and is otherwise not arbitrary, irrational and
F perverse. It was held :
"22. If the State acts within the bounds of reasonableness,
it would be legitimate to take into consideration the national
priorities and adopt trade policies. As noted above, the
ultimate test is whether on the touchstone of
G reasonableness the policy decision comes out unscathed.
23. Reasonableness of restriction is to be determined in
an objective manner and from the standpoint of interests
of the general public and not ·from the standpoint of the
H 11. (2003) s sec 437.
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1141
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
interests of persons upon whom the restrictions have been A
imposed or upon abstract consideration. A restriction
cannot be said to be unreasonable merely because in a
given case, it operates harshly. In determining whether
there is any unfairness involved; the nature of the right
alleged to haw; been infringed, the underlying purpose of B
the restriction imposed, the extent and urgency of the evil
sought to be remedied thereby, the disproportion of the
imposition, the prevailing condition at the ·relevant time,
enter into judicial verdict. The reasonableness of the
legitimate expectation has to be determined with respect c·
to the circumstances relating to the trade or business in
question. Canalisation of a particular business in favour of
even a specified individual is reasonable where the
interests of the country are concerned or where the
business affects the economy of the country."
D
42. In the case of Directorate of Education and Ors. v.
Educomp Datamatics Ltd. and Ors. 12, this Court, inter alia,
applied the principles enunciated in Tata Cel/ular7 and
Monarch Infrastructure (P) Ltd. 10 and held as follows :
"12. It has clearly been held in these decisions that the E
terms of the invitation to tender are not open to judicial
scrutiny, the same being in the realm of contract. That the
Government must have a free hand in setting the terms of
the tender. It must have reasonable play in its joints as a
necessary concomitant for an administrative body in an F
administrative sphere. The courts would interfere with the
administrative policy decision only if it is arbitrary,
discriminatory, l)lala fide or actuated by bias. It is entitled
to pragmatic adjustments which may be called for by the
particular circumstances. The courts cannot strike down the G
terms of the tender prescribed by the Government because
it feels that some other terms in the tender would have been
fair, wiser or logical. The courts can interfere only if the
policy decision is arbitrary, discriminatory or mala fide."
12. (2004) 4 sec 1s. H
1142 SUPREME COURT REPORTS [2010] 6 S.C.R.
A 43. In Bannari Amman Sugars Ltd. v. Commercial Tax
Officer & Ors. 13 , this Court was concerned with the question
relating to withdrawal of benefits extended to appellant therein
as subsidy and it was held :
" ......... We find no substance in the plea that before a
B policy decision is taken to amend or alter the promise
indicated in any particular notification, the beneficiary was
to be granted an opportunity of hearing. Such a plea is
clearly unsustainable. While taking policy decision, the
Government is not required to hear the persons who have
c been granted the benefit which is sought to be withdrawn."
44. In Global Energy Limited & Anr. v. Adani Exports Ltd.
and Ors. 14, this Court reiterated the principles that the terms of
the invitation to tender are not open to judicial scrutiny and the
courts cannot whittle down the terms of the tender as they are
0 in the realm of contract unless they are wholly arbitrary,
discriminatory or actuated by malice.
45. In Master Marine Services (P) Ltd. v. Metcalfe &
Hodgkinson (P) Ltd. & Anr. 15, the legal position highlighted in
E Tata Ce/lular7 was reiterated in the following words :
"12. After an exhaustive consideration of a large number
of decisions and standard books on administrative law, the
Court enunciated the principle that the modern trend points
to judicial restraint in administrative action. The court does
F not sit as a court of appeal but merely reviews the manner
in which the decision was made. The court does not have
the expertise to correct the administrative decision. If a
review of the administrative decision i~ permitted it will be
substituting its own decision, without the necessary
G expertise, which itself may be fallible. The Government
must have freedom of contract. In other words, fair play in
the joints is a necessary concomitant for an administrative
13. (2005) 1 sec 625.
14. (2005) 4 sec 435.
H 15. (2005) 6 sec 138.
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1, 4143\ y
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LdDHA, J.] I
body functioning in an a\imini,strative sphere or quasi~ A
adqiinistrative'sphere. However, the decision must not only
be tested by the application of Wednesbury principle~ of
reasonableness but also must be free from arbitrariness
not affected by bias or actuated by mala fides. It was also
pointed out that quashing decisions may impose heavy B
~dhtinist[<;itive burden on the administration and lead to
incre-as~1,1nbudgeted expenditure."
Our View
46. In the light of the afore-noticed legal position, we shall C
now examine whether judicial intervention is called for in NIT
issue8 by the State of West Bengal/and State of Orissa for
manufacture and supply of HSRP/fnsofar as State of West
Bengal is concerned, the first ~1{ was issued in the month of
.... July, 2003 fixing August 6, 2003 as the last date for submission
D
of tender papers. Pursuant thereto, four bidders participated.
The fil)alization of the tender process could not take place
because of interim order passed by this Court in Association
J .
of Registration Plates 1 and other connected cases. These
cases were decided by this Court on November 30, 2004. Of
the four bidders, who initially participated in the tender process, E
one withdrew and as regards Promuk, an objection was raised
Ot,Shimnit about thE)[r eligibility. Shimnit approached Calcutta
High Court and obtained an iritefirn6rOemomffi1:rSingle Judge
that tender process shall not be finalized. As a matter of fact,
due to litigation no substantial progress took place for two F
years in finalization of process for which NIT was issued in July,
2003 and practically two bidders in the entire tender process
remained in fray. In interregnum, considerable number of
indigenous manufacturers obtained the requisite TAC from the
approved institutions as per the provisions of 1988 Act and G
thereby acquired capacity and ability to manufacture HSRP. In
the backdrop of these reasons, the State Government seemed
to have .formed an opinion that by increasing competition,
greater public interest could be achieved and, accordingly,
decided to cancel first NIT and issued second NIT doing away H
1144 SUPREME COURT REPORTS [2010] 6 S.C.R.
A with conditions like experience in foreign countries and
prescribed minimum turnover from that business. Whether
State Government could have changed terms of NIT despite the
judgment of this Court in Association of Registration Plates1?
Once a particular matter relating to conditions in NIT has been
B finally decided by the highest Court, the State Government,
which was party to the litigation, ought to tiave proceeded
accordingly but, in a case such as the present one, where. the
circumstances changed in some material respects as
aforenoticed, departure from the earlier policy cannot be held
c to be legally flawed, particulaily when there is no challenge to
the changed policy reflected in second NIT on the ground of
Wednesbury reasonableness or principle of legitimate
expectation or arbitrariness or irrationality. In considering
whether there has been a change of circumstances sufficient
to justify departure from the previous stance, the Division Bench
0
of Calcutta High Court recorded a finding that reasons sta\ed
by the State Government for departure from the conditions. \
in
the first NIT did exist and accepted the contention of the State
Government that by increasing the area of competition, greater
public interest wou,ld be sub-served because of finanqial
E implications. We have no justifiable reason to take a view
different from the High Court insofar as correctness of these
reasons is concerne(:!. The courts have repeatedly held that
government ~olicy can b'e, changed with changing
circumstances and only on the ground of change, such policy
F will not be vitiated. The government has a discretion to adopt
a different policy or alter or change its policy calculated to serve
public interest and make it more effective. Choice in the
balancing of the pros and cons relevant to the change in policy
lies with the authority. But like any discretion exercisable by the
G government or public authority, change in policy must be in
conformity with Wednesbury reasonableness and free from
arbitrariness, irrationality, bias and malice.
47. In Association of Registration Plates1, this Court while
dealing with the challenge to the conditions with regard .to.
H
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 1145
l~:FRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
experience in foreign countries and prescribed minimum A
turnover from that business observed that these conditions have
been framed- in the NIT to ensure that the manufacturer selected
would be technically and financially competent to fulfill the
contractual obligations and to eliminate fly-by-night operators
and that the insistence of the State to search for an experienced B
manufacturer with sound financial and technical capacity cannot
be misunderstood. While maintaining the State Government's
right to get the right and most competent person, it was held
that in the matter of formulating conditions of a tender document
and awarding a contract of the nature of ensuring supply of c
HSRP, greater latitude is required to be conceded to the State
authorities and unlessithe action of tendering authority is found
to be malicious and a misuse of statutory powers, tender
conditions are unassailable. On the contentions advanced, this
Court examined the impugned conditions and did not find any D
fault and overrul~d all objections raised by the petitioners therein
in challenge, to these conditions. This Court has neither laid
down as an absolute proposition that manufacturer of HSRP
must have the foreign experience and a particular financial
capacity to fulfill the contractual obligations nor it has been held
E
that these conditions must necessarily be insisted upon in the
NIT. The judgment of this Court in Association of Registration
Plates1 cannot be read as prescribing the conditions in NIT for
manufacture and supply of HSRP. Rather this Court examined
legality and justification of the impugned conditions within the
permissible parameters of judicial review and recognized the F
right of the States in formulating tender conditions. In our
opinion, there is no justification in denying the State authorities
latitude for departure from the conditions of the NIT that came
up for consideration before this Court in larger public interest
to broaden the base of competitive bidding due to lapse of time G
and substantial increase in the number of persons having TAC
from the approved institutes without compromising on the
quality and specifications of HSRP as set out in Rule 50, Order
2001 and Amendment Order, 2001.
H
1146 SUPREME COURT REPORTS [2010] 6 S.C.R.
A 48. Mr. F.S. Nariman, learned senior counsel heavily relied
upon a decision of this Court in S. Nagaraj & Ors. v. State of
Karnataka & Anr. 16 and submitted that the decision of this
Co1~rt in Association of Registration Plates 1 was binding on
all State:; and the said judgment has to be enforced and
B obeyed strictly and any deviation from those conditions by the
States on their own is impermissible.
49. In S. Nagaraj & Ors. 16 , this Court observed as follows:
"Was it so? Could the Government take up this stand?
Law on the binding effect of an order passed by a court
c of law is well settled. Nor there can be any conflict of
opinion !hat if an order had been passed by a court which
had jurisdiction to pass it then the error or mistake in the
order can be got corrected by a higher court or by an
application for clarification, modification or recall of the
D
order and not by ignoring the order by any authority actively
or passively or disobeying it expressly or impliedly. Even
if the order has been improperly obtained the authorities
cannot assume on themselves the role of substituting it or
clarifying and modifying it as they consider proper. In
E Halsbury's Laws of England (Fourth Edn., Vol. 9, p. 35,
para 55) the law on orders improperly obtained is stated
thus: \.
"The opinion has been expressed that the fact that
an order ought not to have been made is not a
F
sufficient excuse for disobeying it, that
disobedience to it constitutes a contempt, and that
the party aggrieved should apply to the court for
relief from compliance with the order."
G Any order passed by a court of law, more so by the higher
courts and especially this Court whose decisions are
der.larations of law are not only entitled to respect but are
binding and have to be enforced and obeyed strictly. No
court much less an authority howsoever high can ignore
H 16. 1993 Suppl. (4) sec 585.
SHIMNIT UTSCH INDIA PVT. LTD. v. W.B. TPT 114 7
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
it. Any doubt or ambiguity can be removed by the court A
which passed the order and not by an authority according
to its own understanding."
50. The statement of law exposited in S. Nagaraj 16 is
beyond question. As noticed above, in the case of Association
of Registration Plates1, this Court did not find any fault with the 8
controversial conditions in the NIT and overruled all objections
raised by the petitioners therein in challenge to those conditions.
The impugned conditions of NIT in that group of cases were
not held to be arbitrary, discriminatory or irrational nor amounted
to creation of any monopoly as alleged. The declaration of law C
by this Court in Association of Registration Plates1 is that in
- the matter of formulating conditions for a contract of the nature
of ensuring supply of HSRP, greater latitude needs to be
accorded to the State authorities. We find it difficult to hold that
by virtue of that judgment the impugned conditions were frozen D
for all times to come and the States were obliged to persist
with these conditions and could not alter them in larger interest
of the public. In our view, the decision of this Court in
Association of Registration Plates1 did not create any
impediment for the States to alter or modify the conditions in E
the NIT if the circumstances changed in material respects by
lapse of time.
51. In the PIL filed by Maninderjit Singh Bitta, it was prayed
that the States and UTs be directed to implement the judgment
of this Court in Association of Registration Plates 1 . This Court F
disposed of the writ petition on May 8, 2008 by observing, 'we
feel it would be in the interest of all concerned if the States and
Union Territories take definite decision as to whether there is
need for giving effect to the amended Rule 50 and the scheme
of HSRP and the modalities to be followed'. It was further G
observed that while taking the decision, the aspects highlighted
by this Court in Association of Registration Plates1 shall be
kept in view. After disposal of the PIL, the petitioner therein filed
I.A. No. 5 for clarification of the order dated May 8, 2008 and
this Court while disposing of the said I.A. on May 5, 2009 H
1148 SUPREME COURT REPORTS [2010] 6 S.C.R.
A clarified that there was no discretion given to the States/UTs
not to give effect to the amended Rule 50 and the claim of HSRP
and the modalities to be followed. Thereafter, I.A. was filed by
the Central Government on September 17, 2009 before this
Court for extension of time wherein the following statement was
B made:
'The primary reason for non implementation of the scheme
has been the challenges to certain conditions of the tender
floated by various States. The issues such as experience
in foreign countries, minimum net worth and turnover with
C a certain prescribed percentage of turn over from number
plate business in the immediately preceding last three
years and long term contract to a single vendor for the
entire State had been the subject matter of WP(C) No. 41
of 2003-Association of Registration Plates Vs. UOI &
D Ors. That this Hon'ble Court in the judgment dated 30th
November, 2004, laid to rest all such issues by holding that
all such conditions were essential and mandatory
conditions of the HSRP tender to ensure that the vendors
selected by the States would be technically and financially
E competent to fulfill the contractual obligations which looking
to the magnitude of the job requires huge investment
qualitatively and quantitatively."
By order dated December 15, 2009, this Court extended
the time for implementation of HSRP upto May 31, 2010. None
F of these orders holds that while implementing the new system
of HSRP, States and UTs are bound to incorporate the
conditions of foreign experience and minimum turnover from that
business. The statement made by the Central Government in
its application as aforenoticed only reflected the reason for non-
G implementation of HSRP scheme. As a matter of fact, the
Central Government has clarified the position in its
communication with the States/UTs that draft tender conditions
circulated by them are only suggestive. Be that as it may. The
decision of this Court in Maninderjit Singh Bitta and the
H
/
SHIMNIT UTSCH INDIA Plff. LTD. v. W.B. TPT 1149
INFRASTRUCTURE DEVE. CORPN. LTD. [R.M. LODHA, J.]
subsequently clarificatory order therein are hardly relevant and A
do not help the case of the appellants.
52. It is important to notice that the bids pursuant to the
second NIT have been evaluated by WBTIDCL and we have
been informed that the lowest bid per HSRP unit for a vehicle
is Rs. 469/- while the offer made by Shimnit (appellant) is of B
about Rs. 1200/-. Such a huge difference in the rate per HSRP
unit shows that the action of the State Government in doing
away with the conditions of experience in foreign countries and
prescribed turnover from such business has been in larger
public interest without compromising on safety, security and C
quality or sustainable capacity.
53. Mr. F.S. Nariman, learned senior counsel contended
that cancellation of first NIT and issuance of second NIT by the
Government of West Bengal was actuated with malafides as
Shimnit had challenged the pre-qualification of Promuk by filing D
a writ petition before the Calcutta High Court wherein an interim
order also came to be passed. We are not impressed by this
submission at all and it is noted to be rejected. There is no
material much less substantial material to infer any malafides.
Merely because Shimnit challenged the pre-qualification of E
Promuk before Calcutta High Court, it could hardly lead to an
inference of malafides.
54. It is true that the State or its tendering authority is bound
to give effect to essential conditions of eligibility stated in a F
tender document and is not entitled to waive such conditions
but that does not take away its administrative discretion to
cancel the entire tender process in public interest provided
such action is not actuated with ulterior motive or is otherwise
not vitiated by any vice of arbitrariness or irrationality or in
violation of some statutory provisions. It is always open to the G
State to give effect to new policy which it wished to pursue
keeping in view 'overriding public interest' and subject to
principles of Wednesbury reasonableness. The judgment of
Guwahati High Court in Real Mazon India Ltd. v. State of
H
1150 SUPREME COURT REPORTS [2010] 6 S.C.R.
A Assam and Ors. 17 was also pressed into service by the
appellants. In that case, the corrigenda dated December 26,
2006, January 6, 2007 and January 16, 2007 issued by the
State of Assam deleting the conditions of experience, expertise
and exposure of the bidders in the manufacture and supply of
B HSRP were challenged. Guwahati High Court quashed the
impugned corrigenda. We are unable to approve the judgment
of the f':rl.lwahati High Court in Rea/ Mazon India Ltd. 17 for the
reasons given above.
55. As regards the State of Orissa, it is an admitted
C position that it issued NIT for the first time on April 11, 2007
inviting bids for the manufacture and supply of HSRP in respect
of the existing motor vehicles and vehicles to be registered in
the State of Orissa. The said NIT was not taken to logical
conclusion and a fresh NIT was issued on July 6, 2009 on BOO
D basis. In that NIT, inter alia, eligibility criteria has been provided
that bidder should have experience of working in the field of
HSRP having used the security features as mentioned in Rule
50 of 1989 Rules. However, NIT does not insist on conditions
like experience in the foreign countries and minimum
E prescribed turnover from the said business. In what we have
already discussed above, no case for judicial review or
intervention in the said NIT is made out.
56. For the foregoing reasons, both appeals must fail and
are dismissed with no order as to cost.
F
B.B.B. Appeals dismissed.
G
H 17. 2008 (1) GLT 1020.
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