The present appeals are preferred by Bharat Coking Coal Ltd. in consequence of their grievance against the order passed by a Division Bench of the High Court of Jharkhand at ...
No Acts & Articles mentioned in this case
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2197 OF 2020
[Arising out of Special Leave Petition(C)No. 11915 OF 2018]
The Bharat Coking Coal Ltd. & Ors. ..... Appellants
VERSUS
AMR Dev Prabha & Ors. .....Respondents
WITH
Civil Appeal No. 2198 of 2020 (Arising out of SLP(C) No. 12139 of
2018
WITH
Civil Appeal No. 2199 of 2020 (Arising out of SLP(C) No. 12867 of
2018
AND
Civil Appeal No. 2200 of 2020 (Arising out of SLP(C) No. 13321 of
2018
JUDGMENT
Page | 1
Leave Granted.
2.These appeals have been preferred by Bharat Coking Coal Ltd.
(hereinafter, “BCCL”) being aggrieved by the order dated 12.04.2018
passed by a Division Bench of the High Court of Jharkhand at Ranchi,
wherein a writ petition filed by AMRDev Prabha (Respondent No. 1)
had been allowed and the auction process conducted by M/s C1 India
Pvt Ltd (Respondent No. 4, hereinafter “C1India”) was set aside and
the resultant award of tender by BCCL to M/s RK Transport Co
(Respondent No. 6) had also been quashed.
FACTUAL BACKGROUND
3.BCCL, a subsidiary of Coal India Ltd, operates coking coal mines
in India and as part of its operations regularly outsources many
mining and processing functions to external entities. Such allocation
of tasks is done through competitive bidding processes, with
Respondent No. 4 [M/s C1 India Pvt Ltd (hereinafter “C1 India”) – an
online procurement facilitator] being appointed as the service provider
for etendering of its contracts.
4. A Notice Inviting Tender (“NIT”) was issued by the appellant on
09.03.2015 for purposes of ‘Hiring of HEMM for removal of OB,
extraction and transportation of coal with fire fighting from XIV, XII,
XI/XII, XII, XI, IX/X, V/VI/VII/VIII, IV/VIII, IV(T), IV(B), III, II I(T) and
Page | 2
I(B) seams at PatchDE (Mega Project) of DhansarEna colliery of
Kusunda Area along with crushing of coal by portable crusher’ (NIT No
312). An initial estimate of Rs 1694.84 crores was prepared by the
appellant, with the aim of contracting the firm which offered the
lowest cost estimate for fulfilment of the tender work.
5.The bidding was slated to be conducted on the online ereverse
auction platform of C1India on 04.05.2015 and 05.05.2015, with C1
India having near complete supervision and autonomy over the
auction process. In turn, C1India had hosted its server with Tata
Communications Ltd (“TCL”) which was also providing internet
connectivity through a leased line to C1India. As per terms of the NIT,
the auction would close at 6:00PM on 05.05.2015. However, the
auction would automatically terminate in case any particular bid went
unresponded for a period of 30 minutes. In case of any technical faults
at the service provider’s end, the auction period was to be paused and
extended by the period of the fault; however, bidders were to be
responsible for connectivity problems at their end.
6.Although the auction proceeded smoothly on the first day, on
05.05.2015 at around 12:55PM, C1India is stated to have received
certain telephone calls from various participants claiming that there
were connectivity problems leading to failure in submitting bids. An
email was thus sent by C1India to TCL at 12:59PM stating “my link is
Page | 3
down”. In response, TCL informed C1India through an email at
2:11PM that bandwidth issues had indeed been experienced owing to
a dual fiber cut in their intracity network as well as a fault in their
patch cord. In the interregnum, the last bid of Rs 2345 Crores made
by M/s AMRDev Prabha (Respondent No. 1) at 12:33PM went
unresponded for thirty minutes, and the auction was automatically
closed at 1:03PM.
7.Taking conscious notice of these technical issues communicated
by TCL and estimating that a lower price could be discovered had
such fault not arisen, C1India (allegedly with the concurrence of
BCCL officials) took a decision to restart the auction process at
2:30PM. Such resumption, with the possibility of extension of time,
was communicated to all bidders telephonically, as well as through
emails sent between 2:17PM and 2:36PM. Accordingly, various bids
were received by many participants, including numerous bids from the
now aggrieved Respondent No. 1 and the ultimately successful
Respondent No. 6. The auction proceeded to the extended time of 1
hour and 27 minutes (calculated as being the time of interruption
between the erroneous closure at 1:03PM and subsequent resumption
at 2:30PM), and Respondent No. 6 was declared successful with a bid
of Rs 2043 crores at 7:27PM.
Page | 4
8.This was communicated to BCCL, which then after assessing
eligibility of M/s RK Transport (Respondent No. 6, hereinafter “RK
Transport”), issued Letter of Acceptance (“LOA”) on 30.05.2015. As per
earlier agreed contractual terms, a Performance Bank Guarantee had
to be submitted within 28 days of receipt of LOA. Respondent No. 6
was unable to do so, and it requested BCCL to provide an additional
two months for compliance. The appellant returned the Earnest Money
Deposit (“EMD”) to all unsuccessful bidders, including Respondent No.
1, through speed post on 18.06.2015. Finally, the requisite guarantees
were submitted after a delay of 49 days, which was condoned by the
appellant and job was started on the ground.
9.Three months after closure of the auction, Respondent No. 1
preferred a Writ Petition before the High Court of Jharkhand at Ranchi
on 10.08.2015, praying for a declaration that it emerged as the
successful L1 bidder at 1:03PM on 05.05.2015, and for quashing of
the LOA issued by the appellant to Respondent No. 6 for being
arbitrary. Simultaneously, it was also prayed that directions be issued
to BCCL for awarding the contract to them and for conducting enquiry
into the entire matter.
10.During the pendency of the Writ Petition, Respondent No. 1
invoked Clause 20 of the NIT which provided for an integrity pact
under which two Independent External Monitors (“IEM”) had been
Page | 5
appointed. A report was received from one of these two IEMs on
23.09.2016 which held that there had been no technical problem and
that resumption of the auction process at 2:30PM was unjustified. It is
relevant to mention that this report was submitted by the first IEM,
acting unilaterally and without according hearing to C1India and RK
Transport.
11.Simultaneously, the appellant approached the second IEM who
post receiving response from all parties presented a divergent report
with the observation that there was no possibility of collusion and
noting that the interruption in bandwidth had been established and
thus the subsequent resumption by C1India was in consonance with
specified procedure.
12.In light of such conflict, BCCL first approached the
Standardization, Testing & Quality Certification (STQC) Directorate
seeking an audit, and later upon them expressing inability to do so
owing to the technical nature of the dispute; the appellant approached
the Director General of CERTIn (an independent body under the
Ministry of Communications & IT of the Government of India). An
‘Incident Analysis Report’ was consequently submitted by the CERTIn
to BCCL on 30.12.2015. This report broadly concurred with the
observations of the second IEM and found that the process was not
Page | 6
afflicted by collusion, and confirmed the existence of connectivity
problems which necessitated resumption of the auction process.
13.On 16.08.2017, the learned Single Judge dismissed the first
respondent’s writ, holding that a level playing field had been provided
by BCCL to all bidders; there indeed was a connectivity issue and the
subsequent resumption of auction was as per terms of the NIT; award
of contract to RK Transport was not arbitrary for not only was it L1
but also had offered a bid much better than that of AMRDev Prabha.
Further, the first respondent was held to have acquiesced to any
possible irregularity in the process by participating in the resumed
auction, and BCCL’s condonation of delay in submission of guarantee
by RK Transport was held to be permissible and in public interest.
14.This was challenged by Respondent No. 1, before a Division
Bench of the High Court. During the pendency of the letters patent
appeal, on 18.09.2017, counsel for AMRDev Prabha offered a lower
bid of Rs 1950 Crores for the job, which they portrayed as being far
better than their earlier bid of Rs 2345 Crores which they had made at
12:33PM on 05.05.2015. This, however, was refused by the appellant
and instead a work order was issued to Respondent No. 6 on
23.11.2017, who shortly afterwards commenced work.
Page | 7
15.The Division Bench allowed the appeal vide impugned judgment
dated 12.04.2018 and quashed the LOA issued by BCCL in favour of
RK Transport and held that all consequent work was invalid. The
Division Bench of the High Court further directed reconduction of the
auction and ordered a vigilance enquiry into the matter. Taking
cognizance of the ratio of RD Shetty v. International Airport
Authority of India
1
and Tata Cellular v. Union of India
2
wherein
this Court had elucidated the breadth and permissibility of judicial
review in tender matters, the High Court opined that it was concerned
not with the outcome but only the manner in which the decision to
award workcontract was arrived at.
16.Analysing the terms of the NIT, the High Court held that it was
the bidder’s responsibility to comply with system requirements, with
BCCL not being liable for any technical difficulties or connectivity
failures. Tender could be paused only in case of technological/system
failure at the service provider’s end and once concluded, could only be
revoked in limited circumstances. Not only were the complaints non
actionable for C1India was continuously connected to TCL which
meant there were no problems at the service provider’s end, but even
1
(1979) 3 SCC 489.
2
(1994) 6 SCC 651.
Page | 8
otherwise C1India failed to pause the auction process during the
crucial period which it ought to have as per the terms of the NIT.
17.Noting the absence of any call records or other proof of technical
complaints by the bidders, the delay in communication of resumption
of auction process (observing how emails were sent till 2:37PM
whereas auction resumed at 2:30PM), failure to revoke/cancel
declaration of AMRDev Prabha as L1 bidder and erroneous
calculation of the extended time (7:27PM instead of 7:35PM), the
Court held that BCCL and C1India failed to maintain the sanctity of
the auction process and committed serious illegality which raised
doubts on procedural propriety and indicated arbitrariness in the
decision making process. Such deviations from terms of the NIT were
held to not only be mere aberrations, but indicative of a complete lack
of fair play which affected integrity of the entire process, rendering it
contrary to public interest and consequently illegal.
CONTENTIONS OF PARTIES
18.Assailing the order of the High Court primarily on preliminary
counts, BCCL vehemently contended that the present case was not
one where judicial review was possible. It highlighted that the scope of
writ jurisdiction in contractual dealings of the State or its
Page | 9
instrumentalities was extremely limited, and deference to commercial
wisdom of the executive ought to be the norm. The decision making
process was shown as not being illegal as there was no allegation of
receipt of extraneous gratification or violation of any statute; nor
irrational as the decision of resuming the auction process to arrive at
a better price wasn’t such which would offend the sensibilities of a
reasonable person; nor arbitrary as there was substantial discretion
granted by the terms of the NIT. Respondent No. 1’s participation in
the tender process postresumption was contended to bind him from
making any further judicial challenge, and alternate remedies under
contract and civil law were demonstrated. It was further stated that
the entire process had been upheld by multiple independent
authorities, not least being the CERTIn and one of the two IEMs.
19.Adopting such stand, Respondent No. 4 (C1India) contended
that the slight delay in the decisionmaking process, wherein it did not
immediately take action, was because C1India as a responsible e
services provider was first attempting to determine whether the
interruption was at the bidders’ end or its own. By the time a response
had been received from the entity responsible for hosting and
connectivity (i.e. TCL), the auction had stopped by itself. Instead, it
was argued that upon receipt of written response from TCL at 2:11
PM, C1India expeditiously took a decision in consultation with BCCL,
Page | 10
and started informing all participants and resumed bidding at
2:30PM. It was underscored that no prejudice had been caused to any
bidder. Respondent No.1 had more than an adequate opportunity of
bidding, as it itself submitted eight bids during the resumed time
frame. Further, such participation combined with silence for three
months afterwards evidenced that AMRDev Prabha did not consider
itself to be L1 and the present legal challenge was nothing but
commercial opportunism. With regard to the calculation of extended
time, counsel for C1India submitted that such was immaterial as the
quantum of extension had uniformly been communicated to all
bidders, and everyone had the same information and hence an equal
opportunity. The resumption decision was claimed to have been taken
in good faith and upon a judicious consideration of all factors. It was
thought to be in public interest, and in retrospect, had only resulted
in substantial savings for the public exchequer.
20.Counsel for the appellant, along with that for C1India
highlighted how the goalpost was being changed by Respondent No.1
throughout the litigation. Whereas before the High Court AMRDev
Prabha sought adherence to terms of NIT and strict procedural
compliance, but later they wished to settle the matter at a lower price
claiming larger public interest. This was claimed to demonstrate how
AMRDev Prabha’s interest was, in fact, personal and not public, and
Page | 11
only to win the tender one way or the other and not to maintain the
sanctity of the auction process. The lack of onthespot protest,
neither during the auction process, nor at the time of availing refund
of the Earnest Money Deposit; and the substantial delay in filing the
writ petition (after more than 3 months of close of the auction process
and 2 months from issue of the LOA) was nothing but an afterthought
aimed at making a commercial opportunity out of litigation. Hence,
the present proceedings were claimed to be an abuse of the process of
law by AMRDev Prabha and only a chance for arm twisting BCCL to
award to it the tender, no better than a contractual enforcement of
private rights.
21.Instead, it was submitted, that any possible infirmity was merely
minor and inconsequential. There had been a substantive compliance
of the tender process and the Clauses of the Notive Inviting Tender
(NIT), and public interest of ensuring the lowest price discovery had
been kept at the forefront. It was contended that hyper technical
compliance was often not possible, nor desirable as oftenatimes
strict procedural compliance could defeat the ends of substantive
equality, like in the present case.
22.Reliance was placed on the CERTIN report to demonstrate lack
of any mala fide or tampering in the process. The interruptions at the
Page | 12
end of TCL were claimed to be but natural and a part of operational
inefficiencies which were not unheard of in etendering processes.
23.On the other side, Respondent No. 1 claimed that it had been
declared as the lowest bidder (L1) by virtue of automatic conclusion of
the auction process at 1:03PM, post which any resumption was
impermissible and contrary to contractual terms. Further, a colour
was sought to be cast, by claiming that such resumption was to
benefit particular parties. The refusal of BCCL to accept the new bid
which was more than Rs 400 crores less than the previous offer was
claimed to demonstrate this. Per AMRDev Prabha, public interest
ought to be prioritised, which according to Ram and Shyam Co v.
State of Haryana
3
would entail that the State instrumentality accept
the best available price, irrespective of formal technicalities.
24.No adverse inference could be drawn against Respondent 1’s
participation in the resumed bidding process as the resumption itself
was illegal. The auction was closed and not paused, and hence no
resumption of a closed bidding process was possible. Even otherwise,
it was asserted that grant of extension of 1 hour and 27 minutes was
wrong. The time should have been calculated from the time when the
internet was affected, which as per the appellant themselves was from
12:55PM as informed to them by TCL. Hence an extension of 1 hour
3
(1985) 3 SCC 267.
Page | 13
and 35 minutes (and not 1 hour and 27 minutes) was appropriate, per
which the auction ought to have concluded at 7:35 PM, and not 7:27
PM. Similarly, emails for resumption at 2:30PM, were shown as having
been sent to some participants at 2:17PM and to others at 2:36PM.
Further, two persons were claimed to have logged into the system at
2:29PM, that is, one minute before resumption of the eauction
process, which wrongly gave them an upper hand in the eauction
process. Other allegations were also made regarding login by one
entity using two accounts, which was contended as being
impermissible per the NIT.
25.All this was postulated to cast a serious cloud of doubt over the
entire auction process. Even during the pendency of the writ petition
before the High Court, instead of complying with an order dated
04.11.2015 to produce all relevant records, BCCL was said to have
impermissibly referred the matter to CERTIn. However, the first IEM
had held that the server of the appellant was well connected to the
server of the TCL and that there was no problem on the appellant’s
end which would necessitate stoppage or resumption of the auction
process.
26.On maintainability, although Respondent No. 1 admitted to
having alternate remedies, but it argued that there could be no hard
and fast rule preventing it from approaching writ courts. On the point
Page | 14
of delay, in their counteraffidavit, Respondent No. 1 has contended
that the cause of action arose after Respondent No. 6 failed to submit
the Performance Guarantee within 28 days per the tender clauses.
27.Substantial emphasis was placed on the offer made by the
Respondent No. 1 to the appellant during the course of hearing of the
writ petition, the rejection of which was claimed as being contrary to
public interest and settled law which aims at prioritising value
maximisation of the public exchequer.
ANALYSIS
28.Two clear issuesindispute arise from the above discussion. The
first pertains to the maintainability of the writ considering the nature
of tender processes, and the second concerns application of that
standard to the facts of the present case to determine whether there
were lapses on part of BCCL and C1India.
(I)Maintainability of Writ Petition
29.The scope of judicial review in tenders has been explored in
depth in a catena of cases. It is settled that constitutional courts are
concerned only with lawfulness of a decision, and not its soundness.
4
4
Central Coalfields Ltd. v. SLLSML (Joint Venture Consortium), (2016) 8 SCC
622; Siemens Aktiengeselischaft & Siemens Ltd. v. DMRC Ltd., (2014) 11 SCC
288.
Page | 15
Phrased differently, Courts ought not to sit in appeal over decisions of
executive authorities or instrumentalities. Plausible decisions need not
be overturned, and latitude ought to be granted to the State in
exercise of executive power so that the constitutional separation of
powers is not encroached upon.
5
However, allegations of illegality,
irrationality and procedural impropriety would be enough grounds for
courts to assume jurisdiction and remedy such ills. This is especially
true given our unique domestic circumstances, which have
demonstrated the need for judicial intervention numerous times.
Hence, it would only be the decisionmaking process which would be
the subject of judicial enquiry, and not the end result (save as may be
necessary to guide determination of the former).
30.This position of law has been succinctly summed up in Tata
Cellular v. Union of India (supra), where it was famously opined
that:
“77. ... Therefore, it is not for the court to determine whether a
particular policy or particular decision taken in the fulfilment of
that policy is fair. It is only concerned with the manner in which
those decisions have been taken. The extent of the duty to act
fairly will vary from case to case. Shortly put, the grounds upon
which an administrative action is subject to control by judicial
review can be classified as under :
(i) Illegality: This means the decisionmaker must understand
correctly the law that regulates his decisionmaking power and
must give effect to it.
5
Air India Ltd v. Cochin International Airport Limited (2000) 2 SCC 617.
Page | 16
(ii) Irrationality, namely, Wednesbury unreasonableness,
(iii) Procedural impropriety."
31.But merely because the accusations made are against the State
or its instrumentalities doesn’t mean that an aggrieved person can
bypass established civil adjudicatory processes and directly seek writ
relief. In determining whether to exercise their discretion, writ courts
ought not only confine themselves to the identity of the opposite party
but also to the nature of the dispute and of the relief prayed for. Thus,
although every wrong has a remedy, depending upon the nature of the
wrong there would be different forums for redress.
32.In cases where a constitutional right is infringed, writs would
ordinarily be the appropriate remedy. In tender matters, such can be
either when a party seeks to hold the State to its duty of treating all
persons equally or prohibit it from acting arbitrarily; or when
executive actions or legislative instruments are challenged for being in
contravention to the freedom of carrying on trade and commerce.
However, writs are impermissible when the allegation is solely with
regard to violation of a contractual right or duty. Hence, the persons
seeking writ relief must also actively satisfy the Court that the right it
is seeking is one in public law, and not merely contractual. In doing
so, a balance is maintained between the need for commercial freedom
Page | 17
and the very real possibility of collusion, illegality and squandering of
public resources.
33.Such a proposition has been noticed by this Court even earlier in
Jagdish Mandal v. State of Orissa
6
in the following words:
“22. Judicial review of administrative action is intended to
prevent arbitrariness, irrationality, unreasonableness, bias and
mala fides. Its purpose is to check whether choice or decision is
made “lawfully” and not to check whether choice or decision is
“sound”. When the power of judicial review is invoked in
matters relating to tenders or award of contracts, certain
special features should be borne in mind. A contract is a
commercial transaction. Evaluating tenders and awarding
contracts are essentially commercial functions. Principles of
equity and natural justice stay at a distance. If the decision
relating to award of contract is bona fide and is in public
interest, courts will not, in exercise of power of judicial review,
interfere even if a procedural aberration or error in assessment
or prejudice to a tenderer, is made out. The power of judicial
review will not be permitted to be invoked to protect
private interest at the cost of public interest, or to decide
contractual disputes. The tenderer or contractor with a
grievance can always seek damages in a civil court.
Attempts by unsuccessful tenderers with imaginary
grievances, wounded pride and business rivalry, to make
mountains out of molehills of some technical/procedural
violation or some prejudice to self, and persuade courts
to interfere by exercising power of judicial review, should
be resisted. Such interferences, either interim or final, may
hold up public works for years, or delay relief and succour to
thousands and millions and may increase the project cost
manifold.”
(emphasis supplied)
6
(2007) 14 SCC 517.
Page | 18
34.Such conscious restraint is also necessary because judicial
intervention by itself has effects of time and money, which if
unchecked would have problematic ramifications on the State’s ability
to enter into contracts and trade with private entities. Further, it is
not desirable or practicable for courts to review the thousands of
contracts entered into by executive authorities every day. Courts also
must be cognizant that oftenatimes the private interest of a few can
clash with public interest of the masses, and hence a requirement to
demonstrate effect on ‘public interest’ has been evolved by this Court.
7
35.It is thus imperative that in addition to arbitrariness, illegality or
discrimination under Article 14 or encroachment of freedom under
Article 19(1)(g), public interest too is demonstrated before remedy is
sought. Although the threshold for the latter need not be high, but it is
nevertheless essential to prevent bypassing of civil courts and use of
constitutional avenues for enforcement of contractual obligations.
36.In the present case, although it is clear that the Division Bench
of the High Court was cognizant of these principles surrounding scope
of judicial review, however, it failed to effectively evaluate whether
larger public interest was being affected. On the contrary, we feel that
7
Jagdish Mandal v. State of Orrisa, (2007) 14 SCC 517 ¶ 22.
Page | 19
the interest of Respondent No. 1 was purely private and monetary in
nature.
37.First, AMRDev Prabha’s initial prayer sought to nullify the
award of contract, which if granted, would have increased the sums
payable by the State instrumentality from Rs 2043 crores to Rs 2345
crores. Second, the conduct of Respondent No. 1 over the course of the
present proceedings, as highlighted by the appellants, further bolsters
the lack of public interest. Whereas initially the first respondent was
seeking quashing of the LOA issued to Respondent No. 6 owing to
arbitrariness on part of BCCL and on the ground that sanctity of the
auction process had been violated; later, before the Division Bench,
Respondent No. 1 sought to make a new offer of Rs 1950 Crores. This
shows how AMRDev Prabha’s priority was only to secure the contract
and not to uphold the law or protect larger public interest.
38.Even otherwise, granting such a prayer means that Respondent
No. 1 would have gotten a special opportunity of negotiation, to the
detriment of all other participants, which would probably be a more
egregious violation of equality envisaged under Article 14 than the
procedural adherence which they were initially seeking to protect.
39.Additionally, we are not impressed with the first respondent’s
argument that there is a certain public interest at stake whenever the
Page | 20
public exchequer is involved. There are various factors in play, in
addition to mere bidding price, like technical ability and timely
completion which must be kept in mind. And adopting such
interpretation would permanently blur the line between contractual
disputes involving the State and those affecting public law. This has
aptly been highlighted in Raunaq International Ltd. v. IVR
Construction Ltd.
8
“11. When a writ petition is filed in the High Court challenging
the award of a contract by a public authority or the State, the
court must be satisfied that there is some element of public
interest involved in entertaining such a petition. If, for
example, the dispute is purely between two tenderers,
the court must be very careful to see if there is any
element of public interest involved in the litigation. A
mere difference in the prices offered by the two tenderers
may or may not be decisive in deciding whether any
public interest is involved in intervening in such a
commercial transaction. It is important to bear in mind that
by court intervention, the proposed project may be considerably
delayed thus escalating the cost far more than any saving
which the court would ultimately effect in public money by
deciding the dispute in favour of one tenderer or the other
tenderer. Therefore, unless the court is satisfied that there is a
substantial amount of public interest, or the transaction is
entered into mala fide, the court should not intervene under
Article 226 in disputes between two rival tenderers.”
(emphasis supplied)
40.Further, the first respondent has failed to demonstrate which
public law right it was claiming. The main thrust of AMRDev Prabha’s
8
(1999) 1 SCC 492.
Page | 21
case has been on the fact that at 1:03PM on 05.05.2015 it was
declared the lowest bidder (or L1). However, being declared the L1
bidder does not bestow upon any entity a public law entitlement to
award of the contract, as noted in Maa Binda Express Carrier v.
NorthEast Frontier Railway
9
:
“8. The scope of judicial review in matters relating to award of
contracts by the State and its instrumentalities is settled by a
long line of decisions of this Court. While these decisions clearly
recognise that power exercised by the Government and its
instrumentalities in regard to allotment of contract is subject to
judicial review at the instance of an aggrieved party,
submission of a tender in response to a notice inviting such
tenders is no more than making an offer which the State or its
agencies are under no obligation to accept. The bidders
participating in the tender process cannot, therefore,
insist that their tenders should be accepted simply
because a given tender is the highest or lowest
depending upon whether the contract is for sale of public
property or for execution of works on behalf of the
Government. All that participating bidders are entitled to is a
fair, equal and nondiscriminatory treatment in the matter of
evaluation of their tenders. It is also fairly well settled that
award of a contract is essentially a commercial transaction
which must be determined on the basis of consideration that
are relevant to such commercial decision. This implies that
terms subject to which tenders are invited are not open to the
judicial scrutiny unless it is found that the same have been
tailormade to benefit any particular tenderer or class of
tenderers. So also, the authority inviting tenders can enter into
negotiations or grant relaxation for bona fide and cogent
reasons provided such relaxation is permissible under the
terms governing the tender process.”
(emphasis supplied)
9
(2014) 3 SCC 760.
Page | 22
41.Instead, precedent laid down by this Court in Master Marine
Services (P) Ltd v. Metcalfe & Hodg Kinson (P) Ltd,
10
illustrates that
if a prayer for rebidding is on account of a desire to get a better price,
then involvement of Article 14 of the Constitution would not be made
out.
42.Further, regular recourse was made over the course of
proceedings by learned senior counsel for the first respondent on
terms of the NIT. Findings in the impugned order too were based upon
disputed interpretation of such contractual terms. Thus, it is clear
that there was neither any public law right of the first respondent
which was affected, nor was there any public interest sought to be
furthered.
(II)Infirmities in the auction process
43.On merits also, we do not feel that the impugned order is correct
in its conclusion that there were substantial procedural lapses on part
of BCCL and C1India which amount to arbitrariness, and ought to be
remedied by way of judicial review.
44.Instead, having the benefit of a detailed inquiry report of the
Central Vigilance Commission (“CVC”), we are of the firm opinion that
10
(2005) 6 SCC 138.
Page | 23
both the appellant and Respondent No. 4 acted in a bona fide manner
and as per their abilities. Even if it is true that BCCL could have
assumed more responsibility and C1India could have exercised a
more proactive role in checking for internet issues, yet the possibility
of improvement can’t be a ground for striking down an authority’s
action. Additionally, no allegation of the decisions being accentuated
by illegal gratification, or otherwise being fraudulent or contrary to a
statute have either been clearly made or established.
45.It would thus be apt at this stage to reproduce the concluding
passage of fact finding enquiry conducted by CVC, which reads as
follows:
“It is significant to place on record that the notification of
closure of the reverse auction generated by system at 13:03:47
hrs on 05.05.2015 submitted by M/s AMR Dev Prabha, in fact,
belongs to another bidder M/s. Montecarlo Ltd. Neither BCCL
nor C1 India Pvt. Ltd. have ever placed such notification on
record. It remaims unclear as to how and when M/s. AMR Dev
Prabha got possession of this document, which actually
belonged to M/s. Montecarlo Ltd. and which became the basis
for M/s. AMR Dev Prabha to stake their claim of being the
lowest bidder at 13.03.47 hrs. It is also seen that this
important fact, of generation of notification of closure of the
auction by the system at 13:03:47 Hours, as the bid of M/s
AMR Dev Prabha remained unresponded for the specified
period of 30 minutes, was neither reported by C1 India to BCCL
nor to the participating bidders. Such, notification of closure of
the auction, even though generated during the period of
interruption in connectivity of the bidders with the server,
should have been declared as ‘null and void’ before restarting
the auction process. Even, BCCL did not demand any report
Page | 24
from C1 India Pvt. Limited for the interruption period so as to
take a call before proceeding further for restart of the reverse
auction process. Further, considering that during this period
BCCL was aware of the connectivity problem being faced by the
bidders, it should have exercised intense real time monitoring
which have not been done. Failure to do so is a reflection of the
fact the adequate incident management system was not put in
place by the service provider M/s. C1 India Pvt. Ltd. to handle
such eventuality effectively.
While there was lack of control and supervision on part of
BCCL, however, the Committee has not come across any
evidence suggesting malafide on their part. As regards to C1
India Pvt. Ltd., their conduct has been found to be far from
satisfactory.”
46.We do not deem it necessary to venture into the existence of
technical problems of limited bandwidth, for the same is a question of
fact. However, given the concurrent finding of the second IEM, CERT
In, TCL, as well as the CVC, we feel that the Division Bench erred in
holding that there were no technical difficulties. Furthermore, such a
conclusion is at odds with subsequent occurrences. A finding that
there were no internet problems implies that no other bidder deemed
it appropriate to counter the bid of Rs 2345 crores offered by
Respondent No. 1 at 12:33PM and that it was the competitively
determined lowest price. However, it is obvious that minutes into the
resumption of the auction process bids started coming in and more
than a dozen bids were received subsequently, with the last bid of Rs
Page | 25
2043 crores having been made mere seconds before closure of the
auction at 7:27PM.
47.With regard to other allegations concerning condonation of
Respondent No. 6’s delay in producing guarantees, we would only
reiterate that there is no prohibition in law against public authorities
granting relaxations for bona fide reasons. In Shobikaa Impex (P)
Ltd. v. Central Medical Services Society
11
, it has been noted that:
“… the State 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. It has been
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 decisionmaking
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 out
of a legal point.”
48.Even if there had been a minor deviation from explicit terms of
the NIT, it would not be sufficient by itself in the absence of mala fide
for courts to set aside the tender at the behest of an unsuccessful
bidder.
12
This is because notice must be kept of the impact of
overturning an executive decision and its impact on the larger public
interest in the form of cost overruns or delays.
11
(2016) 16 SCC 233.
12
Central Coalfields Ltd v. SLLSML (Joint Venture Consortium), (2016) 8 SCC 622
Page | 26
49.There is also no need to venture into questions concerning
quantum of extension of time. It is clear that the same message was
communicated by CI–India to all, stating that the auction process
would be extended by a period equivalent to the time between closure
of auction at 1:03PM and resumption at 2:30PM. Not only did such
uniform communication put all bidders on an equal footing, but there
was no possibility of any confusion given the clear wordings of the
email. When it is not the case of Respondent No. 1 that they thought
that auction would close at 7:35PM and hence they were taken by
surprise at the early closure, nor did they in fact highlight or object to
such interpretation over the course of the resumed auction process,
the question is moot and a finding ought not to be given on it.
50.Additionally, we also do not see merit in the justification for
delay in filing writ proffered by the first respondent. It is claimed that
the cause of action arose when Respondent No. 6 failed to submit
guarantees within a period of 28 days. However, we do not see how
that would allow AMRDev Prabha to challenge the entire process of
auction, or overcome the settled legal principle of privity of contract
between Respondent No. 6 and the appellant.
(III)Deference to authority’s interpretation
51.Lastly, we deem it necessary to deal with another fundamental
problem. It is obvious that Respondent No. 1 seeks to only enforce
Page | 27
terms of the NIT. Inherent in such exercise is interpretation of
contractual terms. However, it must be noted that judicial
interpretation of contracts in the sphere of commerce stands on a
distinct footing than while interpreting statutes.
52.In the present facts, it is clear that BCCL and C1India have laid
recourse to Clauses of the NIT, whether it be to justify condonation of
delay of Respondent No. 6 in submitting performance bank guarantees
or their decision to resume auction on grounds of technical failure.
BCCL having authored these documents, is better placed to appreciate
their requirements and interpret them.
13
53.The High Court ought to have deferred to this understanding,
unless it was patently perverse or mala fide. Given how BCCL’s
interpretation of these clauses was plausible and not absurd, solely
differences in opinion of contractual interpretation ought not to have
been grounds for the High Court to come to a finding that the
appellant committed illegality.
CONCLUSION
54.In light of the above discussion, the appeal filed by Bharat
Coking Coal Ltd, as well as connected appeals filed by M/s RK
Transport and M/s C1 India Pvt Ltd, are allowed. Resultantly, the
13
Afcons Infrastructure Ltd v. Nagpur Metro Rail Corporation Ltd, (2016) 16 SCC
818 at ¶ 15.
Page | 28
appeal filed by AMRDev Prabha is dismissed. The Division Bench
judgment of the High Court dated 12.04.2018 is setaside and the writ
petition filed by AMRDev Prabha is dismissed. No order as to costs.
……………………….. CJI.
(S. A. BOBDE)
………………………… J.
(B.R. GAVAI)
…………………………. J.
(SURYA KANT)
NEW DELHI
DATED : 18.03.2020
Page | 29
Legal Notes
Add a Note....