Holding

The High Court erred in quashing the award; the licence requirement could be validly relaxed and the contract award to Master Marine Services was not arbitrary, so the award stands.

Summary

The Container Corporation of India (CONCOR) floated a limited tender for survey services and shortlisted Master Marine Services Pvt. Ltd. (appellant) and Metcalfe & Hodgkinson Pvt. Ltd. (first respondent). The appellant’s bid was 25% lower, but the first respondent challenged the award on the ground that the appellant did not possess a licence to act as a surveyor/loss assessor in its own name under the Insurance Act, 1938. The Delhi High Court quashed the award, holding the licence requirement was an essential pre‑qualification norm and that the award was arbitrary. On appeal, the Supreme Court held that the tender instructions expressly allowed CONCOR to relax conditions, that the licence held by the chairman could satisfy the requirement, and that no public interest justified interference under Article 226. Consequently, the High Court’s order was set aside and the contract award upheld.

Issues considered

The validity of the High Court’s quashing of the contract award on the ground that the appellant lacked a licence in its own name under the Insurance Act, 1938.
Whether the tender condition requiring a licence can be lawfully relaxed under clause 11 of the tender instructions.
Whether the award of the contract was arbitrary or violative of Article 14 (equity clause) of the Constitution.
Whether judicial review under Article 226 is appropriate in the absence of a public interest concern.
Whether a licence held by the chairman/consultant of a company satisfies the statutory requirement for a company under the Insurance Act.

Legislation cited

Insurance Act, 1938s. 42(4), s. 64(D), s. 64-UM

Subjects

tender awardlicence requirementInsurance Actjudicial reviewArticle 226arbitrarinesspublic interestcontract awardpre‑qualificationrelaxation of tender conditions

Judgment

A
MIS. MASTER MARINE SERVICES PVT. LTD.
v.
METCALFE AND HODGKINSON PVT. LTD. AND ANR.

B APRIL 19, 2005

[R.C. LAHOTI, CJ. AND G.P. MATHUR, J.]

Contract-Award of-For professional work-To a Company-After
C opening the tender-Another company-tenderer objecting to the award of
contract as the Company did not hold licence for carrying out the work-
Licence was in the name ofCliairman ofthe Company who was also appointed
as consultant by the Company-Contract awarded in discretion to relax the
tender conditions~98% of the work did not require licence-The financial bid
D ofthe Company was 25% lower than that ofthe other company-Writ Petition--
Award of contract quashed by High Court-In appeal, held: High C.ourt was
not justified in quashing the contract-In the facts of the case, no such public
interest was involved which may warrant interference by High Court in exercise
of its extraordinary jurisdiction while undertaking judicial review of an
administrative action relating to award of a contract-Constitution of India,
E Article 226.

The second respondent floated a limited tender for hiring professional
services.for survey of container and cargo. The contract was to be awarded
through two bid process i.e. 'Technical bid' and 'Financial bid'. After opening
F the Technical bid, the bid of appellant and first respondent was accepted.
Before awarding the contract, the Tender Evaluating Committee had doubt
with regard to surveyors licence of appellant Company under Insurance Act,
1938, as the same was not in the name ~f the Company. The appellant
informed that the licence had been issued in the name of Chairman of the
Company. After reconsidering the matter second respondent qualified both
G the tenderers for their technical capabilities. On opening of financial bid, the
bid of appellant was accepted as his bid was 25% lower than that submitted
by first respondent. Second respondent was also of the view that the major
work (98%) under the contract was of such nature for which no licence was
required. Hence, work was awarded to appellant.

H 666

-
)
---
MASTER MARINE SER. PVT. LTD. v. METCALFE AND HODGKINSON PVT. LTD. 667
First respondent had initially filed Writ Petition challenging the A
eligibility of the appellant to participate in the tender process on the ground
that the appellant did not have licence to act as a surveyor/loss assessor under
the Insurance Act. High Court dismissed the petition. Special Leave Petition
against it was also dismissed.

Thereafter first respondent filed another Writ Petition seeking quashing B
the award of contract to the appellant High Court allowed the petition holding
that the appellant did not fulfil an essential pre-qualification norm by not
having a licence as surveyor/loss assessor in its name; and thus the decision
of second respondent in accepting the tender of the appellant, being violative
of the equity clause of the Constitution, suffers from vice of arbitrariness.
c
In appeal to this Court, appellant contended that in view of the fact that
the licence-holder was the Chairman and Managing Director of the appellant
Company, holding 40.02% shares of the Company, and that the appellant
company had entered into an agreement whereunder the licence - holder·was
employed as consultant, it could not be said that the appellant did not hold D
the licence; and that High Court while exercising jurisdiction under Article
226 of the Constitution, had not acted under the well defined parameters of
judicial review of administrative action in setting aside the order of second
respondent in awarding the contract.

Allowing the appeal, the Court E
HELD : The High Court erred in setting aside the order of the second
respondent awarding the contract to the appellant The only ground on which
the High Court has quashed the decision of second respondent awarding the
contract to the appellant is that there was no licence to act as surveyor/loss
assessor under the Insurance Act, 1938 in favour of the appellant which is a F
company. This question was considered by the Tender Evaluation Committee
and it also took notice of the fact that there were only two bidders (the
appellant and the first respondent) in the tender and it would be desirable to
prevent the tender from lapsing into a single bidder tender. After receipt of
the reply from the appellant, the Committee again evaluated the tenders for G
pre-qualification bid and after noting that appellant is known to be an
established surveyor doing work for a number of shipping lines at its various
terminals and further that the person who had the licence, had been appointed
the Chairman of the Company, made a recommendation that both, t'1e
appellant and the first respondent may be qualified for their technical
capabilities. One of the instructions ~learly conferred a power upon second H
....
668 SUPREME COURT REPORTS [2005] 3 S.C.R.

A respondent to relax the tender conditions at any stage, if considered necessary,
for the purpose of finalizing the contract in overall interest of second
respondent and the trade. Therefore having regard to the fact that the
Chairman of the Company had a licence under the Insurance Act, the
condition regarding the holding of such a licence by the appellant itself, hr
B the facts and circumstances of the case, could be relaxed. So far as commercial
considerations are concerned, it is the specific case ofsecond respondent that
for 98% of the work under the contract the appellant had quoted the amount
lesser than that quoted by the first respondent and for this kind of work no
licence is required. In such circumstances, no such public interest was involved
which may warrant interference by .he High Court in exercise of its
C extraordinary jurisdiction under Article 226 of the Constitution while
undertaking judicial review of an administrative action relating to award of
a contract. (678-F; 678-A-E)

Tata Cellular v. Union of India, AIR (1996) SC 11; Sterling Computers
Ltd v. Mis. MN. Publication Ltd, AIR (1996) SC 51 - Raunaq International
D Ltd v. l VR. Construction Ltd, (1999) 1 SCC 492 and Air India Ltd v. Cochin
International Airport Ltd, (2000) 2 SCC 617, relied on.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1853 of 2005.

From the Judgment and Order dated 15.12.2004 of the Delhi High
E Court in W.P.(C) No, 9258 of 2004.

Mukul Rohtagi and Chetan Sharma, Manish Vashisht and Vikas Mehta
with him for the Appellant.

Ramesh P. Bhat, Inderbir Singh Alag, J.S. Lamba, R.S. Suri, R.K. Joshi
F and Sushi' :cumar Jain with him for the Respondents.

The Judgment of the Court was delivered by

G.P. MATHUR, J. I. This appeal, by special leave, has been preferred
against the judgment and order dated 15.12.2004 of Delhi High Court, by
G which the writ petition filed by the first respondent, Metcalfe & Hodgkinson ,-
Pvt. Ltd. was allowed and the contract of work of professional services given
by second respondent, Container Corporation of India in favour of the appellant
was quashed.

2. The second respondent, Container Corporation of India (for short
H 'CONCOR') floated a limited tend~ in December 2003 for hiring professional
I
MASTER MARINE SER. PVT.LTD. v. METCALFE AND HODGKINSON PVT. LTD. [G.P. MATHUR, J.] 669

services for survey of containers and cargo at Inland Container Depot (for A
short 'ICD'), Tughlakabad, Delhi, for a period of 24 months. The contract
was to be awarded through a two bid process. The first part was to consist
of "Pre-Qualification Bid", which was to be accompanied by various
documents showing experience, constitution of the firm/company, turn over
for past three years, a copy of the license to act as surveyor/loss assessor B
under the Insurance Act, 1938, besides other matters and earnest money in
the form of bank draft/pay order. The second part was to consist of the
"Financial Bid". The technical bid was to be opened on 15.12.2003 and the
financial bid was to be opened on 28.2.2004. After opening the technical bid,
the CONCOR pre-qualified two bidders, viz., the appellant and the first
respondent. Thereafter, the financial bid was opened. The bid of the appellant C
was Rs. 3.00 per container while that of the first respondent it was Rs.3.75
per container and as the appellant's bid was 25 per cent lower than that
submitted by the first respondent, its bid was accepted and the work was
awarded to it. The fist respondent initially filed Writ Petition (C) No.3687 of
2004 before the Delhi High Court challenging the eligibility of the appellant
to participate in the tender process, mainly on the ground that the appellant D
did not have a license to act as a surveyor/loss assessor under the Insurance
Act, 1938, and in support of this submission it was urged that on an earlier
occasion, the bid submitted by the appellant had been rejected on the said
ground. The High Court summarily dismissed the writ petition by observing
that in the meanwhile the appellant might have obtained the requisite license E
and the court cannot be asked to undertake a roving or fishing enquiry as it
is for the appropriate authority to consider and decide the matter in accordance
with law. The special leave petition preferred by the first respondent against
the said order was also dismissed by this Court on 5.5.2004.

3. Thereafter, the first respondent filed another writ petition on 27.5.2004 F
praying that the order passed by the second respondent awarding the contract
of survey of containers and cargo at ICD, Tughlakabad, Delhi and ancillary
facilities to the appellant pursuant to the tender notice dated 15.12.2003 be
quashed and a writ of mandamus be issued to the second respondent to award
the said contract to it (first respondent). The main plea taken in the writ
petition was that the appellant did not meet the eligibility criteria as it did not G

-- have a liecence to act as surveyor/ loss assessor under the Insurance Act,
1938. In the counter affidavit filed by the CONCOR, it was pleaded that both
the appellant and the first respondent did not fulfill the conditions mentioned
in the eligibility criteria in the tender. However, clause 12 of the Instructions
regarding submission of tender provided that the CONCOR had the power to H·
670 SUPREME COURT REPORTS (2005] 3 S.C.R.

A relax the tender conditions and exercising power under the said clause, it had
qualified both the bidders in public interest. It was further submitted that the
appellant had submitted copy of license from the Insurance Regulatory and
Development Authority (for short 'IRDA') in the name of Percy Meher Master.
The appellant had clarifief that the said license had been issued in the name
of Capt. Percy Meher Ma\ter in his capacity as proprietor of Master Marine
B Services. Subsequently, the said proprietorship concern had been converted
\
into a private limited company, of which Capt. Percy Meher Master was
1
appointed as Chairman. The Tender Evaluation Committee (for short 'TEC') '
had deliberated upon the said fact and after taking into consideration the fact
that the appellant was known to be an estab11shed surveyor doing work of
C number of shipping lines and that Capt. Percy Meher Master had been
appointed as Chairman of the Company by its Board, the tender committee
took a decision that the financial bids of both the bidders be opened. The first
respondent had enclosed two IICL certificates, but the same were not in
conformity with the tender conditions. It was further pleaded that the major
work (98%) under the contract is of data entry i.e. recording of .container
D number, seal number, condition of seal and external condition of container
on arrival and dispatch of containers from the ICD for which the appellant 1
had quoted Rs.3.00 per container against Rs. 3.75 of the first respondent and
for such kind of work no license under IRDA is required. Having regard to
the fact that the bid offered by the first respondent for external survey of a
E container, which is the. main work, was 25 per cent higher than that of the
appellant, the work was awarded to the appellant,

4. The appellant also filed a counter affidavit stating that Capt. Percy
Meher Master started a sole proprietorship business of marine and cargo
surveyors by the name of Master Marine Services in February, 1983. He had
F in his name a hcense to act as a surveyor/loss assessor under the Insurance
Act, 1938. As over the years the business had considerably increased, a
private limited company by the name of Master Marine Services Pvt. Ltd.
was formed on 6. IO. l 997, which took over the entire business of the
proprietorship concern. The main object of the company is to carry out ship,
G cargo and marine surveys and to act a:: loss assessors and technical consultants.
In the company 40.02 per cent shares are held by Capt. Percy Meher Master
and the remaining shares are held by his wife, son and daughter and all four
of them are directors in the company. It was also stated that an agreement
was entered into on 15.10.1997, whereunder Capt. Percy Meher Master who
is the Chairman and Managing Director of the company, would be employed
-
H as a consultant with the company and he will sign all survey reports on
MASTER MARINE SER. PVT.LTD.•. METCALFE AND HODGKINSON PVT. LTD. [G.P. MATHUR, J.] 671
behalf of the company. Besides this, several other pleas were also taken A
including a plea that the second writ petition was barred by the principles of
res judicata and Order 2 Rule 2 CPC as an earlier writ petition filed by the
first respondent had already been dismissed by the High Court and the special
leave petition preferred against the said order had also been dismissed.

5. The High Court after a detailed examination of the material on B
record held that the appellant had failed to fulfill an essential pre-qualification
norm as it did not have a license to act as surveyor/loss assessor in its name
under the Insurance Act. It was further held that the second respondent, the ·
CONCOR was bound to observe the eligibility criteria scrupulously and
consequently the bid of the appellant could not be entertained. It was C
accordingly held that the decision of the CONCOR to accept the tender of the
appellant being violative of the equity clause of the Constitution, suffers
from the vice of arbitrariness and, therefore, could not be sustained. The
High Court accordingly allowed the writ petition filed by the first respondent
and quashed the award of contract of professional services made in favour of
the appellant. It was, however, directed that in view of the fact that the D
appellant had already commenced the work, it could continue to do the work
assigned under the contract till the CONCOR reconsidered the bid submitted
by the first respondent. It was further directed that it will be open to the
CONCOR to negotiate with the first respondent the bid price and if they are
satisfied with their offer, the contract shall be awarded to them, failing which E
fresh tenders may be invited.

6. Learned counsel for the appellant has submitted that the only ground
on which the High Court has set aside the award of contract to the appellant
is that it does not possess a license to act as surveyor/loss assessor under the
Insurance Act, 1938. Initially in the year 1983, Capt. Percy Meher Master, p
who had a license to act as surveyor/loss assessor under the Insurance Act,
had started a sole proprietorship business in the name of Master Marine
Services. Subsequently, on account of increase in business, he formed a
private limited company in 1997 by the name of Master Marine Services Pvt.
Ltd. (appellant herein), which took over the entire business of Master Marine
Services (the sole proprietorship concern). Capt. Percy Meher Master holds G
40.02 per cent share holding in the said company and the remaining is held
by his wife, son and daughter who are all directors of the company. The
company had also entered into an agreement whereunder Capt. Percy Meher
Master, who is .also the Chainnan and Managing Director of the company,
will be employed as consultant. Having regard to these facts, it could not be H
672 SUPREME COURT REPORTS (2005) 3 S.C.R.

A said that the appellant did not hold a license to act as surveyor/loss assessor.
Learned counsel has further submitted that the tender document contained a
clause that the CONCOR had a right to relax the tender conditions. The TEC
after careful examination of the entire matter had approved the technical bid
of the appellant and. in view of the fact that the bid made by the appellant
was 25 per cent lower than that of the first respondent, the contract was
B awarded to it. It has thus been submitted that the High Court, while hearing
a writ petition under Article 226 of the Constitution, has not acted under the
well-defined parameters of judicial review of administrative action in setting
aside the order of the CONCOR in awarding the contract to the appellant.
The learned counsel for the first respondent has, on the other hand, submitted
C that the condition regarding holding of a license to act as surveyor/loss assessor
under the Insurance Act was an essential condition which could not be relaxed.
Section 64-UM of the Insurance Act mandates that no person shall act as
surveyor or loss assessor in respect of general insurance business unless he
holds a valid license issued to him by Insurance Regulatory and Development
Authority. Sub-section (D) of this Section lays down that no license to act as
D a surveyor or loss assessor shall be issued unless the applicant, where he is
an individual, satisfies the Authority that he possesses the qualification
enumerated in sub-clauses {a) to (g) and where the applicant is a company
or firm, it satisfies the Authority that all its directors and partners, as the case
may be, possess one or more qualifications as aforesaid and none of such
E directors or partners suffer from any of the disqualifications mentioned in
sub-section (4) of Section 42. Learned counsel has thus submitted that there
being no license in favour of the appellant, which is a company, its technical
bid ought to have been rejected and there was no occasion for considering
the financial bid made by it and in such circumstances the CONCOR erred
in awarding the contract to the appellant.
F
7. In order to appreciate the contention raised by the learned counsel
for the parties, it is necessary to briefly notice the relevant part of the tender
document. Chapter I deals with 'Instructions Regarding Submission Of The
Tender'. Para 2 gives a long list of documents which had to be submitted for
G pre-qualification bid. The relevant parts of para 1, para 2, para 3 and para 11
of the instructions are being reproduced below :

1. The tendering will be through a two bid process. Document duly
completed should be submitted in two parts.
2. First part will consist of "Pre-Qualification Bid" for tender for
H professional services for survey of cargo/containers for CONCOR
MASTER MARINE SER. PVT.LTD.''· METCALFE AND HODGKINSON PVT.LTD. [G.P. MATHUR. J.] 673

at ICD/TKD and should be superscribed as such. It should be A
sealed in a separate envelope, to be called envelope "A". The
envelope must contain the following documents :

(a) .............................................................................................. ..

B
(g) Copy of license to act as surveyor/loss assessor under
Insurance Act, 1938

3. The second part will consist of the "Financial Bid" for tender for
professional services for survey of containers and cargo for C
CONCOR at ICD/TKD and should be superscribed similarly on
the second envelope as such. Only the Schedule of Rates as given
in Annexure Ill should be completely filled up, signed and placed
in this envelope which should be sealed. This envelope will be
called Envelope "B".
D

11. CONCOR reserves the right to amend the tender document, if
considered necessary, with due intimation to respective tenderers
prior to the last date of submission. CONCOR also reserves the
right to extend the date of submission and opening of tender if E
considered necessary to allow reasonable time to the tenderers in
such cases.

CONCOR also reserves the right to

accept or reject any tender in part or in full without F
assigning any reason whatsoever.

Relax the tender condition at any stage if considered
necessary for the purpose of finalizing the contract in
the overall interest of the CONCOR and the trade.

Accept/reject any or all the technical ·bids or financial G
bids.

The tender document shows that the CONCOR had adopted a two bid
process for making selection and award of the contract. The first part consisting
of "pre-qualification bid" required submission of documents to show proof of H
674 SUPREME COURT REPORTS [2005] 3 8.C.R.

A experience, deposit of earnest money, constitution of the firm/company, turn
over for past three years, proof in support of having employed at least 20
persons including IICL certified supervisors for preceding three years. The
second part related to financial bid and this was to be considered only for
such tenderers who were short-listed in the pre-qualification bid. Para 2(g)
which has been quoted above, only required "a copy of license to act as
B surveyor/loss assessor under Insurance Act, 1938". It may be noted that the
tender document does not say that in case where a company has made a bid,
the license to act as surveyor/loss assessor under the Insurance Act must be
in the name of the company itself or that a license personally in the name of
the Chairman or a Director of a Company would not be treated as a valid
C compliance of the requirement of tender. Para 11 of the Instructions is
important. The CONCOR reserved the right to amend the tender document,
if considered necessary, with due intimation to the respective tenderers prior
to the last date of tender submission. The CONCOR also reserved the right
to relax the tender conditions at any stage, if considered necessary, for the
purpose of finalizing the contract in the overall interest of the CONCOR and
D the trade.

8. The Tender Evaluation Committee of the second respondent held a
meeting on 17. I .2004 where the technical bids of the appellant and the second
respondent were considered and recorded as under in the notings :

E "The documents given by Mis Metcalfe are perfectly in order. There
is slight ambiguity about one of the documents given by Mis Master
Marine Services. This concerns the surveyor license. The license is
issued in the name of Mr. Percy Meher Master who is the sole
proprietor of M/s Master Marine Serv.ices. The license issued by the
F IRDA mentions Mr. Percy as being the sole proprietor of Mis Master
Marine Services. As per our tender criteria, clause l(d), Chapter 2
(pg.6) mentions that the tenderer must have license to act as surveyor/
loss assessor under Insurance Act, 1938. The TEC feels that there are
only two bidders in this tender. It would be desirable to prevent this
tender from lapsing into a single bidder tender. Therefore, the TEC
G feels that, subject to the approval of Accepting Authority, Master
Marine Services can be asked to provide proof of the company, i.e.
Master Marine Services, having a survey license in the name of the
company. This might require the company to get an endorsement on
the license issued to Sh. Percy as per clause-3 of the license issued
by IRDA. The Committee feels that subject to Mis Master Marine
H
MASTER MARINE SER. PVT.LTD. v. METCALFE AND HODGKINSON PVT. LTD. [G.P. MATHUR, J.] 67 5

fulfilling this condition, both the bidders can be considered for short- P.
listing and date fixed for opening the financial bids by the accepting
authority.

This is without prejudice to Competent Authority's discretion to accept/
reject/modify/amend the Committee's recommendations."
p
A letter was thereafter sent to the appellant to provide proof that the
company is having a license in its name or an endorsement in the name of
the company in their subsisting license issued by the IRDA. The appellant
informed that the license had been issued in the name of Capt. Percy Meher
Master in his capacity as proprietor of Master Marine Services, who was now
the Chairman of the Company and a copy of the Resolution of the Board was C
also enclosed. The TEC then considered the matter again and recorded the
following in the minutes of the meeting :

"The TEC therefore, opines that Mis Master Marine Services Pvt.
Ltd. is known to be an established surveyor doing work for a number
of shipping lines at various CONCOR terminals. Moreover, Mr. Percy
Meher Master who was the sole proprietor of Mis Master Marine
Services has been appointed the Chairman of the Company by its
Board. Therefore, they do have adequate experience and credentials
to carryout the survey activities.

In view of the above, Tender Committee is of the opinion that we E
may qualify both the tenderers, Mis Master Marine Services Pvt. Ltd.
and Mis Metcalfe & Hodkinson Pvt. Ltd., for their Technical
capabilities. It is therefore recommended that the financial bids of
these two agencies can be opened on a date with due intimation to
both the bidders. F
Competent Authority may accept/reject/modify the recommendation
of the TEC as deemed fit."

The recommendation of the TEC was accepted and the appellant was
held to be qualified and the financial bids of the first respondent and the G
appellant were thereafter opened. As already stated, the financial bid of the
appellant was Rs. 3.00 as against Rs. 3. 75 of the first respondent for data
entry i.e. recording of container number, seal number, condition of seal and
external condition of container on arrival and dispatch of containers from the
ICD. It is also the case of the second respondent that the major work (98%)
under the contract is of the aforesaid nature for which no license under IRDA H
676 SUPREME COURT REPORTS [2005] 3 S.C.R.

l\. is required. Thereafter, the work was awarded to the appellant.
9. The principles which have to be applied in judicial review of
administrative decisions, especially those relating to acceptance of tender and
award of contract, have been considered in great detail by a three Judge
Bench in Tata Cellular v. Union of India, AIR (1996) SC 11. It was observed
B that the principles of judicial review would apply to the exercise of contractual
powers by Government bodies in order to prevent arbitrariness or favouritism.
However, it must be clearly stated that there are inherent limitations in exercise
of that power of judicial review. Government is the guardian of the finances
of the State. It is expected to protect the financial interest of the State. The
,.... right to refuse the lowest or any other tender is always available to the
Government. But, the principles laid down in Article 14 of the Constitution
have to be kept in view while accepting or refusing a tender. There can be
no question of infringement of Article 14 if the Government tries to get the
best person or the best quotation. 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 down. (See para
85 of the reports.)

After an exhaustive consideration of a large number of decisions and
standard books on Administrative Law, the Court enunciated the principle
that the modem trend points to judicial restraint in administrative action. The
E Court does 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
is permitted it will be substituting its own decision, without the necessary
expertise, which itself may be fallible. The Government must have freedom
p of contract. In other words, a fairplay in the joints is a 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 principles of reasonableness but must be free
from arbitrariness not affected by bias or actuated by mala tides. It was also
pointed out that quashing decisions may impose heavy administrative burden
G on the administration and lead to increased and unbudgeted expenditure. (See
para 113 of the reports.)

10. In Sterling Computers Ltd. v. Mis MN. Publications Ltd., AIR
(1996) SC 51 it was held as under :

H "While exercising the power of judicial review, in respect of contracts
MASTER MARINE SER. PVT.LTD. v. METCALFE AND HODGKINSON PVT. LTD. [G.P. MATHUR. J.] 677

entered into on behalf of the State, the Court is concerned primarily A
as to whether there has been any infirmity in the "decision making
process." By way of judicial review the Court cannot examine the
details of the terms of the contract which have been entered into by
the public bodies or the State. Court have inherent limitations on the
scope of any such enquiry. But at the s11me time the Courts can
certainly examine whether "decision making process" was reasonable B
rational, not arbitrary and violative of Article 14 of the Constitution.
If the contract has been entered into without ignoring the procedure
which can be said to be basic in nature and after an objective
consideration of different options available taking into account the
interest of the State and the public, then Court cannot act as an C
appellate authority by substituting its opinion in respect of selection
made for entering into such contract. .........."

IL In Raunaq International Ltd v. I. V.R. Construction Ltd., [1999]
sec 492 it was observed that the award of a contract, whether it is by a
private party or by a public body or the State, is essentially a commercial D
transaction. In arriving at a commercial decision, considerations which are of
paramount importance are commercial considerations, which would include,
inter alia, the price at which the party is willing to work, whether the goods
or services offered are of the requisite specifications and whether the person
tendering is of ability to deliver the goods or services as per specifications. E
12. The law relating to award of contract by State and public sector
corporations was reviewed in Air India Ltd v. Cochin International Airport
Ltd, [2000) 2 SCC 617 and it was held that the award of a contract, whether
by a private party or by a State, is essentially a commercial tnµ1saction. It can
choose its own method to arrive at a decision and it is free to grant any F
relaxation for bona fide reasons, if the tender conditions permit such a
relaxation. It was further held that the State, its corporations, instrumentalities
and agencies have the public duty to be fair to all concerned. Even when
some defect is found in the decision making process, the Court must 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 G
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 not. Only
when it comes to a conclusion that overwhelming public interest requires
interference, the Court should interfere.

H
678 SUPREME COURT REPORTS [2005) 3 S.C.R.

A 13. The only ground on which the High Court has quashed the decision
of CONCOR awarding the contract to the appellant is that there was no
license to act as surveyor/loss assessor under the Insurance Act, 1938 in
favour of the appellant which is a company. This question was considered by
the TEC in its meeting held on 17.1.2004. The TEC also took notice of the
fact that there were only two bidders (the appellant and the first respondent)
B in the tender and it would be desirable to prevent the tender from lapsing into
a single bidder tender. After receipt of the reply from the appellant, the TEC
again evaluated the tenders for pre-qualification bid and after noting that M/
s Master Marine Services Pvt. Ltd. is known to be an established surveyor
doing work for a number of shipping lines at various CONCOR terminals
C and further that Capt. Percy Meher Master, who had the license, had been
appointed the Chairman of the company, made a recommendation that both,
the appellant and the first respondent may be qualified for their technical
capabilities. It has to be borne in mind that para 11 of the Instructions clearly
conferred a power upon the CONCOR to relax the tender conditions at any
stage, if considered necessary, for the purpose of finalizing the contract in
D overall interest of the CONCOR and the trade. Therefore, having regard to
the fact that the Chairman of the company had a license under the Insurance
Act, the condition regarding the holding of such a license by the appellant
itself, in the facts and circumstances of the case, could be relaxed·. So far as
commercial considerations are concerned, it is the specific case of the
E CONCOR, which has not been disputed by the first respondent, that ninety
eight per cenr of the work under the contract is of data entry of a container,
for which the appellant had quoted Rs. 3.00 against Rs. 3.75 as quoted by_ the
first respondent and for this kind of work no license under !RDA is required.
In such circumstances, no such public interest was involved which may warrant
interference by the High Court in exercise of its extraordinary jurisdiction
F under Article 226 of the Constitution while undertaking judicial review of an
administrative action relating to award ofa contract. We are, therefore, clearly
of the opinion that the High Court erred in setting aside the order of the
CONCOR awarding the contract to the appellant.

14. For the reasons discussed above, the appeal is allowed with costs
G and the judgment and order dated 15.12.2004 of the High Court is set aside.
The writ petition filed by the first respondent is dismissed.

K.K.T. Appeal allowed.