ARGUMENTS ADVANCED

1.That the action of the Government of Hind Pradesh of not awarding the contract to
Modern Infrastructure Private Limited is valid under the law.
1.(a)There is no obligation to accept tender or lowest tender
A party inviting tenders is not bound to accept any tender, nor it is bound to accept lowest tender.
There is no liability on government for not accepting any tender. Awarding contract to CLCPL and not to
MIPL is totally up to government and if the government feels that CLCPL is more suitable option than
MIPL then choosing higher tender does not ipso facto make the acceptance illegal.

In the proposition its only written that generally L1 is granted the contract but its not mentioned that it
is mandatory to award the contract to lowest bidder. In Deepak Kumar Sarkar v. State of W.B. there was
no liability for accepting any tender.

In Trilochan Mishra v. State of Orissa , the government did not accept the highest bidder for the sale of
Kendu leaves . The court held that government is not bound to accept the highest tender but may
accept the lower tender in case it thinks that the person offering lower tender is an overall
consideration to be preferred over higher tenderer. Also that the refusal to accept the higher bids could
not be the cause of any complaint as the government could have preferred one tenderer over the
another.1

1.(b) The decision taken by the Government of awarding the contract to CLCPL was in favour of public
interest.

On page 3 para VI, it is mentioned that had the qualifications of the advertisement dated 22 June
2012,stood as it was , MIPL would have been disqualified on technical ground. Considering the dangers
of awarding the contract to MIPL, a company which was not financially sound , Mr. Agarwal exercising
the inherent power of the government ,awarded the contract to CLCPL.

If the Government would have given the contract to a party whose financial stability was doubtful, The
result could be that the economic operator would be unable to fulfil the contract or would even become
insolvent. The contracting authority would then need to re-tender the services or works that the
economic operator has failed to deliver. The outcome would be lost time as well as additional
administration and costs incurred by the contracting authority.

Government also kept in mind the quality of the project. Quality risk is that the goods or services
provided will be of a lower quality than they should be according to the terms of the contract. For
example, an economic operator that had proposed a very low tender could try to cheat the contracting
authority by replacing materials of high quality with less expensive substitutes or by not performing all
of the required services.

The Government is the guardian of the finances of the State. It is expected to protect the financial
interest of the State and the power to refuse the lowest or any other tender is always available to
the Government. The right to choose cannot be considered to be an arbitrary power. Of course, if
the said power is exercised for any collateral purpose, the exercise of that power will be struck

1
Trilochan Mishra v. State of Orissa
down. In a commercial transaction, the State can choose its own method to arrive at a decision
and it is free to grant any relaxation for bona fide reasons, provided the tender conditions permit
such a relaxation. Even when some defect is found in the decision-making process, the Court has
to necessarily exercise its discretionary powers under Article 226 with great caution and should
exercise it only in furtherance of public interest and not merely on the making out of a legal
point. The Court should always keep the larger public interest in mind in order to decide whether
its intervention is called for or not2
1.(c)Government action of awarding contract to CLCPL is not arbitrary and fair in nature and it does
not violate article 14 of MIPL.

The government of Hind Pradesh could enter into specific contract with anyone it wanted and it
is not bound to accept the lowest bid at auction for execution of any work when the government
chooses one person over another to enter into contract the MIPL can not claim the protection of
article 14 because the choice of the person to fulfill the particular contract must be left to it.
There is no discrimination, because it is perfectly open to the Government ,even as it is to a
private party, to choose a person to their liking , to fulfil contracts which they wish to be
performed. When one person is chosen rather than another, the aggrieved party cannot claim the
protection of Art.14 because the choice of the person to fulfil a particular contract must be left to
the Government.3
In G.E. & E. Co. v. Chief Engineer, the Government awarded the contract for executing some
work to a person other than the lowest tender. He alleged that the discrimination had been done
against him and that preferential treatment was accorded to government owned company whose
chairman was also the chairman of government stores purchase committee. the court rejected the
contention saying that when the government chose one person rather than the other, the
aggrieved party could not claim the protection of article 14 because the choice of the person to
fulfil the particular contract must be left to the government,” it is perfectly open to government
even as it to a private party to choose a person to their liking to fulfil a contract which they wish
to be performed.”4
1.(d) The action of Government of Hind Pradesh of awarding contract to CLCPL was
done with bona fide intention and was not bias.
Considering the danger of awarding contract to MIPL a company which was financially not
sound Mr. Agarwal when asked Chief Minister about awarding the contract to a particular
company then the Chief Minister asked him to do whatever he thinks is the best so it was totally
at the discretion of Mr. Agarwal to decide upon the matter. Earlier also in the fact sheet it is
mentioned that the Chief Minister had asked Mr. Agarwal to award the contract to MIPL as soon
as possible. So merely on the fact that one of the promoters happened to be the brother in law of
Chief Minister we can not say that the action of the government was bias.

2
ION Exchange Waterleau Ltd. Vs. The commissioner, Madurai Municipal Corporation, Madurai
3
C.K. Achutan v State of Kerala.
4
G.E. & E. Co. v. Chief Engineer
Also Government took into consideration various aspects of awarding contract to lowest bidder
which was not financially stable and about the economic condition and need of medical
healthcare at affordable rate in the state, Government made the correct decision . : An economic
operator that was chosen on the basis of a very low tender might, in the course of the execution of the
contract, seek to charge the contracting authority for extra costs and request increased remuneration.
Another risk is that the goods or services provided will be of a lower quality than they should be
according to the terms of the contract. . For example, an economic operator that had proposed a very
low tender could try to cheat the contracting authority by replacing materials of high quality with less
expensive substitutes or by not performing all of the required services.

Also amongst all the four proposers possessing the requisite technical qualification CLCPL was found to
be the most suitable option since its experience, standard and quality of earlier job performed,
financial status of the tenderer, quality were qualifying and in financial quotation also it was only
40K above than the lowest tender therefore also economical.

3The law relating to award of contract by the State and public sector corporations was
reviewed in Air India Ltd. v. Cochin International Airport Ltd. and it was held that the award
of a contract, whether by a private party or by a State, is essentially a commercial
transaction. It can choose its own method to arrive at a decision and it is free to grant any
relaxation for bona fide reasons, if the tender conditions permit such a relaxation. 5

5
Air India Ltd. v. Cochin International Airport Ltd