NATIONAL LAW

UNIVERSITY
2015-16

SYNOPSIS

HISTORY

TOPIC ASHOKAS DHAMMA POLICY

SUBMITTED FOR THE PROJECT WORK UNDERTAKEN IN PARTIAL
FULFILLMENT OF BA LLB (HONS.) 5 YEARS INTEGRATED COURSE AT DR.
RMLNLU, LUCKNOW

SUBMITTED UNDER SUBMITTED BY-

THE GUIDANCE OF-

LOKESH CHANDRA
RANJAN DR.VANDANA SINGH Section-A

Assistant Professor Roll No.75

Dr. RMLNLU BA.LLB(Hons.)(1stSem)

OPENING TENDERS

The Tender Panel shall convene within one working day of the closing date for return of
tenders. A member of the Tender Panel will collect the unopened tender envelopes from
secure storage and the panel shall assemble, preferably in a room where they can be
undisturbed.

If the number of tenders received does not equate to the number invited (allowing for any
declines), the panel must decide whether to proceed with the opening or not. A decision to
delay opening would be appropriate if there are insufficient tenders to provide true
competition. See under 'Exceptional Actions' for options available in these circumstances.

Each envelope should be opened in turn and the tender date, name of the tenderer, tender
sum(s) and delivery time recorded on the Schedule of Tenders. All pages containing prices
should be date stamped and initialled by a member of the Tender Panel. When all tenders
have been recorded, each member of the Tender Panel should sign the Schedule of Tenders.
The purpose of this procedure is to record the tender as submitted, there should be no attempt
to rank tenders or decide who will get the business.

In Blackpool and Fylde Aero Club Ltd vs Blackpool Borough Council1 a local authority was
held contractually bound to consider tenders submitted before deadline, where invitation was
sent to only selected parties and authority also stated that tender submitted after deadline
would not be accepted.

FACTS
Blackpool Borough Council ran Blackpool Airport, and gave a licence to a single company to

run pleasure flights to and from the airport Blackpool & Fylde Aero Club had held this

licence since 1975, and had been granted it again in 1978 and 1980.In 1983 the current

licence was due to expire, and the council sent out letters to seven organisations, including

the Aero Club, inviting new tenders to a licence to operate light and heavy aircraft from the

airport, requiring a reply to be at the Town Hall 'not later than 12 o'clock noon on Thursday

17 March 1983.

Three organisations replied, two of which sent in light bids for only the lighter class of

aircraft. The Aero Club sent in a significantly higher bid for both classes of aircraft, and

1 (1990)3 AII ER 25, (1990) 1WLR 11959(CA)Fairclough building ltd v port Talbot
CBC
placed their offer in the Town Hall letter box at 11 am on the 17th, an hour before the

deadline. The Town Clerk's staff failed to empty the letter box at 12 pm as they were expected

to do, and as a result the letter

was not considered 'delivered' until after the deadline, and the license was granted to one of

the other bidders, Red Rose Helicopters.

After discussions between the Aero Club and the Council it became apparent the letter had

been delivered on time, and the Council decided to rectify the situation by declaring the

previous round of tenders invalid and inviting the submission of new tenders. At this point

Red Rose Helicopters, having consulted their lawyers, informed the Council that they were

contractually bound to grant the license to them. As a result of this the Council withdrew their
offer of a second round of tenders, and pursued the contract with Red Rose Helicopters.The

case went to the High Court of Justice, where the judge found in favour of the club. The

Council appealed, and it was taken to the Court of Appeals, where Roger Toulson QC and

Hugh Davies represented the Council, and Michael Shorrock QC and Paul Sylvester

represented the aero club.

DISCRETION OF ACCEPTANCE OF TENDER

The government is perfectly entitled to enter into a contract with a private party .2 and
for or reject the lowest offer , the condition is valid ,but if done on a policy , should be
on ground which are rational and reasonable .The govt. May enter into contract with
any person, but in doing so, the state or its instrumentalies may not act arbitrarly.The
tender should be adjudged on their intrinsic merits according to the term and
conditions of the tender notice. The government is entitled to make a choice but the
choice can not be arbitrarily and fanciful.3 The government had right to enter into a
contract with a person well known it, especially one has faithfully perform his contracts
in the past, in preference to an undesirable,unsuitable or untried person.

REJECTION OF TENDER

A tender could not be rejected on the ground that the tenderer had deposited the money
by term deposited receipt insted of demand draft as prescribed .When bid is not
2 CK Achutan v state of kerala AIR 1959 SC 490
accepted for a collateral purpose of diverting the contract to a particular person, and
not for the purpose of obtaining the best possible price the auction was strucked down
at malafide, when no contract was concluded.

NEGOTIATION BEFORE ACCEPTANCE

In Air India Ltd v Coachin International Airport Ltd,3a public sector undertaking
established for setting up new private international airport .Its high level committee
accepted limited global competitive bidding norms and tentatively recommended
awarding the contract to Cambatta ,who made the highest offer. However, its board of
directors inviting only the air India (the other tenderer) for negotiations and sought a
final offer ,on the grounds that being an airline and national carrier, it would be in a
position to bring more traffic of air India and other domestic airlines. This decision was
not arbitrary.

WITHDRAWAL OF TENDER

The tenderer is entitled to withdraw the proposal and get the refund of earnest
money .when because of pending litigation the government was not in position to accept
or reject the tender.

DECISION OF ACCEPTANCE OR REJECTION

No person has the right to enter into a contract and the government may decide not to
deal with anyone.It was held that government cannot depart from accepting the lowest
bid in a supply contract(or the highest bid in a purchase contract) where no question of
policy was involved, namely, in contract for supply of fresh milk. Where very limited
number of tenders were received and the desired to have better price ,it was justified in
rejecting all the tenders. This is not a violation of the principles of legitimate
expectation.

DECISION OF EXPERT COMMITEES

The government is not bound to accept the recommendations of the committees set up
for the purpose of evaluating the tenders and may decide to call fresh tender4 but where
the recommendation of technical expert and the finanace department requiring further
negotiations on technical aspect were ignored by the authority and the decision was
taken only on the recommendation of the tender and purchase committee without
discussion or examining those recommendations, the decision of authority was arbitrary
and unreasonable.

3 Dileep kumar patnaik v state of Orissa AIR 1998 Ori 213

UNILATERAL TERMINATION UNDER POWERS CONFERRED BY CONTRACT

The question of contractual obligation cannot as rule be gone into in writ jurisdiction of
the High Court and Supreme Court example termination of contract under the terms of
the contract. Thus where the state government leased forest land to lessee for collecting
sal seeds for 15 years on payment of royalty at certain rate, and then it revised the rate
of royalty provision in the lease, the cancellation of the lease did not violate art 14 of the
constitution because the contract (of lease) governed the relation between the parties.
Nor the term conferring power on the state to terminate unilaterly the contract against
public policy.

JUDICIAL REVIEW IN CONCLUDED CONTRACTS

The state acts purely in its executive capacity at the stage of entry into the field when it
chooses persons with whom it could contract and is bound by the obligation which
dealing of the state with individual citizens import into every transaction entered into in
exercise of its constitutional powers.The doctrine of legitimate expectation does not
apply after contract is concluded.In commercial contract the breach of contract can be
properly adjudicated in a civil suit and not in a writ petition,a civil suit is proper
remedy when disputed questions of interpretation of contract or of facts are involved.

ENFORCEMENT OF OTHER TERM

A petitioner who had accepted the counter proposal of the employer to do only part of
the tendered work for which he had originally submitted the tender,could not challenge
the decision of the employer to award the remaining part to another as arbitrary.The
court would not interfere in the question of the discharge of loan of banks on the ground
that such a course would result in the domain of the law contract.No writ lay for
preventing the enforcement of bank guarantee given to the government or for deciding
whether the deducton made towards sales tax and retention of tht amount by the
government were valid under the term of the contract,or in respect of a claim for
amount due offered in full and final settelement of the contract and disputed by the
contractor or where the financial agency did not disburse an installment of loan on
account of breach by the petitioner.
CONTRACT BINDING ON THE GOVERNMENT

Tenders wereinvited by a government company,th Hindustan steel works construction

from Indian supplier of goods of foreign manufacturer,and the petitioner tender was the
lowest and was accepted.The purchaser company could not thereafter cancel the
contract on the ground that it coud have procured the goods directly foreign supplier at
much cheaper rate.4

EXCEPTIONS

STATUORY CONTRACTS

There is a distinction between contracts which are executed in exercise of the executive
powers of the union or the state under art.299(1) and contracts which are statuory in
nature .In contract by a state with a person in exercise of the statuory power under the
act or the rules framed under an act ,where the aggrieved party alleged breach on the
part of the state ,was held latter was bound by its constitutional obligation to act in a
reasonable just and fair manner and the contract could not be arbitrarily or
unreasonably terminated this was justifiable in a writ petition .

RELIEF IN EXCEPTIONAL CIRCUMSTANCES

Specific performance has been granted in a writ petition enabling a petitioner to lift the
the items purchased by him in an advertised sale.5An order for final payment of final
bills was made in writ petition where the works were delayed by the changes made by
government, the work was admittedly delayed for no fault of the contractor and
escalation rates were also sanctioned by the government but final bills were not paid.
Holding that relief can be rarely and sparingly granted in writ petition for breach of a
concluded contact. When the circumstances were exceptional ,where facts not disputed,
and ther was considerable delay in delivery of goods by the authority, the Madras High
Court ordered the authority to issue effect delivery on the delivery order already issued
to the petitioner.

4 Niranjan Pipalia v Hindustan steel works construction Ltd AIR 1994 Cal 232