No Fundamental Right To Carry Out Business With Govt; Court's Interference In Formulating Tender Conditions Restrictive: Rajasthan HC

Justice Inderjeet Singh, while dismissing the plea, ruled,

"In formulating the conditions of tender document, greater latitude is required to be conceded to the State Authorities and if the State or its instrumentalities act reasonably, the interference of the Courts is very restrictive since no person can claim fundamental right to carry out business with the Government".

In furtherance, the court relied on Uflex Ltd. v. Government of Tamil Nadu LL 2021 SC 465, where the Apex Court had held that in the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities, unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted.

In the present matter, E-auction notice was issued for sale of Run of Mine Lignite on behalf of respondent - Rajasthan State Mines & Minerals Limited (RSMML) and the total quantity of the Run of Mine Lignite is 15 Lac MT.

The petitioners had challenged two conditions incorporated in this E-auction notice i.e. first, any Indian buyer who has lifted a cumulative quantity of at least 1.25 lac MT of lignite from all of RSMML mines in the last three years can participate in the e-auction, and second that the said buyer has to lift minimum 1.25 lac MT Lignite.

The court observed that the petitioners have failed to prove any violation of Articles 14, 19(1)(g), 21, 38 & 39 of the Constitution of India as well as the malafides on the part of the respondents in formulating the impugned conditions, with any supported tangible documentary evidence.

It added that no person by name has been impleaded as party in the writ petitions, in the absence of which the allegation/argument of the petitioners is without any factual foundation.

The court rejected the argument of petitioner that the action of the respondents in incorporating the impugned conditions was arbitrary in nature and without application of mind. The court pointed out that it is reflected from respondents' reply that only after having an overall scrutiny of the availability of the lignite in the concerned mines and taking into consideration the provision of Regulation 107 of the Coal Mines Regulations of 2017, such decision was rightly taken by the respondents in incorporating conditions on Tender.

After the perusal of the material placed by the respondents on record, the court observed that the action of the respondents in imposing the impugned conditions has a nexus with the objects sought to be achieved. The court further added that the impugned conditions does not appear to be either arbitrary in nature or a case of discrimination, which could call upon this Court to exercise jurisdiction under Article 226 of the Constitution of India.

The counsel for petitioners submitted that action of the respondents of inserting the conditions, referred to in the tender document/E-auction notice is arbitrary in nature and completely without application of mind. He further submitted that in earlier years, no such condition was imposed/inserted by the respondents while auctioning the lignite and it has been a continuous practice of the respondents to give chance to all the Indian Buyers to participate in the E-Auction process. He referred to multiple judicial pronouncements of the Apex Court in support of his argument.

On the other hand, counsel for the respondents contended that the conditions imposed by them can only be challenged on the ground of malafide. He added that although the allegation of malafides has been levelled and argued but no person by name has been impleaded as party in the writ petitions to demonstrate as to who will be favoured by the alleged person. He further submitted that no public interest is involved in this matter as the transaction is purely of commercial nature.

Sr. Adv. Rajendra Prasad, Adv. Vipul Sharda, Adv. Deepak Bishnoi and Adv. Ashwani Kumar Chobisa appeared on behalf of the petitioners. Advocate General G M.S. Singhi and Adv. Sheetanshu Sharma appeared on behalf of respondents.