2013 PLP 526 (SCMR)

P. SATHASIVAM, J.

Leave granted.

2. This appeal is directed against the fi nal judgment and order dated 2-7-2008 passed by the High Court of Karnataka at Bangalore in Writ Appeal No. 1928 of 2007 whereby the High Court dismissed the ap peal filed by the appellant-Company herein.

3. Brief facts:-- (a) On 4-8-2005, the Karnataka State Road Transport Corporation (KSRTC) - Respondent No.2 herein floated a Tender being No.G30-05 for supply of Tyres, Tubes and Flaps specifying certain pre- qualification criteria. (b) Challenging the said pre-qualifica tion criteria, the appellant-Company, which is engaged in the manufacture and supply of tyres, tubes and flaps filed a Writ Peti tion being No. 20543 of 2005 before the High Court. After filing of the writ peti tion, the said criterion was withdrawn by the KSRTC. Thereafter, the KSRTC modi fied the pre-qualification criteria and issued a Tender being No.G-23-07 dated 5-7-2007 wherein, a new pre-qualifica tion criterion was specified. (c) Being aggrieved by the said pre- qualification criteria, the appellant-Com pany preferred a Writ Petition being No. 11951 of 2007 before the High Court. By judgment dated 13-9-2007, the learned single Judge of the High Court dismissed their writ petition. (d) Challenging the said judgment, the appellant filed a Writ Appeal being No.1928 of 2007 before the Division Bench of the High Court. By impugned judgment dated 2-7-2008, the Division Bench of the High Court dismissed the same. (e) Being aggrieved by the said judg ment, the appellant-Company has preferred this appeal by way of special leave before this Court.

4. Heard Ms. Madhurima Tatia, learned counsel for the appellant-Company and Mr. S.N. Bhat, learned counsel for respondents Nos.2 and 3 and Mr. V.N. Raghupathy, learned counsel for the State.

5. Ms. Madhurima Tatia, learned coun sel for the appellant-Company, after tak ing us through the tender pre-qualification criteria and their performance, raised the following submissions:-- (i) The pre-qualification criteria as speci fied in Condition Nos.2(a) and 2(b) (amended Condition Nos.4(a) and 4(b)) of the Tender in question, viz., G-23-07 dated 5-7-2007 is unreasonable, arbitrary, dis criminatory and opposed to public interest in general. (ii) The said conditions were incorpo rated to exclude the appellant-Company and other similarly situated companies from the tender process on wholly extra neous grounds which are unsustainable in law. (iii) The appellant-Company was suc cessful in previous three contracts and sup plied their products to the KSRTC. There was no complaint pertaining to short sup ply and quality. The financial capacity of the appellant-Company was never doubted by the KSRTC at any point of time, hence, the impugned pre-qualification criteria was included to exclude the appellant-Company from the tender bidding process with an ulterior motive.

6. Per contra, Mr. S.N. Bhat and Mr. V.N. Raghupathy, learned counsel for the re spondents, after taking us through the rel evant materials including the constitution of high level Committee i.e. Contract Man agement Group (CMG), its deliberations and decisions etc., submitted that:-- (i) To have the best of the equipment for the vehicles, which ply on road carrying passengers, the respondents, in the circum stances, thought it fit that the criteria for applying-for tender for procuring tyres should be at a high standard and hence only those manufacturers, who satisfy the eligi bility criteria, should be permitted to par ticipate in the tender. (ii) The said two conditions were im posed in order to ensure the supply of good quality tyres. (iii) The two conditions were incorpo rated in the tender notice pursuant to the decision of the Contract Management Group (CMG) of the KSRTC which con sists of higher level officials having tech nical knowledge. (iv) The corrigendum was issued to minimize the confusion, which might have occurred due to condition No. 2(a). Discussion:--

7. We have carefully considered the ri val submissions and perused all the mate rials placed before us. It is not in dispute that the KSRTC has issued tender No. G 23-07 dated 5-7-2007. The pre-qualifi cation criteria as specified in Condition No.2 of the tender dated 5-7-2007 reads as under:-- "2 Pre-qualification criteria for procure ment of TTF Sets:-- (a) Only the tyre manufacturers who have supplied a minimum average of 5000 sets of Tyres, Tubes and Flaps set per an num, in the preceding three years out of 2003-04, 2004-05, 2005-06 and 2006-07 to any one of the OE chassis manufacturer, i.e. Ashok Leyland, Tata Motors, Eicher, Swaraj Mazda and Volvo are eligible to participate, for supply of respective size/type of Tyres, Tubes and Flaps set. They should produce purchase order copies and invoice supplies in support of the same. (b) The firm should have minimum av erage annual turnover of Rs.500 crores in the preceding three years out of 2003-04, 2004-05, 2005-06 and 2006-07 from the sale of Tyres, Tubes and Flaps."

8. Being aggrieved by the above-men tioned conditions, viz., 2(a) and 2(b) of the tender dated 5-7-2007, the appellant- Company preferred W.P. No. 11951 of 2007 before the High Court. After filing of the said writ petition, before opening of the tender bids, the KSRTC amended the ten der conditions as were incorporated in the earlier tender document replacing Condi tion Nos.2(a) and 2(b) with Condition Nos.4(a) and 4(b). Condition Nos. 4(a) and 4(b) read as under:-- "

4. Pre-qualification criteria for procure ment of TTF sets:-- (a) Only the tyre manufacturers who have supplied a minimum average of 5000 sets of Tyres, Tubes and Flaps set per an num, in the preceding three years out of 2003-04, 2004-05, 2005-06 and 2006-07 to any of the heavy goods/passenger vehicles/chassis manufacturers in the coun try are eligible to participate. They should produce purchase order copies and invoice supplies in support of the same. (b) The firm should have minimum av erage annual turnover of Rs.500 crores in the preceding three years out of 2003-04, 2004-05, 2005-06 and 2006-07 from the sale of Tyres, Tubes and Flaps." Under the said amendment, only Con dition No. 2(a) was replaced by Condition No 4(a). In Condition No. 4(a), the classi fication of the vehicles was maintained but the names of the manufacturers were de leted. It is the grievance of the appellant- Company that the pre-qualification crite ria as specified in Condition Nos. 2(a) and 2(b) (amended Condition Nos. 4(a) and 4(b)) of the tender in question is unreason able, arbitrary, discriminatory and opposed to public interest in general. It is also their grievance that the said conditions were in corporated to exclude the appellant-Com pany and other similarly situated compa nies from the tender process on wholly extraneous grounds which is unsustainable in law. In other words, according to the appellant-Company, the decision of the KSRTC in restricting their participation in the tender to Original Equipment Manu facturer (OEM) suppliers is totally unfair and discriminatory.

9. This Court, in a series of decisions, considered similar conditions incorporated in the tender documents and also the scope and judicial review of administrative ac tions. The scope and the approach to be adopted in the process of such review have been settled by a long line of decisions of this Court. Since the principle of law is settled and well recognized by now, we may refer some of the decisions only to recapitulate the relevant tests applicable and approach of this Court in such matters.

10. In Tata Cellular v. Union of India, (1994) 6 SCC 651 : (AIR 1996 SC 11 : 1994 AIR SCW 3344), this Court emphasised the need to find a right balance between ad ministrative discretion to decide the matters on the one hand, and the need to rem edy any unfairness on the other, and ob served:-- "94. (1) The modern trend points to ju dicial restraint in administrative action. (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 exper tise to correct 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 open to judicial scrutiny because the invitation to tender is in the realm of contract. ... (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administra tive 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 must be free from arbitrariness not af fected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the admin istration and lead to increased and unbudgeted expenditure."

11. In Raunaq International Ltd. v. I.V.R. Construction Ltd. and others (1999) 1 SCC 492 : (AIR 1999 SC 393: 1999 AIR SCW 53), this Court reiterated the principle govern ing the process of judicial review and held that the writ court would not be justified in interfering with commercial transactions in which the State is one of the parties except where there is substantial public interest involved and in cases where the transac tion is mala fide.

12. In Union of India and others v. Interna tional Trading Co. and others (2003) 5 SCC 437 : (AIR 2003 SC 3983 : 2003 AIR SCW 2828), this Court, in similar circumstances, held as under:-- "

15. While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and im plicit in terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the require ment of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reason, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and cir cumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reason ableness.

16. Where a particular mode is pre scribed for doing an act and there is no im pediment in adopting the procedure, the de viation to act in a different manner which does not disclose any discernible principle which is reasonable itself shall be labelled as arbitrary. Every State action must be informed by reason and it follows that an act uninformed by reason is per se arbitrary.

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 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 interests of persons upon whom the re strictions have been imposed or upon ab stract consideration. A restriction cannot be said to be unreasonable merely because in a given case, it operates harshly. In de termining whether there is any unfairness involved; the nature of the right alleged to have been infringed, the underlying pur pose of the restriction imposed, the extent and urgency of the evil sought to be rem edied thereby, the disproportion of the im position, the prevailing condition at the rel evant time, enter into judicial verdict. The reasonableness of the legitimate expecta tion has to be determined with respect to the circumstances relating to the trade or business in question. Canalisation of a par ticular business in favour of even a specified individual is reasonable where the in terests of the country are concerned or where the business affects the economy of the country. (See Parbhani Transport Co op. Society Ltd. v. Regional Transport Au thority, Shree Meenakshi Mills Ltd. v. Union of India, Hari Chand Sarda v. Mizo District Council and Krishnan Kakkanth v. Govt. of Kerala.)"

13. In Jespar I. Slong v. State of Meghalaya and others (2004) 11 SCC 485 : (AIR 2004 SC 3533: 2004 AIR SCW 3399), this Court, in paragraph 17, held as under:-- "17.......... fixation of a value of the tender is entirely within the purview of the ex ecutive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreason able ......."

14. In Association of Registration Plates v. Union of India and others (2005) 1 SCC 679 : (AIR 2005 SC 469: 2004 AIR SCW 7074), similar issue was considered by a bench of three Judges. In that case, the dis pute was about the terms and conditions of notices inviting tenders (NITs) for supply of high security registration plates for mo tor vehicles. The tenders have been issued by various State Governments on the guide lines circulated by the Central Government for implementing the provisions of the Motor Vehicles Act, 1988 and the newly amended Central Motor Vehicles Rules, 1989. The main grievance of the appellant therein was that all notices inviting tenders (NITs) which were issued by various State Governments, contained conditions which were tailored to favour companies having foreign collaboration. Their further griev ance was that the tender conditions were discriminatory as per Article 14 of the Con stitution and were being aimed at exclud ing indigenous manufacturers from the ten der process. It was also contended that in all the cases, the work of supply of high security registration plates for all existing vehicles and new vehicles was being en trusted to a single licence plates manufac turer in a State or a region and for a long period of 15 years thus creating monopoly in favour of selected bidders to the com plete exclusion of all others in the field. The further contention advanced therein was that creation of monopoly in favour of a few parties having connection with for eign concerns is violative of the fundamen tal right of trade under Article 19(1)(g) and discriminatory under Article 14 of the Con stitution. It was also pointed out that in the name of implementing the amended Rule 50 of the Motor Vehicles Rules, 1989, the States are imposing conditions in the tender that would take away the existing rights of the manufacturers of plates in India. On the condition laid down for prescribed minimum turnover of business, the chal lenge made on behalf of the petitioners therein was that fixing such high turnover for such a new business is only for the pur pose of advancing the business interests of a group of companies having foreign links and support. It is impossible for any indig enous manufacturer of security plates to have a turnover of approximately 12.5 crores from the high security registration plates which were sought to be introduced in India for the first time and the imple mentation of the project has not yet started in any of the States. On behalf of the Union of India, the State authorities and counsel appearing for the contesting manufactur ers, in their replies, have tried to justify the manner and implementation of the policy contained in Rule 50 of the Motor Vehicles Rules. On behalf of the Union of India, learned ASG submitted that Rule 50 read with Statutory Order of 2001 issued under Section 109(3) of the Motor Vehicles Act, the State Governments are legally compe tent to formulate an appropriate policy for choosing a sole or more manufacturers in order to fulfil the object of affixation of security plates. The Scheme contained in Rule 50 read with the Statutory Order of 2001 leaves it to the discretion of the State concerned to even choose a single manu facturer for the entire State or more than one manufacturer regionwise. It was pointed out that such a selection cannot be said to confer any monopoly right by the State on any private individual or concern. He further pointed out that the tender con ditions were formulated taking into account the public interest consideration and aspects of high security.

15. While considering the above submis sions, the three-Judge Bench held as un der:-- "

38. In the matter of formulating condi tions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State authorities. Unless the action of ten dering authority is found to be malicious and a misuse of its statutory powers, ten der conditions are unassailable. On inten sive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fun damental rights of the class of intending tenderers under Article 19 of the Constitu tion. On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying regis tration plates in foreign countries and the quantum of business turnover are intended only to keep indigenous manufacturers out of the field. It is explained that on the date of formulation of scheme in Rule 50 and issuance of guidelines thereunder by the Central Government, there were not many indigenous manufacturers in India with technical and financial capability to under take the job of supply of such high dimen sion, on a long-term basis and in a manner to ensure safety and security which is the prime object to be achieved by the intro duction of new sophisticated registration plates.

39. The notice inviting tender is open to response by all and even if one single manufacturer is ultimately selected for a region or State, it cannot be said that the State has created a monopoly of business in favour of a private party. Rule 50 permits the RTOs concerned themselves to implement the policy or to get it imple mented through a selected approved manufacturer.

40. Selecting one manufacturer through a process of open competition is not cre ation of any monopoly, as contended, in violation of Article 19(1)(g) of the Consti tution read with clause (6) of the said Ar ticle. As is sought to be pointed out, the implementation involves large network of operations of highly sophisticated materi als. The manufacturer has to have emboss ing stations within the premises of the RTO. He has to maintain the data of each plate which he would be getting from his main unit. It has to be cross-checked by the RTO data. There has to be a server in the RTO's office which is linked with all RTOs in each State and thereon linked to the whole na tion. Maintenance of the record by one and supervision over its activity would be sim pler for the State if there is one manufac turer instead of multi-manufacturers as sup pliers. The actual operation of the scheme through the RTOs in their premises would get complicated and confused if multi- manufacturers are involved. That would also seriously impair the high security con cept in affixation of new plates on the ve hicles. If there is a single manufacturer he can be forced to go and serve rural areas with thin vehicular population and less volume of business. Multi-manufacturers might concentrate only on urban areas with higher vehicular population.

43. Certain pre-conditions or qualifica tions for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work. Article 14 of the Constitution prohibits the Government from arbitrarily choosing a contractor at its will and plea sure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim a funda mental right to carry on business with the Government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest. Undisputedly, the legal position which has been firmly established from various deci sions of this Court, cited at the Bar (supra) is that Government contracts are highly valuable assets and the court should be pre pared to enforce standards of fairness on the Government in its dealings with tenderers and contractors.

44. The grievance that the terms of no tice inviting tenders in the present case vir tually create a monopoly in favour of par ties having foreign collaborations, is without substance. Selection of a competent contractor for assigning job of supply of a sophisticated article through an open-ten der procedure, is not an act of creating monopoly, as is sought to be suggested on behalf of the petitioners: What has been argued is that the terms of the notices in viting tenders deliberately exclude domes tic manufacturers and new entrepreneurs in the field. In the absence of any indica tion from the record that the terms and con ditions were tailormade to promote parties with foreign collaborations and to exclude indigenous manufacturers, judicial interfer ence is uncalled for." After observing so, this Court dismissed all the writ petitions directly filed in this Court and transferred to this Court from the High Courts.

16. In Reliance Airport Developers (P) Ltd. v. Airports Authority of India and others (2006) 10 SCC 1, this Court held that while judicial review cannot be denied in con tractual matters or matters in which the Government exercises its contractual pow ers, such review is intended to prevent ar bitrariness and must be exercised in larger public interest.

17. In Jagdish Mandal v. State of Orissa and others, (2007) 14 SCC 517, the fol lowing conclusion is relevant:-- "

22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial re view is invoked in matters relating to ten ders or award of contracts, certain special features should be borne in mind. A con tract is a commercial transaction. Evaluat ing tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a dis tance. If the decision relating to award of contract is bona fide and is in public inter est, courts will not, in exercise of power of judicial review, interfere even if a proce dural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be per mitted to be invoked to protect private in terest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interfer ences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:-- (i) Whether the process adopted or de cision made by the authority is mala fide or intended to favour someone; OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article

226. Cases involving blacklisting or impo sition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a dif ferent footing as they may require a higher degree of fairness in action."

18. The same principles have been reit erated in a recent decision of this Court in Tejas Constructions and Infrastructure Pvt. Ltd. v. Municipal Council, Sendhwa and another (2012) 6 SCC 464.

19. From the above decisions, the fol lowing principles emerge:-- (a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the na tional priorities; (b) fixation of a value of the tender is entirely within the purview of the execu tive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Gov ernment acts in conformity with certain healthy standards and norms such as award ing of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited; (c) In the matter of formulating condi tions 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 pow ers, interference by Courts is not warranted; (d) Certain preconditions or qualifica tions for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and (e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interfer ence by Court is very restrictive since no person can claim fundamental right to carry on business with the Government.

20. Therefore, a Court before interfer ing in tender or contractual matters, in ex ercise of power of judicial review, should pose to itself the following questions:-- (i) Whether the process adopted or de cision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no respon sible authority acting reasonably and in accordance with relevant law could have reached"; and (ii) Whether the public in terest is affected. If the answers to the above questions are in negative, then there should be no interference under Article 226.

21. Respondent No.1 the State, in their counter-affidavit, highlighted that tyre is very critical and a high value item being procured by the KSRTC and it procured 900 x 20 14 Ply Nylon tyres along with the tubes and flaps in sets and these types of tyres are being used only by the State Trans port Units and not in the domestic market extensively. It is highlighted that the qual ity of the tyre plays a major role in provid ing safe and comfort transportation facil ity to the commuters.

22. It is also pointed out by the Respon dent-State that in order to ensure procure ment of tyres, tubes and flaps from reli able sources, the manufacturers of the same with an annual average turnover of Rs. 200 crores during the preceding three years, were made eligible to participate in the ten ders. In the tender issued for procurement of these sets during October, 2004, the ap pellant participated and based on the Ll rates, the orders for supply for 16,000 sets of tyres were placed on the firm. It is also pointed out that the appellant supplied 10,240 sets of tyres and remaining quan tity was cancelled due to quality problems.

23. Materials has also been placed to show that the appellant participated in sub sequent tenders and orders were released for supply of 900 x 20 14 PR tyres, tubes and flaps from October, 2006 to Septem ber, 2007. It is also explained that after going into various complaints, in order to achieve good results, new tyre mileage and safety of the public etc., and after noting that vehicle/chassis manufacturers such as Messrs Ashok Leyland, Messrs Tata Motors etc. have strict quality control system, it was thought fit to incorporate similar criteria as a pre-qualification for procurement of tyres.

24. It is also highlighted by the State as well as by the KSRTC that the tender con ditions were stipulated by way of policy decision after due deliberation by the KSRTC. Both the respondents highlighted that the said conditions were imposed with a view to obtain good quality materials from reliable and experienced suppliers. In other words, according to them, the condi tions were aimed at the sole purpose of obtaining good quality and reliable supply of materials and there was no ulterior motive in stipulating the said conditions.

25. Both the counsel for the respondents have brought to our notice that the two im pugned conditions were incorporated in the tender notice pursuant to a decision of the Contract Management Group (CMG) of the KSRTC, which is an institutional mecha nism for the purpose of devising proper method in the matter, inter alia, of procure ment of materials to the KSRTC. The said Group consists of various high level offi cials representing different departments of KSRTC. The CMG constitutes of the fol lowing officials:-- (a) Managing Director, Bangalore Met ropolitan Transport Corporation (b) Managing Directors of four sister Corporations (c) Director, Security and Vigilance (d) Director, Personnel and Environment (e) Chief Accounts Officer (f) Chief Engineer (Production) (g) Chief Engineer (Maintenance) (h) Chief Accounts Officer (Internal Au dit) (i) Controller of Stores and Purchase. Thus it is clear that the said CMG is a widely represented body within the Re spondent No. 2-KSRTC.

26. Further materials placed by KSRTC show that the CMG met on 17-5-2007 and deliberated on the question of conditions to be incorporated in the matter of calling of tenders for supply of tyres, tubes and flaps. It is pointed out that in view of the experience gained over the years, it was felt by the said Group that the impugned two conditions should be essential qualifi cations of any tenderer. The said policy decision was taken in the best interest of the KSRTC and the members of the travel ling public to whom it is committed to pro vide the best possible service. In the course of hearing, learned counsel for the respon dents have also brought to our notice the Minutes of Meeting of the CMG held on 17-5-2007. The said recommendation of the CMG was ultimately approved by the Vice Chairman of KSRTC. In the circum stances, the said impugned two conditions were incorporated in the tender notice dated 5-7-2007.

27. It is also brought to our notice that the KSRTC is governed by the provisions of the Karnataka Transparency in Public Procurements Act, 1999 and the Rules made thereunder, viz., Karnataka Transpar ency in Public Procurements Rules, 2000. Though in Condition No 2(a) in the tender notice dated 5-7-2007, the names of cer tain vehicle manufacturers were mentioned, after finding that it was inappropriate to mention the names of specific manufactur ers in the said condition, it was decided to delete their names. Accordingly, a corrigendum was put up before the CMG and by decision dated 4-8-2007, CMG decided to revise the pre-qualification cri teria by deleting the names of those manu facturers. Learned counsel for the respon dents have also placed the Minutes of Meet ing of the CMG held on 4-8-2007. It is also brought to our notice that the said corrigendum was also approved by the competent authority.

28. In addition to the same, it was not in dispute that the appellant-Company was well aware of both the original tender no tices and the corrigendum issued. It is also brought to our notice that the appellant wrote a letter making certain queries with regard to the corrigendum issued by the KSRTC and the said queries were suitably replied by the letter dated 11-8-2007.

29. It is also seen from the records that pursuant to the tender notice dated 5-7-2007, seven bids were received in cluding that of the appellant-Company. They are:-- (i) Messrs Apollo Tyres (ii) Messrs Birla Tyres (iii) Messrs Ceat Ltd. (iv) Messrs Good Year India (v) Messrs JK Industries (vi) Messrs MRF Ltd. (vii) Messrs Michigan Rubber (Former Betul Tyres). It is brought to our notice that success ful bidders were CEAT and JK Tyres. Ac cordingly, contracts were entered into with the said two companies by the KSRTC and the purchase orders were placed and they have also effected supplies and completed the contract and the KSRTC also made pay ments to the said suppliers.

30. It is pertinent to point out that the second respondent has also issued 4 (four) more tender notices after the tender notice dated 5-7-2007. The said tender notices were dated 4-3-2008, 22-8-2008, 24-10-2008 and 19-3-2009. Pursuant to the tender notices dated 4-3-2008, 22-8-2008 and 24-10-2008, contracts have been awarded and have been substantially performed. It is also brought to our notice that all the said four subsequent tender no tices also contained identical conditions as that of the impugned conditions contained in tender notice dated 5-7-2007.

31. As observed earlier, the Court would not normally interfere with the policy de cision and in matters challenging the award of contract by the State or public authori ties. In view of the above, the appellant has failed to establish that the same was con trary to public interest and beyond the pale of discrimination or unreasonable. We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd respondent thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligi bility criteria should be permitted to par ticipate in the tender. As noted in various decisions, the Government and their under takings must have a free hand in setting terms of the tender and only if it is arbi trary, discriminatory, mala fide or actuated by bias, the Courts would interfere. The Courts cannot interfere with the 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. In the case in hand, we have already noted that taking into account vari ous aspects including the safety of the pas sengers and public interest, the CMG con sisting of experienced persons, revised the tender conditions. We are satisfied that the said Committee had discussed the subject in detail and for specifying these two con ditions regarding pre-qualification criteria and the evaluation criteria. On perusal of all the materials, we are satisfied that the impugned conditions do not, in any way, could be classified as arbitrary, discrimi natory or mala fide.

32. The learned single Judge considered all these aspects in detail and after finding that those two conditions cannot be said to be discriminatory and unreasonable refused to interfere exercising jurisdiction under Ar ticle 226 of the Constitution and dismissed the writ petition. The well reasoned judgment of the learned single Judge was affirmed by the Division Bench of the High Court.

33. In the light of what is stated above, we fully agree with the reasoning of the High Court and do not find any valid ground for interference. Consequently, the appeal fails and the same is dismissed with no order as to costs. MWA/3/SC-IND Appeal dismissed.