Labex K.K. International vs. State Of Gujarat

Held

The Court held that judicial review is concerned with the decision-making process and not the merits of the decision itself. It does not sit as a court of appeal and lacks the expertise to correct administrative decisions. The terms of an invitation to tender are generally not open to judicial scrutiny as they fall within the realm of contract. The Government must have freedom of contract, and decisions must be free from arbitrariness, bias, or mala fides, tested against principles like Wednesbury reasonableness. In this case, the Court found that the Corporation's decision could not be faulted based on the principles of judicial restraint and the nature of judicial review. The petitioner's contention that the selection was vitiated by arbitrariness was not substantiated to the Court's satisfaction. Therefore, the petition failed. The Court did not grant the relief of quashing the impugned decisions or amending the Acceptance Letter.

Facts

The petitioner, Labex K.K. International, a manufacturer of microscopes, participated in an e-tender floated by Respondent No. 2, Gujarat Medical Services Corporation Limited (GMSCL), for the supply of Binocular Microscopes. The petitioner's bid was selected at the preliminary and technical stages. During a meeting on December 27, 2017, the petitioner's representative allegedly agreed to absorb the Goods and Services Tax (GST) load without increasing the final offered price. Subsequently, on January 12, 2018, GMSCL issued an Acceptance Letter, stating the tender was accepted and the price was inclusive of GST. The petitioner later challenged decisions of Respondent No. 2, including an impugned decision dated January 2, 2019, and decisions from Board of Director meetings, seeking to quash them and amend the Acceptance Letter to reflect a specific GST amount per unit. The petitioner also sought to quash a decision of the High Level Purchase Committee.

Key Issues

1. Whether the decision of Respondent No. 2 to treat the petitioner's bid as qualified and subsequently issue the Acceptance Letter dated January 12, 2018, was vitiated by arbitrariness, bias, or mala fides, thereby warranting judicial review under Article 226 of the Constitution of India? 2. Whether the petitioner is entitled to a writ of mandamus to amend the Acceptance Letter to reflect a specific GST amount per unit, as calculated by the petitioner, despite the letter stating the price was inclusive of GST? Petitioner's Arguments: The petitioner contended that the decisions of Respondent No. 2 were arbitrary and sought to quash them. They also sought to amend the Acceptance Letter to reflect a specific GST amount of Rs. 3239.10 per unit, calculated at 18% on a base price of Rs. 17,995/-. The petitioner relied on the principle that judicial review is available to correct arbitrary administrative actions. Respondent's Arguments: The respondent argued that the petitioner's representative had agreed to absorb the GST load during the meeting on December 27, 2017, and that if the petitioner had refused, the Acceptance Letter would not have been issued. They asserted that the petitioner had conveniently omitted this crucial fact. The respondent also implicitly argued that the tender process and contract acceptance were within their domain and not subject to judicial interference on merits, citing principles of judicial restraint and the nature of judicial review.