The Gauhati High Court held that Rule 4(1)(j) of the Assam Panchayat (Settlement of Seal Tenders) Rules, 2015 cannot be interpreted to mean that settlement of seal tenders is automatically capped at 10% over the average of the previous three years’ sealed tender rates, and that the provision does not operate as a statutory minimum bid requirement. The Division Bench clarified that the rule should be read as a guiding parameter for the settlement process rather than a rigid ceiling that the tender quoting authority must mechanically apply to all tenders without regard to prevailing market values or other relevant considerations. The Court emphasised that the objective of the rule is to ensure fairness, transparency and reasoned decision-making in settlement of sealed tenders, and that interpreting it as imposing an absolute rate cap or a mandatory minimum bid would defeat its purpose and create practical difficulties in administration of local bodies.
The dispute arose from a challenge to the settlement of a seal tender by a Panchayat body in Assam in which the tendered rate for grant of a commercial lease or right was fixed at an amount marginally exceeding the ten per cent figure relative to the average of rates realised in sealed tenders over the preceding three years. The petitioner contended that the rule clearly imposed a statutory cap of ten per cent above such average, limiting the authority’s ability to settle at any higher value, and that any settlement beyond that formula was void. Alternatively, the petitioner argued that the rule effectively fixed a minimum bid figure, compelling tendering authorities to accept only bids that met or exceeded the prescribed threshold.
In evaluating the provision, the High Court analysed the language and context of Rule 4(1)(j), which states that in settlement of sealed tenders, the settlement rate “shall not normally exceed” a figure equivalent to ten per cent above the average of the last three years’ realised rates. The Court observed that the statutory text does not mandate an absolute prohibition but rather incorporates the qualifier “shall not normally exceed,” indicating legislative intent to treat the guideline as an aspirational or normative benchmark rather than an inflexible ceiling. The High Court explained that interpreting the rule to operate as a strict cap or to create a minimum bid requirement would unduly constrain the discretion of Panchayat authorities, particularly where market conditions or the nature of the tendered rights demand higher considerations.
The Court further noted that the rule does not expressly prescribe any minimum bid floor, and to read such an implication into the text would be an unwarranted exercise in legislative substitution. It held that the absence of language fixing a mandatory minimum bid necessarily negates any such interpretation. The bench emphasised that tendering authorities must be free to consider a spectrum of factors, including current market trends, comparative values, demand patterns and equitable distribution of resources, when determining settlement rates, subject to the overarching principles of transparency and fairness.
In its reasoning, the High Court pointed out that administrative convenience alone cannot justify the rigid application of a formulaic cap that fails to accommodate situational realities. The Court held that the rule’s purpose is to provide a reasonable check or reference point, not to fetter the authority’s lawful discretion. It explained that the phrase “shall not normally exceed” necessarily contemplates that in exceptional or justified circumstances, rates may be fixed beyond the three-year average plus ten per cent, provided the reasons are recorded and the process remains transparent and rational.
Accordingly, the High Court rejected the petitioner’s contention that the rule fixed a statutory minimum bid or an absolute ceiling that automatically invalidates any settlement departing from the three-year average plus ten per cent figure. It clarified that tender-settlement authorities must apply the rule with due regard to its purpose and context, and that mechanical application of a formula without regard to substance would undermine the effective functioning of Panchayat governance. The Court’s ruling thereby affirms a purposive interpretation of the rule, aligning it with principles of reasoned administration and flexibility within prescribed guidelines.
In conclusion, the High Court held that while Rule 4(1)(j) serves as an important guide to sealed tender settlement and rate fixation, it does not operate as a binding ceiling or a minimum bid threshold, and authorities must exercise their discretion judiciously based on all relevant factors. The judgment underscores that tender settlement norms should not be applied in a rigid or formulaic manner but with an understanding of their intent to ensure fairness, transparency and equitable outcomes in local governance.
0 Comments
Thank you for your response. It will help us to improve in the future.