The Andhra Pradesh High Court has reiterated that the Government or State can enter into contract with any person it chooses but no individual can claim fundamental right to carry on business or trade with the government.

The High Court has also held that the terms and conditions imposed by the authorities could not be interfered with as it was the best judge to decide, depending upon the nature of the contract.

The Bench of Justice Ravi Nath Tilhari referred to the decision of Supreme Court in the case of Tata Cellular v. Union of India (1994) 6 SCC 651 wherein it was held that "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-administrative sphere. However, the decision must not only be tested by the application of principle of reasonableness but must be free from arbitrariness not affected by bias or actuated by mala fides."

The Bench remarked that “...formulation of tender invitation conditions i.e as to what conditions are to be incorporated falls within the administrative domain of the authority. The scope of judicial review of such conditions is limited.”

Advocate P. Sai Surya Teja appeared for the petitioner and Standing Counsel V.R. Reddy appeared for the respondents.

In this case, writ petition was preferred challenging certain conditions in a tender notice issued by Superintendent Engineer (SE) of Kadapa Operation Circle. The tenders were invited for scanning, printing and serving of Spot Bills in consumer premises. The petitioner claimed to be qualified and willing to apply for the tender but contested that condition no. 2 and condition no. 19 of the tender notice were illegal and arbitrary.

The Counsel for the petitioner contended that the conditions imposed infringed upon the principles of fairness and equality on public procurement and violated the fundamental right to trade.

On the other hand, counsel for the respondent submitted that the tender conditions were fair and did not breach the principles of equality. Further it was submitted that any person who met the eligibility criteria could participate in the tender process and would have to comply with the same conditions as all other participants.

The High Court said that the petitioner's submission that the conditions violated the fundamental right to practice any profession, trade or business under Article 19(1)(g) of the Constitution was unsustainable as it is well settled in law that no person could claim a fundamental right to carry on business or trade with the Government.

Citing several authorities, the High Court said that the terms and conditions of a tender were prescribed by the Government bearing in mind the nature of contract and in such matters, the authority calling for the tender was the best judge to prescribe the terms and conditions of the tender. It was not for the Court to say as to whether the conditions prescribed in the tender under consideration were better than the one’s prescribed in the earlier tender invitations.

Therefore, the High Court observed that “...only because previously, there were no such tender conditions as 2 and 9 or in the present form that does not deprive the authorities to impose conditions different from the earlier tender invitation conditions.”

Accordingly, the Writ Petition was dismissed.

Cause Title- Nallacheruvu Obulesu v. State of Andhra Pradesh

Click here to read/download the Judgment