Rajasthan High Court - Jodhpur
Jsw Cement Limited vs State Of Rajasthan & Ors on 29 May, 2018
1 [CW-12873/2017]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Civil Writ Petition No. 12873 / 2017
JSW Cement Limited, Regd. Office: JSW Centre, Bandra Kurla
Complex, Bandra (East), Mumbai 400 051 Through Its Authorised
Representative Shri. N Gopal Krishna (Vice President, Legal),
JSW Centre, Bandra Kurla Complex, Bandra (East), Mumbai 400
051.
----Petitioner
Versus
1. State of Rajasthan, Through the Joint Secretary, Department
of Mines (Gr. II), Khanij Bhawan, Shashtri Circle Udaipur 313001,
Rajasthan.
2. The Director, The Directorate of Mines and Geology, Khanij
Bhawan, Shastri Circle, Udaipur 313001, Rajasthan.
3. Additional Director (Geology ) HQ, Department of Mines &
Geology, Khanij Bhawan, Shastri Circle, Udaipur 313001,
Rajasthan.
4. Mineral State Trading Corporation Limited (MSTC), Head
Office: 225-C, A.J.C. Bose Road, Near Lamatinia School, Kolkata,
West Bengal 700020.
5. Mineral State Trading Corporation Limited (MSTC), Site Office:
CF/02, First Floor, Nehru Place Complex, Tonk Road, Jaipur
302015, Rajasthan.
6. Financial Advisor (Chairman, Transaction Advisory Committee),
Department of Mines & Geology, Khanij Bhawan, Shastri Circle,
Udaipur 313001, Rajasthan.
2 [CW-12873/2017]
7. M/s Ambuja Cement Limted, Ambujanagar P O, Taluka Kodinar
Dis Gir Somnath, Junagadh, Gujarat- 362715.
8. Mr. Dinesh Meel Sr. Manager, MSTC Ltd, Site Office: CF/02,
First Floor, Nehru Place Complex, Tonk Road, Jaipur 302015,
Rajasthan.
----Respondents
____________________________________________________
For Petitioner : Mr. Sudhir Gupta, Sr. Counsel assisted by
Mr. Ramit Mehta, Mr. Umang Gupta, Ms.
Shweta Chauhan, Mr. Tarun Dudia and Mr.
Saurabh Maheshwari
For Respondents : Mr. M.S. Singhvi, Sr. Counsel assisted by
Mr. D.D. Thanvi & Mr. Abhishek Mehta
Mr. Rishabh Tayal for Mr. K.L. Thakur,
A.A.G. Mr. Mahesh Thanvi
____________________________________________________
HON'BLE MS. JUSTICE NIRMALJIT KAUR
Reportable Date of Judgment :: 29th May, 2018 The writ petition has been preferred seeking quashing of the E-Auction held on 26.09.2017 in respect of auctioning of Block 3D1 in Tehsil Nagaur for grant of mining lease as well as declaration dated 29.09.2017 recommending respondent No.7 as the preferred bidder, with a further prayer to conduct fresh E- Auction.
The respondent No.2 - Director, Mines and Geology issued a Notice Inviting Tender (NIT) for the grant of mining lease under the provisions of Section 10B/11 of Mines and Mineral (Development and Regulation) Amendment Act, 2015 and in accordance with Mineral (Auction) Rules, 2015 whereby the mineral blocks for the purpose of grant of mining lease for 3 [CW-12873/2017] mineral lime stone through E- auction were notified for inviting bids in digital format only from eligible bidders. In pursuant to the issuance of the NIT, the petitioner company got itself registered on the website of respondent MSTC and obtained its login ID and password. The mining department of State of Rajasthan issued a tender document to all prospective bidders setting out terms and conditions to carry out E-auction for grant of a mining lease for mineral specified therein.
The respondent No.4 and 5 being Mineral State Trading Corporation Ltd. (Commonly known as MSTC) is a mini ratna category -1 PSU under the administrative control of the ministry of Steel, Government of India. The said company acts as a regulating authority for export of ferrous scrap. The State Government had authorised the respondent MSTC for conducting electronic auction through its platform as per Rule 7 of the Mineral (Auction) Rules, 2015.
The grievance of the petitioner-company is twofold:
(a) For no fault of the petitioner company and solely on account of the failure of the loop connectivity, the petitioner company was wrongfully deprived from placing a higher bid in comparison to the bid placed by the respondent No.7. For meeting exigencies, a contact person was nominated in the website of the MSTC. The petitioner contacted the concerned person i.e. respondent No.8 before the expiry of 8 minutes, but he miserably failed to take remedial measures and further did not halt the bid process until
4 [CW-12873/2017] loop was reconnected.
(b) The E-auction process and subsequent declaration of respondent No.7 as 'preferred H1 bidder' has caused irreparable loss and injury not only to the petitioner, but also to the respondent No.1 Government of Rajasthan, in as much as, there is huge loss of almost Rs.2000 crores in revenue by way of price premium as the petitioner on date is ready to start the bid from 50 onwards which has presently been accepted at 41.60.
As per the facts of the case, after completing all the necessary formalities of submitting bank guarantee to the tune of Rs.9,08,93,886/- in accordance with the requirement of tender document the petitioner company submitted its technical bid. On 22.09.2017, the petitioner JSW Cement Limited, Mumbai along with respondent No.7 - M/s. Ambuja Cement Limited, Gujarat and Adani Cementations Limited, Gujarat were declared as technically qualified. On 26.09.2017, the conduct of ascending forward electronic auction and submission of Final Price Offer on electronic auction platform was fixed as per the amended time table. Thereafter, the petitioner company logged into the server of MSTC and started registering its bid.
For understanding the controversy, it would be appropriate to reproduce the conduct of E-auction which reads as under:-
"b. Conduct of e-auction:
E-auction is the process of inviting binding Final Price Offer(s) from Qualified Bidders through internet for the purpose of determination of the Preferred Bidder. During this process, the Qualified 5 [CW-12873/2017] Bidder will be able to submit its Final Price Offer as many times as it wishes against the same mineral block. The Qualified Bidder will remain anonymous to other Qualified Bidders participating in the electronic auction process as well as to MSTC/State Government. The Qualified Bidder will be able to see the prevailing highest Final Price Offer against the mineral block, but the name of the highest Qualified Bidder at any point of time will not be displayed. The Qualified Bidder shall have to put its Final Price Offer over and above the displayed highest bid by a minimum increment of [0.05%] to become the highest Qualified Bidder. The electronic auction process will have a scheduled start and close time which will be displayed on screen. A qualified bidder will be able to put its Final Price Offer after the start of bid time and till the close time of electronic auction. The current server time (IST) will also be displayed on the screen. In the event a Final Price Offer is received during the last 8 (Eight) minutes before the scheduled close time of electronic auction, the close time of electronic auction will be automatically extended by 8(eight) minutes from the last received bid time to give equal opportunity to all other qualified bidders. This process of auto extension will continue till no Final Price Offer is received during a period of 8 (Eight) minutes."
In the present case, the bid for determining the highest bid was to start at 11.00 am uptill 2.00 pm. Thereafter, as per the tender terms of the tender document, the block of 8 minutes become operative after 2.00 pm and if there is no higher bidder 6 [CW-12873/2017] within those 8 minutes, then the last bid would become the highest bid. In case, a person made a higher bid within those 8 minutes, time got extended by another 8 minutes from that point when the next bid was offered within 8 minutes.
As per the contention of the learned counsel for the petitioner, the petitioner quoted the figures from time to time so as to ensure at any given interval of time, its bid is the highest. The bid continued throughout the day without any break. When the petitioner tried to give a higher quote at around 6.33 pm, the connectivity to website ceased. The representatives of the petitioner company entered the figure of 41.65 in designated window and tried to click the Bid Button, it turned non- responsive to the input. Thereafter the petitioner tried to refresh log out and log in again but the login to MSTC website did not happen. Despite repeated attempts, the petitioner did not succeed as the website itself become non responsive. The representatives of the petitioner company panicked and immediately called respondent No.8 - Sr. Manager, MSTC. Thereafter, the petitioner also sent a formal complaint on the same day at 8.50 pm to respondent mining department along with the copy to respondent No.8 and other concerned persons of the respondent MSTC. The petitioner company lodged another complaint vide E-mail dated 27.09.2017 reiterating the facts but the respondent No.3 proceeded to recommend respondent No.7 as the preferred bidder vide declaration dated 29.09.2017.
This Court may note that at the time of issuance of notice of 7 [CW-12873/2017] the writ petition, the learned counsel for the petitioner company made a statement at the bar before this Court that the petitioner company is ready to offer the bid from 50.00 onwards.
All the respondents have filed their respective replies. As per the reply filed by the respondent-State, the complaint made by the petitioner company was gone into and it came to be established that there was no system failure during the aforesaid hours. In pursuance to the complaint of the petitioner-company, the respondent No.1 - Joint Secretary, Department of Mines wrote a letter on 27.09.2017 to the E- Auction Service Provider Company -MSTC and sought their explanation. In turn, the service provider company replied that the system of the service provider company was absolutely in working order and there was no technical fault nor was there any interruption caused by any fault and there was no problem at the end of the server because as many as 473 offers of 19 auctions were accepted by the system during the said period. Therefore, the respondent No.7 was rightly declared as a highest bidder.
A joint reply has also been filed by respondents No.4,5 and 8 being MSTC and Shri Dinesh Meel - Sr. Manager who was impleaded as respondent No.8 by name. While denying the allegation of the petitioner company, it was submitted that no complaint was lodged by the petitioner till the expiry of the scheduled period of bid. Further, there was no plausible reason for halting the auction proceedings. It was denied that the 8 [CW-12873/2017] answering respondent was duty bound to have halted and put on hold the on-going e-auction process in the facts and circumstances as pleaded by aruging that the entire e-auction is conducted by the them through its server situated at Kolkata. It is IBM Power Series 740 server and there is another backup server for disaster recovery at Bombay which is in the nature of rescue and recovery server and copies all activities. The technical capabilities and efficiency of the server is at par excellence, time tested and beyond any doubt. The server is high power series server capable of handling huge concurrent loads both at the data centre at Kolkata and disaster recovery server at Bombay. The capability of the server can be appreciated by the mere fact that it handles and records more than 10000 concurrent hits within nano seconds. Thus, the functioning efficiently of the server of the answering respondent is beyond any pale of doubt.
The respondent No.8 - Shri Dinesh Meel also appeared in person and filed his additional affidavit. He tried to explain that during the bid process, the petitioner had logged in at wrong link of General E-Auction given at the website of the answering respondent while the petitioner was required to log in at the link of MLCL Login for submitting right bid. The respondent No.8 referred to the details of the login by petitioners during the said duration to contend that there was no fault at the server side.
Reply has also been filed on behalf of respondent No.7. Mr. M.S. Singhvi, learned Senior Advocate assisted by Mr. D.D. Thanvi appearing on behalf of respondent No.7 while vehemently 9 [CW-12873/2017] opposing the prayer of the petitioner raised the following arguments:
(a) Scope of judicial review vis.a.vis disputed questions of fact involved is settled and no longer res-integra. The allegation in respect of system error at the end of the service provider itself calls for an enquiry which requires leading of cogent evidence and therefore, the same cannot be a subject matter of the instant writ petition under Article 226 of the Constitution of India.
Reliance was placed on the judgments rendered by this Court in the cases of M/s. K.R. Berwal & Sons. Vs. The Bharat Petroleum Corporation Limited (S.B. Civil Writ Petition No.9293/2017) decided on 24.11.2017, Suman Choudhary Vs. Indian Oil Corporation & Ors. (S.B. Civil Writ Petition No.12556/2017) decided on 3.11.2017 as well as M/s. GIS Consortium India Pvt. Ltd. Vs. State of Rajasthan & Anr. (S.B. Civil Writ Petition No.3405/2016) decided on 20.05.2016 to contend that non-submission of online bid by the petitioners cannot be attributed to the respondents and therefore, any interference would be highly unjustified.
(b) As per Rule 9(4)((b)(iii) of the Mineral (Auction) Rules, 2015.- "the qualified bidder who submits the highest final price offer shall be declared as the "preferred bidder" immediately on conclusion of the auction." The respondent No.7 having been declared as the preferred bidder, it was no more open for challenge and nor was it liable to be cancelled.
10 [CW-12873/2017] Reliance was placed on the judgment rendered by the Division Bench of this Court in the case of M/s. Shiv Shankar Company Vs. State of Rajasthan & Ors. (D.B. civil Special Appeal (writ) No.118/2013) decided on 22.4.2013 vide which the appeal against the order of learned Single Bench was allowed on the ground that learned Single Bench could not allow the impleadment of a party simply on noticing its willingness to offer a higher bid.
(c) In pursuance to the Mineral (Auction) Rules, the tender process was required to be conducted through E-Auction as stipulated in the NIT. It is evident from the condition b of the NIT that "The Qualified Bidder will remain anonymous to other Qualified Bidders participating in the electronic auction process as well as to MSTC/State Government. The Qualified Bidder will be able to see the prevailing highest Final Price Offer against the mineral block, but the name of the highest Qualified Bidder at any point of time will not be displayed." Thus, there was no scope of malafide.
(d) As per the same conduct of E-Auction, the bidder is required to possess a valid Digital Signature Certificate (DSC) of signing type to be able to submit its Bid and to participate in the electronic auction of MSTC website. A bidder is required to authorise its contact person to procure a class III DSC. The petitioner company was obviously not logging in by correct name and it was in those circumstances that the same went to General E-Auction instead of correct MLCL login. The document Annexure-
11 [CW-12873/2017] R/4 placed on record by the State Government shows that the petitioner company was not logging under the valid signature, therefore same was sent to scrap. There is no averment that they were bidding with the digital signature which reveals that there was serious fault in the system of the petitioner itself in the entire process of bidding. Respondent No.7 remained logged in using the MLCL log in and logged in a total of 6 times during the entire bidding process. The petitioner logged in a total of 29 times during the whole bidding process sometimes using the MLCL login and sometimes using the General auction login. From the logged in details provided in reply to the private respondent RTI Application, it becomes clear that once the petitioner logged in using the MLCL login, the log in was successful, however when the petitioner logged in using the General Auction Login, the same would fail. Thus, the failure of the petitioner to log properly was the fault of the petitioner company and not at the end of the service provider.
(e) From the logging details, it become clear that there was no problem/glitch at the end of the server of MSTC in as much as, the e-auction continued not only for the site in question but other auctions were also going on the same server. They were going on even beyond 18:40 hours and successfully concluded. The private respondent placed its bid of 41.60 at 18.31 hrs after which no further bid was recorded in the server. The certificate dated 29.09.2017 issued by MSTC further supports their stand vide which it is certified that at the time the auctioning/bidding 12 [CW-12873/2017] process was being conducted, the system operating at the end of MSTC was in "perfect working condition, free from any snag, glitches, hold-up or the likes.". The averments made by the petitioner that the designated representative of MSTC was contacted by it is absolutely unfounded and baseless in as much as, when the server was working proper and other bidding processes were also going on, there was no question of any fault at the end of MSTC.
(f) There is no allegation of malafide in the writ petition. The petitioner tried to improve and make the allegation of malafide by filing rejoinder and taking a totally different plea. Neither the communication dated 26.09.2017 and nor the letter dated 27.09.2017 states that the fault was at the end of MSTC. This has been only alleged in the rejoinder as an afterthought.
(g) There is no provision for negotiation. Hence, the argument of the learned counsel for the petitioner that they are ready to offer a bid from 50 onwards cannot be accepted. It is a statutory auction. There is no violation of any rule. Hence, the very offer at this stage cannot be accepted, more so, when there was no such offer made by the petitioner either in their letter or in the writ petition. No grievance was raised by the petitioner for almost 02 hours of the acceptance of the bid offered by the respondent No.7 which further shows that the stand of the petitioner is an afterthought. The bidding process has to attain finality at some stage and entertaining of the present writ petition will encourage future unsuccessful bidders to challenge the same on such flimsy 13 [CW-12873/2017] and baseless grounds.
Learned counsel for the parties were heard at length. The first question before this Court in the circumstances is the scope of judicial review in such matters.
I may refer to some of the judicial pronouncements on the subject as cited before this Court.
In M/s. Kasturi Lal Lakshmi Reddy & Ors. Vs. State of Jammu and Kashmir & Anr. :: (1980)4 SCC1, the validity of order was assailed on behalf of the petitioner in the said case on the ground of public interest besides other grounds. In the said case, huge benefit had been conferred on the respondents at the cost of the State. The action of the Government in the said case was held as unreasonable and lacking in public interest as the Government gave out the contract for a consideration less than the highest that could have been obtained for it. The petitioners in the said case were aggrieved by the handing over the contract to an outside party that offered to take all the untapped forests in the State by offering more price than offered by others. The State did not accept this offer made by the petitioners and decided to go ahead with giving tapping contract in respect of these blazes to the respondents therein. The Apex Court in this case upheld the stand of the State on the conclusion that the contract to the respondent was in public interest as the respondent had agreed to provide resources and other facilities for the purpose of setting up an industry which would have long 14 [CW-12873/2017] way in the State like Jammu and Kashmir.
In the case of Rajasthan Housing Board & Ors. Vs. G.S. Investment & Ors. :: (2007) 1 SCC 477, the State Government had disapproved the auction and ordered fresh auction as there was sufficient material before the State Government to show that the past plots in the area past plots in the area had fetched a price of Rs.10,000/- per square meter whereas the respondents had offered only Rs.5750/- per square meter. The Apex Court while upholding the action of the State in public interest observed in para 11 as under:-
"The sale of plots by the Rajasthan Housing Board by means of an auction is essentially a commercial transaction. Even if some defect was found in the ultimate decision resulting in cancellation of the auction, the court should exercise its discretionary power under Article 226 of the Constitution with great care and caution and should exercise it only in furtherance of public interest. The court should always keep the larger public interest in mind in order to decide whether it should interfere with the decision of the authority. In the present case there was enough material before the State Government to show that in the past plots in the area had fetched a price of Rs.10,000/- per square meter and the highest bid made by the respondent in the present case was nearly half, i.e., Rs.5750/- per square meter, which clearly indicated that the auction had not been conducted in a fair manner. If in such a case the State Government took a decision to disapprove the auction held and issued a direction for holding of a fresh auction, obviously the said decision was taken in
15 [CW-12873/2017] larger public interest. In these circumstances there was absolutely no occasion for the High Court to entertain the writ petition and issue any direction in favour of the contesting respondent. The orders passed by the learned single Judge on 4.8.2004 and the order passed by the Division Bench of the High Court on 23.9.2004 are clearly erroneous in law and are liable to be set aside."
In Tata Cellular Vs. Union of India :: (1994) 6 SCC 651, the Court observed that the State has the right to refuse the lowest or any other tender as long as it applies the principle of Article 14 of the Constitution. There was no question of infringement of Article 14 of the Constitution if the Government tries to accept and offering the best person or the best quotation. Para 70 and 71 of the said judgment clarifies that principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness and favoritism. Para 70 and 71 reads thus :
"70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favoritism. 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
16 [CW-12873/2017] 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.
71. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justifiable and the need to remedy any unfairness. Such an unfairness is set right by judicial review."
The Apex Court in case of Meerut Development Authority Vs. Association of Management Studies and Anr. :: (2009) 6 SCC 171, allowed the appeal of the Meerut Development Authority upholding the decision to reject the tender of the respondent on the ground that offer made was lower than the reserved price and allowed it to re-auction with following observations:-
"49. The letter dated 4.3.2002 from AMS to MDA indicating the acceptance of Rs. 690/- per sq. meter only after one Harpal Singh Chowdhary on behalf of the Officer's Class Housing Society had mentioned a higher price of Rs. 775/- per sq. meter in his representation. There is nothing on record to suggest that impugned decision has been taken only for making higher financial gain and profit. But what is wrong even if any such effort was made by MDA to augment its financial resources.
50. We are, however, of the opinion that the effort, if 17 [CW-12873/2017] any, made by MDA to augment its financial resources and revenue itself cannot be said to be unreasonable decision. It is well said that the struggle to get for the State the full value of its resources is particularly pronounced in the sale of State owned natural assets to the private sector. Whenever the Government or the authorities get less than the full value of the asset, the country is being cheated; there is a simple transfer of wealth from the citizens as a whole to whoever gets the assets `at a discount'. Most of the times the wealth of a State goes to the individuals within the country rather than to multi- national corporations; still, wealth slips away that ought to belong to the nation as a whole.
51. Society's repeated representations are of no consequence and the MDA was not under any legal obligation to reopen the tender process which otherwise stood terminated. The MDA, in its meeting dated 15.3.2002 considered the request of the Society as well as the alternative offer but neither of them was accepted. MDA after careful deliberation decided to dispose of the land through fresh tender-cum- auction for residential use after giving wide publicity."
Mr. M.S. Singhvi learned Senior Counsel while contending that the Court has no expertise to go into the procedure of e- auction and the technical glitch which requires enquiry and investigation placed reliance of the judgment in the case of Bharat Earth Movers & Transporters Vs. Eastern Coalfields Ltd. and Ors. :: (2017)1 WBLR(Cal)22 decided by the learned Single Bench of Calcutta High Court wherein it was held that e- auction is to be held strictly in terms of the notice inviting tender 18 [CW-12873/2017] and the plea to hold re-tender on such issue is wholly misconceived and untenable.
Reliance was also placed in the judgment rendered in the case of Glodyne Technoserve Limited Vs. State of Madhya Pradesh and others :: (2011) 5 SCC 103. In the said case, the second lowest bidder was awarded the contract. The same was upheld. The said case does not help in the facts of the present case as the appellant - higher bidder in the said case did not have the valid and active ISO certificate and was accordingly held ineligible.
Similarly, reliance is placed on the judgment rendered in the case of Raunaq International Ltd. Vs. I.V.R. Construction Ltd. and Ors. :: (1999) 1 SCC 492. The said case also does not support the case in hand wherein the judicial relief was denied at the instance of a party which did not fulfill the requisite criteria and in any case, it was not found in public interest as the same would have led to stopping of a project which was likely to seriously affect the industrial development. The judgment relied on in the case of Master Marine Services(P) Ltd. Vs. Metcalfe & Hodgkinson(P) Ltd. & Anr. :: (2005) 6 SCC 138 rather supports the cause of public interest which lays down that the Court should exercise its discretionary power under Article 226 in furtherance of public interest and not merely on the making out of a legal point.
A number of other judgments have also been cited. There is no dispute with the proposition of law laid down in the 19 [CW-12873/2017] said judgments. However, each one of them is on the facts of that case and finally they all zero down to only one conclusion that even if, there is a defect in the decision making process, the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on account of some legal infirmity and should keep larger interest in mind before deciding whether its intervention is called for or not.
In the case of Jagdish Mandal Vs. State of Orissa & Ors. reported in (2007)14 SCC 517 as relied on by both the parties, it was held that before invoking the power of judicial review 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 where equity and natural justice has no place. It will not be invoked to protect private interest. Interference in tender is called for only in case the process is malafide, arbitrary and public interest is affected. Para 22 of the said judgment which is a consistent view in all judicial pronouncements reads thus:-
"Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. 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
20 [CW-12873/2017] 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. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions :
i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone.
OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say : 'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached.' 21 [CW-12873/2017]
ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under Article 226. Cases involving black- listing or imposition of penal consequences on a tenderer/contractor or distribution of state largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."
Thus, the limited scope of judicial review by the High Court as settled by the legal propositions of law requires the examination of the three following questions before proceeding to interfere in any such tender, award or contract;
(i) Whether the process is arbitrary or malafide;
or
(ii) Whether the decision is irrational and in accordance with the relevant law and rules;
(iii) Whether the public interest is affected. This Court therefore proceeds to see whether there was arbitrariness or malafide in the process to favour someone.
All the parties in order to prove their respective stand have relied on the document Annex.R/4 placed on record by the State which are the login details of Ambuja Cements Ltd and JSW Cement Ltd. qua the status from 09.50 hrs. to 19.44 hrs. For convenience, it would be appropriate to reproduce the relevant extract of the same:
S. IP Successful Remarks Comments
No. Login Time
1 10.4.20.227#fe80::c534:c921:f6ef 2017-09-26 SCRAP General Auction Login
22 [CW-12873/2017]
:ff72#fkip->203.187.225.36 09:50:15.244322
2 10.4.20.227#fe80::c534:c921:f6ef 2017-09-26 SCRAP General Auction Login
:ff72#fkip->203.187.225.36 10:21:25.725669
3 10.4.20.227#fe80::c534:c921:f6ef 2017-09-26 SCRAP General Auction Login
:ff72#fkip->123.63.47.57 10:33:12.984398
4 10.4.20.227#fe80::c534:c921:f6ef 2017-09-26 SCRAP General Auction Login
:ff72#fkip->203.187.225.36 10:39:41.208041
5 10.4.21.172#fe80::bc73:8135:374 2017-09-26 CN NAME: NARINDER MLCL Login
0:252a#fkip->203.187.225.22 10:51:35.416548 SINGH KAHLON
Cert
Serial:1f253a420200afea
6 10.4.22.28#fe80::c528:dacd:257: 2017-09-26 SCRAP General Auction Login
543f#fkip ->203.187.225.36 10:53:23.926184
7 10.4.21.172#fe80::bc73:8135:374 2017-09-26 CN NAME: NARINDER MLCL Login
0:252a#fkip-->123.63.47.57 11:29:43.235984 SINGH KAHLON
Cert
Serial:1f253a420200afea
8 10.4.21.172#fe80::bc73:8135:374 2017-09-26 CN NAME: NARINDER MLCL Login
0:252a#fkip-->123.63.47.57 11:30:36.709718 SINGH KAHLON
Cert
Serial:1f253a420200afea
9 10.4.21.172#fe80::bc73:8135:374 2017-09-26 CN NAME: NARINDER MLCL Login
0:252a#fkip->203.187.225.22 11:31:31.118372 SINGH KAHLON
Cert
Serial:1f253a420200afea
10 10.4.21.172#fe80::bc73:8135:374 2017-09-26 CN NAME: NARINDER MLCL Login
0:252a#fkip->203.187.225.22 11:45:14.748614 SINGH KAHLON
Cert
Serial:1f253a420200afea
11 10.4.21.172#fe80::bc73:8135:374 2017-09-26 CN NAME: NARINDER MLCL Login
0:252a#fkip->123.63.47.57 12:32:53.071634 SINGH KAHLON
Cert
Serial:1f253a420200afea
12 10.4.21.172#fe80::bc73:8135:374 2017-09-26 CN NAME: NARINDER MLCL Login
0:252a#fkip->123.63.47.57 14:01:19.389199 SINGH KAHLON
Cert
Serial:1f253a420200afea
13 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
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14 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
0:252a#fkip->123.63.47.57 18:33:56.566514
15 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
0:252a#fkip->123.63.47.57 18:34:50.007498
16 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
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17 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
0:252a#fkip->123.63.47.57 18:35:47.399387
18 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
0:252a#fkip->123.63.47.57 18:36:23.840637
19 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
0:252a#fkip->123.63.47.57 18:36:54.840351
20 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
0:252a#fkip->123.63.47.57 18:37:25.828433
21 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
0:252a#fkip->123.63.47.57 18:38:02.679886
22 10.4.21.172#fe80::bc73:8135:374 =A1:C30+A1:3 SCRAP General Auction Login
0:252a#fkip->123.63.47.57 0=B102017-09-
26
18:38:34.5836
17
23 10.4.22.28#fe80::c528:dacd:257: 2017-09-26 SCRAP General Auction Login
543f#fkip ->203.187.225.36 18:38:58.37755
24 10.4.21.172#fe80::bc73:8135:374 2017-09-26 CN NAME: NARINDER MLCL Login
0:252a#fkip->203.187.225.22 18:39:05.833792 SINGH KAHLON
Cert
Serial:1f253a420200afea
23 [CW-12873/2017]
25 10.4.22.28#fe80::c528:dacd:257: 2017-09-26 CN NAME: NARINDER MLCL Login
543f#fkip ->203.187.225.36 18:46:58.081718 SINGH KAHLON
Cert
Serial:1f253a420200afea
26 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
0:252a#fkip->203.187.225.22 19:36:37.375686
27 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
0:252a#fkip->123.63.47.57 19:42:33.224149
28 10.4.21.172#fe80::bc73:8135:374 2017-09-26 SCRAP General Auction Login
0:252a#fkip->123.63.47.57 19:42:46.269502
29 10.4.21.172#fe80::bc73:8135:374 2017-09-26 CN NAME: NARINDER MLCL Login
0:252a#fkip->123.63.47.57 19:44:15.504844 SINGH KAHLON
Cert
Serial:1f253a420200afea
A perusal of the same shows that the online bid started at 11:00 am and after the submission of first bid at 11:08:51 AM, petitioner company logged out and logged in using the same IP address laptop (10.4.21.172) for six times and for all the times (i.e. between 10:51:35 am to 12:32:53am), the petitioner was successful while log in and log out. The time bound bidding was scheduled to start at 14:00:00 pm on 26.09.2017. Hence, the next highest bid of 25.25% from respondent No.7 was submitted at 13:52:32 pm. Subsequently, petitioner submitted the next highest bid of 25.30% at 13:56:53 using the same IP address laptop (10.4.21.172). Thereafter, the petitioner company logged in to MSTC website again at 14:01:19 PM using IP address laptop (10.4.21.172) as the time bound (eight minutes) interval bidding had commenced and it continued in the way. The petitioner submitted highest bid of 41.55% at 18:27:05 PM. Thereafter, the problem of technical glitch arose at crucial moment after respondent No.7 gave the last bid at 18.31 of 41.60. It could not log in thereafter. This restrained the petitioner from making further higher bid. Surprisingly, it started working after 08 24 [CW-12873/2017] minutes was over at 18.39.
On the basis of the above document, it was submitted by Mr. Sudhir Gupta, learned Senior Counsel appearing on behalf of the petitioner that in case the petitioner company could log in successfully till 14:01:19 PM, there is no reason as to why the petitioner could not continue to make a successful bid thereafter. This was only because of some technical glitch prevailing at the server system of the respondent No.8. The petitioner company at the first instance informed respondent No.8 before expiry of 08 minutes about the technical glitch that had cropped in the midst of E-Auction but the respondent No.8 conveyed to the petitioner company that nothing can be done as only 50 seconds were left. The petitioner also made a complaint in writing of the technical glitch that occurred in the midst of the procedure of the E-auction to the authority within two hours but their complaint was ignored. Surprisingly, the State wrote a letter to respondent No.8 to issue it a certificate that there was nothing wrong with the server which shows that they all were hand in glove, otherwise, there is no reason for the State to ignore a higher offer.
While referring to the same document, learned counsel for the respondent No.7 in whose favour the highest bid was preferred submitted that the petitioner knowingly did not send the same under the correct name and therefore the same went in General Auction. There was no chance of malafide as respondent No.8 did not know who was bidding. None of the party giving the bid is visible at the site of the server.
25 [CW-12873/2017] After hearing the learned counsel for the parties, this Court is of the opinion that the petitioner company had no reason to log in at the wrong site or under a wrong name. The petitioner contacted the concerned authorised person of MSTC before the expiry of 08 minutes and 50 seconds were still left. They also filed a complaint in the next two hours to the appropriate authority with copies to all other relevant parties. It was followed by another complaint on the very next day stating that they were more aggressive in their bid from the very start and from 2 PM to 18.30 PM they were giving bid mostly within one minute interval whereas other bidder was taking more than 5 minutes but the auction got prematurely concluded. However, both respondent No.8 and State showed their helplessness to do anything and went ahead to declare M/s. Ambuja Cement as the preferred bidder. Reliance of the respondent-State on the certificate issued by the respondent No.8 that everything was in order at their end has no sanctity as same has been issued by the concerned MSTC itself. The sequence of events as above show absolute bonafide on the part of the petitioner.
To say that the petitioner was logging in under the wrong name too is difficult to accept, inasmuch as, the petitioner company is not novice in the field. In the case of Maharashtra Housing Development Authority Vs. Shapoorji Pallonji and Company Private Limited and others :: (2018) 3 SCC 13 as relied upon by the learned counsel for the respondents the Court refused to interfere as they found that there was no problem in 26 [CW-12873/2017] the server during the relevant time period because as many as 427 bid documents were uploaded between the relevant time on the said date. In the present case, there was only two bidders and the petitioner was not able to log in the last 08 minutes but surprisingly after the 08 minutes were over, the login went through which does look suspicious. Although it may not be possible to fix the responsibility on the respondents in the absence of any enquiry, we cannot shut our eyes to the fact that there was a technical glitch. There is also no reason to doubt the expertise of the petitioners who are admittedly no novice in the field and had participated in the bids of the same block and have been regularly participating which is also evident from the table reproduced in the earlier part of the judgment showing that they managed to succeed in the subsequent bid of the same adjoining block held on 5.2.2018. The fact that there is every possibility that the petitioners would have gone much much higher than the bid 41.6 is evident from the subsequent bids made by them of the adjoining block to the extent of as high as 60.10. They were runner up in the previous bid in September, 2016 wherein they had given the bid of 59.79. No wonder, they made the offer at the time of issuance of notice to the tune of 50 onwards.
Reliance placed by the learned counsel for the respondent on the judgments rendered in the cases of M/s. K.R. Berwal & Sons. (supra), Suman Choudhary (supra) and M/s. GIS Consortium India Pvt. Ltd. (supra) do not help in the facts of the 27 [CW-12873/2017] present case. The said judgments were passed after noticing that the petitioners in the said cases had not taken any immediate steps. There was no allegation of malafide and moreover the very fact that 09 out of 11 participants had managed to submit their online form well within the time and there was no fault at the side of the respondent. In the present case as stated above, there were only two participants left. In case, there were more than two participants and one of them had been able to log in during the last 08 minutes, whereas the petitioner was not able to do so, it may have been a different story.
Hence, in the given facts and circumstances as also lack of expertise available with the Court, it is not possible for the Court to ascertain as to whether the fault was at the end of server or at the end of petitioner but at the same time, it cannot be denied that there was indeed a technical glitch and the petitioner was restrained from making a genuine and bonafide higher offer on account of the same. Having said that, the fact that the respondent No.8 did not immediately react to the call made by the petitioner does leave one wondering. This Court may note that the respondent No.8 appeared in person and admitted before this Court that he had received a telephone call before the lapse of 08 minutes. The lapse and inaction on their part to act immediately on receiving the call is a great cause of concern because in case their inaction is overlooked by the authorities now and ignored, the same is likely to be misused in future. Next time, someone just might cut off the login to help another. The 28 [CW-12873/2017] argument of the respondents that it is not visible on server side as to who is bidding does not rule out a possibility of other ways to inform through various other modes of communication to the concerned person in case one actually wants to play an unfair game. Hence, a complaint received before cut off time could not have been ignored and the authority needed to handle the situation in a better way. It is therefore evident that there was negligence, inefficiency and total lack of expertise at the end of respondent server to handle a situation where a bidder was vigilant enough to inform well in time about the technical glitch.
In view of the above, what now needs to be seen next is whether the decision made by the authorities in the circumstances was reasonable and in accordance with the rules or arbitrary and irrational.
As per Rule 9(4)(b)(iii) of the Mineral (Auction) Rules, 2015, "the qualified bidder who submits the highest final price offer shall be declared as the "preferred bidder" immediately on conclusion of the auction." Whereas, Rule 10(3) lays down the condition for declaring the preferred bidder as the successful bidder. Rule 10(4) permits an agreement to be signed with the State Government only after all consents, approvals, permits, no- objections and the like as may be required under applicable is obtained.
This makes it clear that a preferred bidder does not succeed till he satisfies all the conditions. The condition No.1.8 of the 'Important Information' given in the NIT specifically states that 29 [CW-12873/2017] the State Government is not bound to select a bidder or to appoint the preferred bidder as the successful bidder. The Same reads :
"The issue of this Tender Document does not imply that the State Government is bound to select a Bidder or to appoint the Preferred Bidder as Successful Bidder for the mineral block and the State Government reserves the right to reject all or any of the Bidders or bids without assigning any reason whatsoever."
As per clause 17.2.1(a) of Other Provisions of the NIT, the State Government in its sole discretion and without incurring any obligation or liability, reserves the right to suspend and cancel the tender process as under:-
"(a) suspend and/or cancel the tender process and/or amend and/or supplement the tender process or modify the dates or other terms and conditions relating thereto;"
Therefore, there is no vested right of the respondent No.7 just because he has been declared as a 'preferred bidder'. The declaration of preferred bidder is open to challenge and recall. In the present case, it is already discussed above that the petitioner company was quick to file their complaint within 08 minutes(The limited time schedule). They managed to call Mr. Dinesh Meel, Sr. Manager - respondent No.8 on his mobile as the authorised person for any such snag. The complaint too was lodged within two hours. It was followed by another complaint on the very next 30 [CW-12873/2017] day. Throughout the bidding, the petitioner company appears to be aggressive bidders. They were neither lethargic nor waited for the conclusion of the tender process and decided to complain about irregularity and arbitrariness and the timely inaction on the side of respondent No.8. The fact that their bid went into the General Auction shows that the petitioner company continued to make effort. The respondent No.8 could have always paused the e-auction process when he came to know that the petitioner company was not able to log in and 50 seconds were still left prior to closing. It was well within the State to make an enquiry in the prevailing situation specially if the petitioner company was able to show the heavy loss the State exchequer was about 1900-2000 crores due to the technical glitch faced by the petitioner. The State knew that adjoining blocks had gone for 67 and above whereas the present had been closed at 41.60 only. In such like cases, the State could have been more careful while making the decision which besides being irrational also smacks of absolute arbitrariness. There was no reason to be in haste keeping in view the public interest involved.
Applying the test laid down in the various legal pronouncements as above, this Court needs to finally examine as to whether it was in public interest to direct a fresh re-auction beginning from a minimum of 50 onwards or uphold the decision of the State in accepting the respondent No.7 as preferred bidder.
31 [CW-12873/2017] Coming back, the other limestone mining blocks adjacent to the present block 3D1 were finalised at much higher percentage, on an average of 62.71 against the present auction value of 41.6 for subject Block 3D1. The petitioner company itself has bagged a bid for the adjoining block 3B2 for a bid of 60.10%. The petitioners have also placed on record the comparative charge showing the bids for all the blocks around the block 3D1 which is necessary to be referred to in order to show the comparison.
"COMPARATIVE CHART PROJECTING BID AUCTIONS OF OTHER NEIGHBORING BLOCKS TO BLOCK 3D1 AND THE BID FIGURE BEING FINALIZED TO BE HIGHEST S.No. Particulars 3B1(b) 3B1(a) 3D1 3B2 (present case) 1 Participants 1.Emami 1. Emami 1. Ambuja 1. JSW Cement Ltd. Cement Ltd. Cement Ltd. Cement Ltd.
2. JSW 2. JSW 2. JSW 2. ACC Cement Ltd. Cement Ltd. Cement Ltd. Cement Ltd.
3. Manglam 3. Star 3. Adani 3. JK Laxmi Cement Ltd. Cement Ltd. Cementation Cement Ltd.
s Ltd.
2 Date of auction 22.09.2016 06.01.2017 26.09.2017 05.02.2018 3 Area (ha) 247.87 267.62 357 470.00 4 Resource (Million 168.84 126.95 199.154 205.53 Tonnes) 5 Bid Figure(%) 60.09 67.94 41.6(B) 60.10 6 Average of highest 62.71 bid (3 blocks)(A) Difference in 21.11 bids(A-B) 7 Loss to Govt. Rs.456.4/- per ton of Limestone as per value of Exchequer resource mentioned by tender document approximately INR 1918.7Cr.
From the above, it is evident that the bidders were participating in the e-auction at a much higher level than has been given to the respondent. This Court cannot but agree with 32 [CW-12873/2017] the argument of the learned counsel for the petitioner that in case, the petitioner company was allowed to continue with the bid, there was 100% chances of the same also reaching at least to the level of 60 and beyond as is evident from the comparative chart of the bidders of the adjoining blocks just prior to the present bid and that also, 9-12 months ago. As noticed above, the learned counsel for the petitioner company stated that they were ready to start from 50 onwards. The inaction of the respondent No.8 to act on time has ultimately affected the revenue of the exchequer and public interest has been sacrificed at the cost of gain to an individual. The likely loss which is not disputed is around 1900-2000 crores. This Court is surprised with the stand of the State supporting to uphold the bid which is as low as 41.6 as compared to the highest bid of the adjoining blocks going upto approximately 67.94 and that too few months prior to the present auction. Thus, the declaration of respondent No.7 to be preferred bidder is at the cost of heavy loss of revenue to the State exchequer and against the public interest.
In the circumstances, this Court cannot shut its eyes and ignore the public interest which stands to suffer in case the State is not stopped from finalising the contract with respondent No.7. The Mineral (Auction) Rules, 2015 duly permit cancellation and recall specially when no vested right is created till as such time the bid is finalised and approved. In any case, individual interest cannot be watched in face of such a huge loss to public exchequer. Hence, keeping the public interest involved as upper 33 [CW-12873/2017] most in the present case, the order dated 29.09.2017 of declaration is set aside. The respondent authorities are directed to re-auction with the minimum start at 50.00 subject to an undertaking given by the petitioner to the effect that 50.00 will be the accepted offer of the petitioner and petitioner company will not be allowed to back out in case the authority does not go beyond 50.00.
The writ petition is allowed as observed above.
(NIRMALJIT KAUR)J. Praveen/ PS