Gujarat High Court
Goldstone Infratech Limited vs State Of Gujarat & 2 on 22 February, 2018
Bench: M.R. Shah, A.Y. Kogje
C/SCA/2097/2018 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 2097 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE M.R. SHAH sd/
and
HONOURABLE MR.JUSTICE A.Y. KOGJE sd/
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1 Whether Reporters of Local Papers may be allowed to see YES
the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law as NO
to the interpretation of the Constitution of India or any
order made thereunder ?
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GOLDSTONE INFRATECH LIMITED....Petitioner(s)
Versus
STATE OF GUJARAT & 2....Respondent(s)
=============================================
Appearance:
MR MIHIR THAKORE, SR. ADVOCATE with MR SHALIN MEHTA, SR. ADVOCATE with MR
SAHIL M SHAH, ADVOCATE for the Petitioner
MR RONAK RAVAL, ASSISTANT GOVERNMENT PLEADER/PP for the Respondent(s) No. 1
MR KAMAL TRIVEDI, SR. ADVOCATE with MS SK VISHEN, ADVOCATE for the Respondent(s)
No. 3
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE A.Y. KOGJE
Date : 22/02/2018
CAV JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) Draft amendment allowed.
[1.0] There shall be a formal order of Rule. Ms. Sangita Vishen, learned Assistant Government Pleader waives service of notice of Page 1 of 67 HC-NIC Page 1 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT Rule on behalf of the respondent Nos.2 and 3. In the facts and circumstances of the case and looking to the urgency more particularly under the Scheme if the Letter of Intent is not issued for purchase of the Electric Buses in question on or before 28.02.2018, the respondent Nos.2 and 3 are likely to loose the subsidy, with the consent of learned Counsel appearing for respective parties, the matter is finally heard.
[2.0] By way of this petition under Article 226 of the Constitution of India, the petitioner - one of the bidder who has submitted the bid for selection of bus operator for procurement, operation and maintenance of MIDI AC fully built pure electric buses on Gross Cost Contract basis has prayed for the following reliefs.
"a. Issue a writ of mandamus or any appropriate writ, order or direction, directing the respondents to appropriately vary the conditions of the request for proposal dated 19.01.2018, more particularly specified in para5 of the petition, so as to enable the petitioner to participate in process of procurement initiated under the said request for proposal dated 19.01.2018;
b. Issue a writ of mandamus or any appropriate writ, order or direction, directing the respondents to modify clause 4.1 in VolumeI of the Request for Proposal, to the effect that a consortium of minimum of three bidders may be permitted to participate in the tender process; c. Issue a writ of mandamus or any appropriate writ, order or direction, directing the respondents to modify Page 2 of 67 HC-NIC Page 2 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT Clause 7.1(a) to VolumeI of the Request for Proposal to the effect that, the foreigner technology partner can be partner of the consortium in the tender process; d. Issue a writ of mandamus or any appropriate writ, order or direction, directing the respondents to modify Clause 7.3(a)(i) to VolumeI of the Request for Proposal to the effect that, OEM or its technology partner or its operator should have delivered / jointly operated at least 100 Electric buses over the last five financial years including financial year 201718 either in India or across the world;
e. Issue a writ of mandamus or any appropriate writ, order or direction, directing the respondents to modify Clause 7(a)(ii) to VolumeI of the Request for Proposal to the effect that, the net worth should be equivalent to Rs.50 Crores as on 31.03.2017 as per the audited certificate or the consortium shall collectively possess a net worth equivalent to at least 100 Crores as on 31.03.2017 as per the audited certificate;
f. Issue a writ of mandamus or any appropriate writ, order or direction, directing the respondents to modify Clause 7.1 to VolumeIII of the Request for Proposal to the effect that, the specification of front suspension should be waveller / Air suspension;
g. Issue a writ of mandamus or any appropriate writ, order or direction, directing the respondents to modify Clause 12.1(d) to VolumeIII of the Request for Proposal to the effect that, wheel base should be equal to or less Page 3 of 67 HC-NIC Page 3 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT than 5000 mm as per Urban Bus Specification II (UBS II);"
[3.0] The facts leading to the present Special Civil Application in nutshell are as under:
[3.1] In order to achieve National Fuel Security and promote electric vehicles in India, the Government of India had launched the National Mission on Electric Mobility, 2020 in the year 2013. That following this the Government of India notified a scheme known as Faster Adoption and Manufacturing of (Hybrid & Electric) vehicles in India (for short "FAME"). The object and purpose of the FAME Scheme is to promote electric vehicles in the country. The said FAME Scheme focuses on four areas i.e. (1) Technology Development, (2) Demand Creation, (3) Pilot Project and (4) Charging Infrastructure. That the Government of India, Ministry of Heavy Industries vide Notification dated 12.09.2017 has extended the FAME Scheme till 31.03.2018. That on 31.10.2017, the Department of Heavy Industries invited "Expression of Interest") (for short "EOI") from all the State Governments / STUs / Municipal Corporations across the country for availing the incentives under the FAME Scheme for Pilot Project Proposal for Multi Model Public Transport. That under the FAME Scheme the UOI also announced the incentives. The FAME Scheme provided the subsidy of procurement of electric buses in the following manner.
"(i) Subsidy on procurement of Electric Buses in following manner:
(a)On 15% localization in manufacturing : 60% of Purchase cost or Rs.85 lakh whichever is lower
(b)On 35% localization in manufacturing: 60% of Purchase Page 4 of 67 HC-NIC Page 4 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT cost or Rs.1 Crore whichever is lower
(c) Upto 10% of eligible incentive as subsidy on the purchase of charging equipments.
(ii) Subsidy disbursement timeline
(a)The subsidy to be released in Three (3) Equal Annual Installments.
(b)LOI would be placed on OEMs/Supplier by the selected cities by 28.02.2018. Upon failure to the deadline, the LOI issued to the city is liable to be cancelled."
[3.2] That under the FAME Scheme the subsidy is to be released in three equal annual installments. FAME Scheme which has been extended to till 31.03.2018 provides that the Letter of Intent (for short "LOI") would be placed on OEMs / suppliers by the selected cities by 28.03.2018. It also further provides that upon failure to the deadline the LOI issued to the City shall be liable to be cancelled.
That on receipt of the EOI vide communication dated 27.11.2017 from the State Government, the Municipal Corporation of AMC who also happens to be the Chairman of Ahmedabad Janmarg Ltd. respondent No.2 herein decided to avail the services of the Expert, i.e. Centre for Excellence in Urban Transport, CEPT University, which is also otherwise acting as the Principal Consultant of Ahmedabad BRTS Project by putting the requisite endorsement on the said communication dated 27.11.2017, alongwith which said EOI was sent. The aforesaid Expert desired to provide the services in the matter of preparing suitable proposal to be submitted in support of the EOI to the Government of India and to take care of all the subsequent aspects related thereto including the preparation of Request for Proposal (for short "RFP") containing suitable tender conditions, for inviting the interested Page 5 of 67 HC-NIC Page 5 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT parties in the matter. It is the case on behalf of the respondent Nos.2 and 3 that the underlying purpose for taking the services of the Expert like CEPT University was to strengthen BRTS and its feeder services with 900 mm floor height 100 (Nos.) MIDI Electric Buses for improving accessibility. It appears that thereafter the respondent No.3 Corporation through its Municipal Commissioner, submitted a proposal duly prepared by the CEPT University, expressing its interest for availing the incentive under the FAME Scheme vide letter dated 28.11.2017 addressed to the Department of Heavy Industries, Government of India. Apropos to the said EOI, the Government of India, Ministry of Heavy Industries and Public Enterprises, Department of Heavy Industries issued the LOI dated 27.12.2017 sanctioning assistance for purchase of 40 Electric Buses and other electric vehicles under the FAME Scheme.
At this stage it is required to be noted that alongwith MIDI Electric Buses, the respondent No.3 - Corporation also proposed for 20 Nos. of eautos to run in heritage circuit in the old city. It appears that the respondent No.3 Corporation proposed for 100 Electric Buses, however, the Government of India, Ministry of Heavy Industries and Public Enterprises, Department of Heavy Industries, approved and alloted 40 electric buses, 20 - four wheeler and 20 - three wheelers. It appears that the said approval was subject to the satisfaction of certain terms and conditions including the condition that the LOI would be placed on OEMs / suppliers of the selected cities by 28.02.2018 and on failure to the said deadline, LOI shall be liable to be cancelled. That the General Manager of the respondent No.2 received the LOI personally in New Delhi on 03.01.2018.
Page 6 of 67HC-NIC Page 6 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT [3.3] It is the case on behalf of the respondent Nos.2 and 3 that thereafter the CEPT University - Consultant after having studied the entire matter including the requirement in question, gave live presentation on 15.01.2018 to the Municipal Commissioner and other officers, whereby an idea was given as to what should be the contents and more particularly the tender conditions forming part of RFP to be issued for inviting the interested parties to cater the requirements of respondent No.2 in this behalf. It is the case on behalf of the respondent Nos.2 and 3 that it was on the basis of the extensive deliberations carried out during the course of the aforesaid presentation that the said consultant prepared RFP, inter alia, containing various tender conditions. The aforesaid was followed by the publication of Notice Inviting Tender (for short "NIT") on 17.01.2018, inviting the interested parties to make their offer. It was stated in the NIT that the interested parties should download RFP from website from 19.01.2018 onwards. That the prebid meeting was held on 21.02.2018, wherein, eight parties participated including the petitioner. The respective participants raised the technical and nontechnical queries. The same were responded by the respondent No.2 through "Response to PreBid QueriescumCorrigendum1" dated 26.01.2018 followed by "Response to QueriescumCorrigendum2" dated 01.02.2018. It was decided that the amendments resulting from the aforesaid response to QueriescumCorrigendum were to be considered as part of the bid document, amending the original conditions of the bid document. It appears that the petitioner also raised some queries vide email dated 21.01.2018. The last date for online Page 7 of 67 HC-NIC Page 7 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT submission was 12.00 p.m. on 06.02.2018, while physical submission of EMD, Tender Fee and opening of the technical bid were scheduled on 06.02.2018. It appears that the petitioner vide letter dated 30.01.2018 requested to modify the terms and conditions of the RFP. The respondent No.2 vide letter dated 02.02.2018 informed the petitioner that its request to modify and/or amend the terms and conditions to the extent it suits the petitioner has been rejected.
[3.4] It appears that in response to the aforesaid RFP, three bidders have submitted their bids viz. (1) Tata Motors Ltd., (2) Mahindra & Mahindra and (3) the petitioner i.e. Goldstone Infratech Ltd. It appears that one another party i.e. M/s. Ashok Leyland Ltd. could not submit its bid online, who requested the respondent No.2 to extend the time. However, while noting the request the same is not permitted. At that stage the petitioner one of the bidder has preferred the present petition under Article 226 of the Constitution of India and has asked for the aforesaid reliefs. Considering the case of the petitioner it appears that the petitioner is aggrieved by several terms and conditions of the RFP more particularly terms and conditions contained in Clause 4.1, Clause 7.1(a), Clause 7.3(a)(i), Clause 7.3(a)(ii) to VolumeI of the RFP and also Clause 7.1 and Clause 12.1.D to VolumeIII. The relevant terms and conditions by which the petitioner is aggrieved and the petitioner has requested to modify and/or amend the terms and conditions are as under:
"Clause 4.1: Consortium Bids are permitted as either (i) Single Bid or (ii) Consortium of a maximum two bidders lead by a Lead Bidder.Page 8 of 67
HC-NIC Page 8 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT Clause 7.1: Eligibility Criteria (PreQualification Criteria) The following Eligibility Criteria shall apply to all Bidders who are bidding as Single Bidder or to all members of a Consortium:
a) The Bidder or and all members shall be legally competent to enter into a contract as per prevailing Indian Law, and must be either: (i) a company incorporated under the Companies Act, 1956 (as amended or reenacted or restated and including the Companies Act, 2013 as notified from time to time), (Copy of Certificate of Incorporation, Memorandum and Article of the association of the bidder should be submitted) Or (ii) Partnership firm registered under The Indian Partnership Act (Copy of registered Partnership Deed should be submitted) or a (iii) registered proprietary firm in India (Copy of Sales Tax / GST registration, EPF registration, Shop registration certificate, as may be applicable, should be submitted) Any foreign firms constituted under respective foreign law not registered in India are not allowed to participate in the Bidding as single bidder or consortium member."
Clause 7.2: Bidding Conditions for Single Bidder and Consortiums.
Bids may be presented by Single Bidders or by Consortiums. Following conditions are prescribed in bidding by Single Bidders and by Consortiums.
a) If the Bid by a Single Bidder, the Bid needs to be presented by a registered Bus Manufacturer (Original Equipment Manufacturer for Buses shortly called "OEM"
henceforth) only who is meeting the prescribed qualifications for OEMs and who is supplying the Buses under this Project. Subcontracting specific tasks by Single Bidder by experienced / qualified sub contractors is not restricted.
b) If the Bid is through a Consortium, then the consortium must mandatorily include an OEM Member and a Bus Operator member meeting respective qualifications for these entities. Lead Member of the Consortium may be either of these two entities.
c) Any replacement in the non lead Consortium member (who is not an OEM) shall be permitted after one year of successful operations only, provided the replacement non lead member processes qualifying credentials required of a nonlead member having similar role. The exercise will need prior approval of the Authority. Exit of Lead Member from any Consortium shall not be permitted at any stage.
d) Bidders having as Consortiums must clearly identify the Lead Member and non lead member and their respective Page 9 of 67 HC-NIC Page 9 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT roles in the Consortium Agreement.
e) The role and responsibility of any member must be commensurate with the technical / financial capabilities that such member is contributing towards meeting the qualification criteria. Each consortium member is liable to contribute resources in terms of knowledge, skills and trained manpower commensurate with its role and responsibilities during the Agreement period.
7.3 Qualification Criteria for Bidders and Associates.
Qualification criteria pertaining to each of the three parties envisaged above are presented below:
a) OEM Qualifications Criteria
i) The Bidder shall be a registered Bus Manufacturer with bus manufacturing facilities in India having experience of manufacturer in India and delivery of at least 1000 Electric / Diesel / CNG buses over the last five financial years including the financial year of 201718.
ii) Possess a Net worth equivalent to at least INR 100 Crore as on 31st March, 2017 as per Auditor's certificate.
iii) Aggregating the Ownership and or Operation Experience of any Associate or Bidder for the purpose of meeting the Manufacturing and Net worth criteria shall be permitted.
Documentary Evidences:
• License to manufacture Buses and Evidence of bus manufacturing facilities • Details of at least 1000 Electric / Diesel / CNG manufactured and supplied in terms of number, year of supply and names of customers to whom supplied • Statement from the statutory auditor as prescribed in the Annexure 3 certifying / specifying Net Worth of the Bidder also specifying that the methodology adopted for calculating net worth conforms to the provisions of this RFP."
[4.0] Shri Mihir Thakore, learned Counsel has appeared on behalf of the petitioners and Shri Kamal Trivedi, learned Counsel has appeared on behalf of the respondent Nos.2 and 3.
[5.0] Shri Thakore, learned Counsel appearing on behalf of the petitioners has vehemently submitted that the aforesaid terms and conditions and/or eligibility criteria contained in the RFP are most Page 10 of 67 HC-NIC Page 10 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT arbitrary and tailormade to suit some of the bidders only and as such have no nexus with the object.
[5.1] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioners that the petitioner is a credible bidder with all necessary eligibility and has experience of supplying and operating electric vehicles in other parts of the country. It is vehemently submitted that the petitioner has experience in supplying number of electric buses / hybrid buses to various authorities like MMRDA, Pune Smart City Development Corporation, Brihun Mumbai Electric Supply and Himachal Pradesh etc. It is the case on behalf of the petitioner that technology for the electric buses is provided by BYD Auto Industry Co. Ltd., China, which is world's largest manufacture of new energy vehicles and its presence in is 48 countries across the world.
[5.2] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioners that as such the RFP has been issued by the respondent No.2 authority without considering the fact that the technology of electric buses is completely different from technology of diesel / CNG buses. It is submitted that therefore as such the criteria / conditions of RFP for procurement of electric buses should have been different from the criteria / conditions of RFP for procurement of diesel / CNG buses.
[5.3] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioners that the technology behind manufacture of electric buses being completely new the requirement of diesel / CNG buses is completely irrelevant and Page 11 of 67 HC-NIC Page 11 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT therefore, contrary to the object of the present RFP.
[5.4] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioners that Clause 4.1 by which it provides that bids are permitted as consortium of a maximum two bidders lead by a Lead Bidder is absolutely most arbitrary and is restrictive condition and is against the very spirit of competitive bidding. It is submitted that such a restrictive condition would not encourage a broader participation and is against the very spirit of competitive bidding. It is submitted that as the entire initiative for procurement of electric buses is for ensuring a cleaner and greener environment pursuant to the scheme framed by the Central Government which is completely a new initiative and therefore, the conditions of RFP would not be restrictive in nature and should promote wider and broader competition to bring in best possible technology in India. It is submitted that therefore Clauses 4.1, 7.1(a) and 7.2 are absolutely arbitrary and/or have no nexus with the object and purpose and/or are restrictive in nature and therefore, the same are liable to be suitably modified / amended.
[5.5] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioners that a leading electric bus manufacturer in the country and has its product running in Himachal Pradesh and Maharashtra. It is submitted that the technology for buses is provided by BYD Auto Industry Co. Ltd., China - a well established manufacturer of electric buses which has business interest all over the world. It is submitted that BYD Auto Industry Co. Ltd., China is the world's largest manufacturer of new Page 12 of 67 HC-NIC Page 12 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT energy vehicles including the cars, buses and trucks. It is submitted that new energy vehicles of BYD Auto Industry Co. Ltd., China have been sold to 200 cities across 48 countries and the regions in six continents around the world. It is submitted that in 2016 BYD Auto Industry Co. Ltd., China sold over 1,14,000/ electric buses more than any other country in the world. It is submitted that BYD Group has over 2 lakh employees and 26 production base across the world, with a total coverage of approximately 18 million sq. meter. It is submitted that the petitioner is a registered manufacturer of electric buses in India having its manufacturing plant in Telangana. It is submitted that Clause 7.3(a)(i) to Volume I of the RFP, is a self defeating and is completely arbitrary as electric buses are direct competitors of diesel / CNG buses and are infact have brought into phase out diesel / CNG buses. It is submitted that having a clause such as this would enable only bus manufacture of diesel / CNG buses to bid in the bidding process. It is submitted that the concept of electric buses is new to India. It is submitted that if at all a threshold requirement is to be set for a supplier of electric buses to be able to bid, the same ought to be in keeping with the extent to which the market has developed in terms of manufacturers and suppliers of pure electric buses. It is submitted that criterion for pure electric bus manufacturers cannot be fixed keeping in mind only manufacturers of CNG / Diesel bus manufacturers. It is submitted that aforesaid condition would exclude pure electric bus manufacturers from the bidding process and create a monopoly in favour of CNG / Diesel bus manufacturers. It is submitted that OEM qualification criteria as per Clause 7.3(a)(i) would eliminate / exclude the pure electric bus Page 13 of 67 HC-NIC Page 13 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT manufacturers. It is submitted that the technology in manufacture of electric bus is new in the country and there shall not be any pure electric bus manufacturer who would have manufactured even in India atleast 500 buses in last five financial years including the financial year of 201718. It is submitted that therefore, the said condition that a bidder shall have an experience of manufacturing in India and delivery of atleast 500 electric buses in the last five financial years including the financial year of 201718 is most arbitrary and/or tailormade to suit and/or favour the manufacturing of diesel / CNG buses and therefore, the same is liable to be quashed and set aside and /or suitably modified and/or amended. It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioners that even Clause 7.3(a)(ii) of RFP - OEM qualifications criteria which provides that a dealer must possess a networth equivalent to atleast INR 100 Crores as on 31.03.2017 is also arbitrary and/or has no nexus with the object of the RFP and/or discriminatory and in violation of Article 14 of the Constitution of India. It is submitted that so far as Clause 7.3(a)(ii) to VolumeI of the RFP is concerned, other authorities have issued the tenders where the said requirement was much less keeping in view the fact that this was a nascent industry and electric buses were not being manufactured in India earlier. It is submitted that when the Mumbai Metropolitan Region Development Authority (MMRDA) issued tender for procurement of electric buses for Mumbai, it had asked for turnover of Rs.30 Crores and networth of Rs.10 Crores for 25 buses. It is submitted that even the BEST, Mumbai when issued the tender for procurement of 5 electric buses, it had not asked for any minimum turnover or networth Page 14 of 67 HC-NIC Page 14 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT criterion as to allow maximum participation of bidders in the said tender. It is submitted that Pune Smart City Development Corporation Limited in its tender dated 04.01.2017 for deployment of 100 electric buses had asked Lead Partner of Consortium should have turnover of Rs.50 Crores and networth should be minimum Rs.50 Crores and its subsequent revised EOI released on 11.02.2017 for deployment of 100 electric buses has even removed criterion of minimum turnover or networth to allow wider participation by the bidders. It is submitted that therefore the aforesaid tender conditions deserve relaxation to bring it in light of the other utilities.
Name of Public No. of hybrid Approx. Turnover Net Worth Parties
Transport Undertaking and/or Supply requirement allowed to Bid
electric buses Value (Rs. Cr.) Requirement
(Rs. Cr.) (Rs. Cr.)
Mumbai Metropolitan 25 60 30 10 Single Entity /
Region Development Consortium
Authority MMRDA
Pune Smart City 100 175300 50 50 Single Entity /
Development Consortium
Corporation Limited
PSCDCL (Before
amendment)
Pune Smart City 100 175300 0 0 Single Entity /
Development Consortium
Corporation Limited
(PSCDCL) Revised EOI
(After amendment)
Brihan Mumbai Electric 5 10 0 0 Dealer /
Supply and Undertaking Manufacturer
(BEST), Mumbai
25 50 500 1000 Single Entity
Respondent No.1 25 50 75 50 Single Entity/
Consortium
[5.6] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioners that so far as Clause No.7.1(a) to VolumeI of the RFP is concerned, the same would Page 15 of 67 HC-NIC Page 15 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT deprive the country of participation of foreign bidders as consortium partners who otherwise have world class technology and expertise to offer. It is submitted that such a condition is completely arbitrary in today's global context. It is submitted that the technology and manufacture of electric buses is not widespread in India. It is submitted that in the absence of world class indigenous technology to manufacture electric buses having been developed in India, foreign technical collaborations ought to be encouraged. It is submitted that foreign technology provider as part of consortium will bring long term commitment for supply of spares and after sales service which will be in the interest of the respondent No.2.
[5.7] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioners that even the requirement of wheel base of 5000 mm +/ 200 mm is also arbitrary / discriminatory and is a tailormade condition by which the petitioner who is manufacturing the electric buses having wheel base of 4400 mm is excluded. It is submitted that the electric buses of the petitioner is based on a monocoque technology, which ensures that (1) road shocks are not transmitted to the passenger section, (2) enhances life cycles of aggregates and components, (3) ensures ease of maintenance, as compared to the traditional truck chassis. It is submitted that the bus and coach industry in India is currently in transition phase from truck chassis to integral and monocoque structures.
Making above submissions, Shri Thakore, learned Counsel appearing on behalf of the petitioners has requested to quash and Page 16 of 67 HC-NIC Page 16 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT set aside the aforesaid conditions and/or amend and/or suitably revise and/or revise aforesaid conditions under challenge.
[5.8] Shri Thakore, learned Counsel appearing on behalf of the petitioners has heavily relied upon the decision of the Himachal Pradesh High Court in the case of Ashok Leyland Ltd. vs. Himachal Pradesh Road Transport Corporation and Anr. dated 26.07.2017 in CWP No.1/2017 by which the Himachal Pradesh High Court has confirmed the LOI in favour of the very petitioner for supply of electric buses in Himachal Pradesh which was submitted by the petitioner and the bid for the same submitted by the petitioner as a consortium with BYD Auto Industry Co. Ltd., China. He has relied upon paragraphs 5 to 12, 18, 59, 64, 68 and 107 of the decision of Himachal Pradesh High Court in the case of Ashok Leyland Ltd. (Supra).
[5.9] Shri Thakore, learned Counsel appearing on behalf of the petitioners has also heavily relied upon the decision of the Karnataka High Court in the case of Esteco Coal Services Limited vs. Karnataka Power Corporation Ltd. and Ors. reported in AIR 1997 Kar. 220 in support of his submission that if the terms and conditions of the RFP are found to be unreasonable and arbitrary, which may deny the rights to many eligible and competent persons, who are in a position to execute the work efficiently, the High Court can interfere with the same in exercise of powers under Article 226 of the Constitution of India. Shri Thakore, learned Counsel appearing on behalf of the petitioners has submitted that in the aforesaid decision the Karnataka High Court has observed Page 17 of 67 HC-NIC Page 17 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT and held that if the conditions are unreasonable and arbitrary, it would deny the rights to many eligible and competent persons, who are in a position to execute the work efficiently, from submitting their tender, same may result in discrimination and violation of rights guaranteed to them under Article 226 of the Constitution of India, apart from the fact that scope of selection would be narrowed down.
[5.10] Shri Thakore, learned Counsel appearing on behalf of the petitioners has also relied upon the decision of the Hon'ble Supreme Court in the case of Tata Cellular vs. Union of India reported in (1994)6 SCC 651 (Para 94) as well as the decision of the Hon'ble Supreme Court in the case of Michigan Rubber (India) Limited vs. State of Karnataka and Ors. reported in (2012)8 SCC 216 (Paras 20, 23 and 24).
Making above submissions and relying upon above decisions, it is requested to allow the present petition and quash and set aside the impugned conditions and/or to suitably modify and/or amend and/or direct the respondent Nos.2 and 3 to suitably revise the respective terms and conditions under challenge as according to the petitioner, all these conditions are arbitrary having no nexus with the objection sought to be achieved under the RFP and are tailormade to benefit certain bidders especially the manufacturers of diesel and CNG buses.
[6.0] Present petition is vehemently opposed by Shri Kamal Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3. An affidavit in reply is filed on behalf of the Page 18 of 67 HC-NIC Page 18 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT respondent Nos.2 and 3 opposing the present petition.
[6.1] Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 has submitted that in the facts and circumstances of the case the Court may not exercise the powers under Article 226 of the Constitution of India and/or may not interfere with the tender process more particularly when as per the condition of LOI / approval by the Government of India, the deadline for issuance of the LOI in favour of the selected cities is 28.02.2018, failing which the respondent Nos.2 and 3 shall lose the subsidy which will not be in the larger public interest more particularly for the citizen of Ahmedabad.
It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 that the project in question aiming at augmenting clean and green shared mobility in the city by deploying electric buses on a Gross Cost Contract Basis, is crucial for the public at large, considering the fact that if the respondent No.2 does not issue LOI on or before 28.02.2018 stipulated by the Department of Heavy Industries, Government of India, the said LOI would stand cancelled and that the public and the city, as a whole, will be deprived of the assistance for purchase of 40 electric buses and other electric vehicles under the FAME Scheme, intended to achieve the aforestated objectives. It is submitted that as aforesaid, the approval has been granted subject to the satisfaction of certain terms and conditions and the most vital condition thereof is that LOI would be placed on OEMs / Supplier by the selected cities by 28.02.2018 and upon failure to this deadline, the LOI is liable to be cancelled.
Page 19 of 67HC-NIC Page 19 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT [6.2] Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 has submitted that as such by this petition and invoking the jurisdiction of this Court under Article 226 of the Constitution of India, the petitioners seek to rewrite and re determine certain tender conditions of the RFP which suits the petitioner. It is submitted that by way of this petition under Article 226 of the Constitution of India the petitioner has sought to re write and/or redetermine certain terms and conditions so as to tailormake the said tender conditions only with a view to suit the petitioners' own convenience which is not permissible in exercise of powers under Article 226 of the Constitution of India. It is submitted that the petitioner as a bidder cannot request and/or insist to amend / modify and/or refuse the tender conditions which suits it. It is submitted that the petitioner as a bidder cannot be permitted to challenge the terms and conditions of the RFP which do not suit it.
[6.3] It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 that the petitioners seek to challenge the tender conditions contained in Clauses (i) No.4.1; (ii) No.7.1; (iii) No.7.2; (iv) No.7.3(a)(i); (v) No.7.3(a)(ii) of VolumeI; and (vi) Serial No.7.1; and (vii) Serial No.12.1.D of VolumeIII of the RFP dated 19.01.2018 mainly on the grounds that (1) the aforesaid conditions are manifestly arbitrary since they do not have any nexus with the object sought to be achieveddd thereby, more particularly by prohibiting foreign parties which are not registered in India from participating in the Page 20 of 67 HC-NIC Page 20 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT bidding process either as a single bidder or as a consortium member; (2) that they are discriminatory in nature as electric bus manufacturer like the petitioner is totally excluded in view of the requirement of having manufactured and supplied 500 such buses during the last five financial years; (3) that they are tailormade so as to favour the existing bus suppliers manufacturing diesel and CNG buses in India and also on the ground that (4) various other States in the country have adopted suitable tender conditions, inter alia permitting foreign parties not registered in India to participate in the bidding process wherein the petitioner alongwith its Chinese collaborators, have been qualified in view of relaxed tender conditions. It is submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 that as such the whole of the tender document, inter alia, containing the impugned tender conditions is prepared by the Expert i.e. CEPT University keeping in mind two important aspects viz. (1) a National Policy of the Government of India to encourage 'Make in India' to promote manufacturing, production of goods and services in India with a view to enhancing income, employment, etc.; and (2) a scheme called 'Faster Adoption and Manufacturing (Hybrid and Electric) Vehicles in India.
[6.4] It is submitted that in the present case the tender conditions have been got formulated by independent Expert and approved by the respondent No.2. It is submitted that once the tender conditions of the RFP having been formulated by the independent Expert, it cannot be said that the same is malafide and/or perverse which calls for interference of this Court in exercise of powers Page 21 of 67 HC-NIC Page 21 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT under Article 226 of the Constitution of India.
In support of his above submissions Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 has heavily relied upon the observations made by the Hon'ble Supreme Court in para 29 of the decision in the case of Michigan Rubber (India) Ltd. (Supra).
[6.5] It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 that all the terms and conditions of the RFP including the terms and conditions under challenge are absolutely considering the object and purpose of the FAME Scheme as well as keeping in mind the National Policy of the Government of India to encourage "Make In India" to promote manufacturing, production of goods and services in India with a view to enhance income, employment etc. [6.6] It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 that each of the impugned tender conditions has full justification for their inclusion in the tender document having direct nexus with the object sought to be achieved.
[6.7] It is further submitted that Clause 4.1 of the RFP requires the bidder to submit its bid either singly or through consortium of maximum two bidders. It is submitted that in furtherance of Clause 4.1, Clause 7.2 provides for bidding conditions for single bidder and consortium. It is submitted that as per the requirement, if the bid is through consortium, then in that case, the consortium must mandatorily include an OEM and Bus Operator Member meeting Page 22 of 67 HC-NIC Page 22 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT respective qualifications. It is submitted that the RFP is for selection of the Bus Operator for procurement, operation and maintenance of MIDI AC Fully Built Pure Electric Buses on Gross Cost Contract Basis. It is submitted that the said RFP is, as can be seen, the conglomeration of Operation, Procurement and Maintenance. It is submitted that for smooth and efficient functioning of the said project having a period of 7 + 2 years of operation, presence of the manufacturer is very much imperative. It is submitted that the RFP is on Gross Cost Contract Basis which means that the revenue risk will be borne by the authorities. It is submitted that on the said count also, with a view to ensuring the smoother and efficient product maintenance throughout the contract period, the presence of OEM is in place.
[6.8] It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 that Clause 7.1 requires the participation by the foreign firm which is registered in India. It is submitted that the present tender requires not only for supply of buses but also for operation and maintenance with all risks of O&M transferred to the OEM or consortium of OEM and Bus Operator. It is submitted that OEM is made mandatory part of the consortium inasmuch as the experience of the OEM as accumulated in manufacturing and servicing of large number of buses becomes readily available, given the requirement to operate buses with new charging infrastructure. It is submitted that possibility of putting the purchaser in the disadvantageous position cannot be ruled out for, lockingin a particular technology partner from a foreign country may result in possible higher cost and Page 23 of 67 HC-NIC Page 23 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT monopoly of a particular type of technology.
[6.9] It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 that Clause 7.3(a)(i) of VolumeI of the RFP requires that the bidder should have manufactured 500 electric / diesel / CNG buses, which has been alleged by the petitioners to be discriminatory and tailor made - discriminatory because electric bus being a new technology, it is rather impossible for any manufacturer to have manufactured 500 buses in last 5 financial years including the Financial Year 201718. It is submitted that the said contention is misplaced, considering the fact that electric bus technology is not completely different from bus technology inasmuch as, large parts of the product of electric bus visavis diesel and CNG bus are common, except internal combustion system associated drive line and transmission system. It is submitted that it is but natural that by providing such requirement all the participant bidders may not be qualified. It is submitted that however that by itself will not render the tender conditions arbitrary and discriminatory. It is submitted that similarly the said condition cannot be said to be tailormade, only because the requirement is that the bidder should have manufactured 500 electric / diesel / CNG buses. It is submitted that the vague allegation of condition being tailormade is not sufficient to render the same arbitrary. It is submitted that such allegation has to be specific, loud and clear and substantiated by material on record. It is submitted that the petitioner has not been able to even faintly justify the said allegation, let alone be substantiated. It is submitted that electric bus technology is not completely different Page 24 of 67 HC-NIC Page 24 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT from the traditional bus technology. It is submitted that experience of bus manufacturing activity will strengthen the capacity of the manufacturer in the areas viz. ability to have distributed service network that support the need for maintenance of buses for a diversified clientele through availability of manufacturers' authorized service station, uninterrupted spare part availability, feed back mechanism that may provide intelligence and data on high frequency maintenance issues, etc. It is submitted that undisputedly, bus manufacturing, its supply, delivery, operation and maintenance being a highly complex area demands knowledge, proficiency and skill which can be gained only with experience of a certain scale. It is submitted that in this view of the matter, there is a nexus with the object sought to be achieved by providing the requirement of the bidder having the experience of having manufactured 500 electric / diesel / CNG during the last 5 financial years including the Financial Year 201718.
[6.10] It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 that Clause 7.3(a)(ii) of VolumeI of the RFP inter alia provide for the bidder possessing the networth of Rs.100 Crores. It is submitted that undisputedly the cost of the electric bus is ranging somewhere between Rs.1.80 Crores to Rs.1.90 Crores. It is submitted that the electric buses required are 50 in number (40 + 25% additional). It is submitted that the cost of 50 electric buses will be around Rs.90 Crores and infrastructure cost will be around Rs.20 Crores and Rs.5 Crores towards miscellaneous expenses, making a total of Rs.115 Crores (approximately). It is further submitted that considering the Page 25 of 67 HC-NIC Page 25 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT aforesaid calculation, providing for the requirement of bidder possessing the networth of Rs.100 Crores is very much in sync with the object sought to be achieved and thus, the said tender condition is reasonable and cannot be said to be arbitrary. It is submitted that moreover, providing for the bidder possessing networth of Rs.100 Crores is also with a view to seeing that the bidder is financially viable and possesses the staying power. It is submitted that the requirement of networth is with a view to seeing that the bidder is financially sound so as to tide over any plausible setback, without hampering the smooth operation of the project.
[6.11] It is further submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 while referring to Serial No.7.1 and Serial No.12.1.D of VolumeIII of the RFP that the petitioner is aggrieved by the aforesaid requirement of Waveler suspension and might be thinking of providing for suspension other than Waveler suspension. It is submitted that justification substantiating the requirement at Serial No.7.1 and Serial No.12.1.D has been set out in detail in the affidavit in reply. It is submitted that the said technical specifications / requirements are also in furtherance of the requirement of maintaining technical and aesthetic symmetry inasmuch as, the buses are sought to be obtained for specific use of Bus Rapid Transit System, which requires doors on the wheel base on both the sides of the bus and hence longer wheel base is considered necessary. It is submitted that in fact, the RFP specifies requirement of wheel base of 5000 mm +/ 200 mm to accommodate total door width of 2100 mm (two doors of 800 mm width each with 500 mm partition in Page 26 of 67 HC-NIC Page 26 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT between) in the centre of wheel base. It is submitted that in addition to above, as per point 14.3(d) of Chapter 3 of USBII, the rear edge of the rear door should be at a distance of 1500 mm from the central line of the rear wheel. Hence, to ensure the aesthetic symmetry, the same distance 1500 mm from the center of front wheel to front edge of the front wheel is maintained, which has been provided by the Expert.
Making above submissions, Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 has tried to justify the respective terms and conditions of the RFP of which the petitioner is aggrieved and/or which the petitioner seeks to modify and/or amend and/or revise.
[6.12] Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 has further submitted that the Hon'ble Supreme Court as well as this Court in catena of decisions have categorically and unequivocally held that in the matter of formulating conditions of tender documents and awarding the contract, a greater latitude is required to be conceded to the State Authorities and the inference of this Court is not warranted, except when the action of the tendering authorities is found to be malicious, arbitrary and misuse of statutory powers. It is submitted that in the present case as the terms and conditions of the RFP are provided after due deliberation and consultation with the Expert and after considering the opinion of the Expert there is no scope for any arbitrariness or malafide as alleged and therefore, the interference of this Court in exercise of powers under Article 226 of the Constitution of India is not warranted and/or required. In Page 27 of 67 HC-NIC Page 27 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT support of his above submissions, Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 has heavily relied upon the following decisions of the Hon'ble Supreme Court.
1. Tata Cellular vs. Union of India (1994) 6 SCC 651 (Para 94)
2. Union of India vs. International Trading Co. & Anr. (2003) 5 SCC 437 (Paras 22 and 23)
3. Directorate of Education & Ors. vs. Educomp Datamatics Ltd. & Ors.
(2004) 4 SCC 19
4. Michigan Rubber (India) Ltd. vs. State of Karnataka & Ors. (2012) 8 SCC 216 (Paras 23, 28 and 29)
5. G.R.L. Engineers vs. State of Haryana (P&H High Court) Decision dated 01.02.2017 rendered in CWP No.380/2017
6. Aahna Air Services Pvt. Ltd. vs. State of Gujarat Decision rendered in SCA No.5338/2016 (Gujarat High Court)
7. Tractors & Farm Equipment Ltd. vs. Union of India Decision rendered in SCA No.18153/2017 (Gujarat High Court) [6.13] Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court and the Himachal Pradesh High Court relied upon by the learned Counsel appearing on behalf of the petitioners is concerned, it is vehemently submitted that in the facts and circumstances of the case, the same shall not be applicable to the facts of the case on hand.
[6.14] Now, so far as the submission on behalf of the petitioners that some other States / Authorities invited the tenders for the very purpose either had not provided for such eligibility criteria and/or have modified and therefore, respondent Nos.2 and Page 28 of 67 HC-NIC Page 28 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT 3 also must be suitably modified and/or amend the impugned terms and conditions are concerned, it is submitted by Shri Trivedi, learned Counsel appearing on behalf of the respondent Nos.2 and 3 that what is required to be considered is whether the impugned terms and conditions provided in the RFP insisted by the respondent Nos.2 and 3 are arbitrary and/or malafide and/or tailormade as contended on behalf of the petitioners or not. It is submitted that the petitioners as a matter of right cannot insist and/or pray to have the terms and conditions either which suits the petitioners and/or which might have been provided and/or insisted by other authorities. It is submitted that respondent Nos.2 and 3 as such are not required to comment upon why other authorities might not have insisted for such conditions which are insisted by the respondent Nos.2 and 3. It is submitted that therefore as the impugned terms and conditions of the RFP are absolutely in consonance with the National Policy of 'Make in India' and also as per the FAME Scheme and they are neither arbitrary and/or irrational, it is requested to dismiss the petition.
[7.0] In rejoinder, Shri Thakore, learned Counsel appearing on behalf of the petitioners has submitted that if the eligibility criteria more particularly the conditions / eligibility criteria under challenge are considered as a whole, the same can be said to be arbitrary and/or nonnexus with the object to be achieved and tailormade to exclude the new electric bus manufacturers in the country and to suit / favour the existing diesel / CNG bus manufacturers in the country. Therefore, he has requested to consider the impugned conditions as a whole.
Page 29 of 67HC-NIC Page 29 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT [8.0] Heard learned Counsel appearing for respective parties at length.
At the outset it is required to be noted that by this petition under Article 226 of the Constitution of India, the petitioners - one of the bidder has challenged some of the terms and conditions / eligibility criteria in the RFP and have prayed for an appropriate writ, direction and order directing the respondent Nos.2 and 3 to modify and/or amend / revise the terms and conditions under challenge. At this stage it is required to be noted that as because of some of the terms and conditions impugned in the petition, the petitioners are likely to be disqualified even at the technical stage itself, the petitioners have preferred the present Special Civil Application and have requested to modify and/or amend the relevant terms and conditions impugned in the present petition to bring it in the zone of consideration and/or which may suit the petitioners to make the petitioners eligible. Therefore, the question which is posed for consideration of this Court is, can a bidder pray to amend and/or modify the terms and conditions of the RFP to the extent it suits it to make it eligible to participate?
The question which is posed for consideration of this Court is whether the High Court would be justified in directing the employer / purchaser to modify and/or amend the eligibility criteria / terms and conditions of the RFP which may suit one of the bidder in exercise of powers under Article 226 of the Constitution of India? Another question which is posed for consideration of this Court is, whether is it open for one of the bidder to challenge the terms and conditions / eligibility criteria Page 30 of 67 HC-NIC Page 30 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT mentioned in the RFP because of which he is likely to be disqualified and can bidder pray for a writ of mandamus and/or any other writ to modify and/or amend the terms and conditions / eligibility criteria which suits it?
[8.1] While considering the aforesaid issue, the scope of judicial review in the contract matter as considered by the Hon'ble Supreme Court in few decisions are required to be dealt with and considered. In the case of Educomp Datamatics Ltd. & Ors (Supra), the Hon'ble Supreme Court has observed and held that terms of initiation to tender are not open to judicial scrutiny, the same being in the realm of contract. It is observed that the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. It is further observed that the Court can scrutinize the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favoritism. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. It is further observed and held that the Courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. While observing that in 9 to 12, the Hon'ble Supreme Court has observed and held as under:
"9. It is well settled now that the courts can scrutinize the award of the contracts by the government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in Page 31 of 67 HC-NIC Page 31 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular vs. Union of India [1994 (6) SCC 651]. After examining the entire case law the following principles have been deduced.
94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract.
In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
10. In Air India Limited vs. Cochin International Airport Limited, this Court observed:
The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to Page 32 of 67 HC-NIC Page 32 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decisionmaking process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness.
11. This principle was again restated by this Court in Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Others [2000 (5) SCC 287]. It was held that the terms and conditions in the tender are prescribed by the government bearing in mind the nature of contract and in such matters the authority calling for the tender is the best judge to prescribe the terms and conditions of the tender. It is not for the courts to say whether the conditions prescribed in the tender under consideration were better than the one prescribed in the earlier tender invitations.
12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.
[8.2] In the case of Central Coalfields Limited and Ors. (Supra), the Hon'ble Supreme Court after considering the host of decisions, has Page 33 of 67 HC-NIC Page 33 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT observed and held that the decision making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with. It is observed and held that interference is permissible only if the decision making process is mala fide or is intended to favour someone. It is further observed that similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that the decision is one which no responsible authority acting reasonably and in accordance with law could have reached. It is further observed that in other words, the decision making process or the decision should be perverse and not merely faulty or incorrect or erroneous. In the aforesaid decision, the Hon'ble Supreme Court has considered its earlier decision in the case reported in (1989) 3 SCC 293 as well as decision in the case reported in (1994) 6 SCC 651 as well as in the case of (2007) 4 SCC 517. After considering the aforesaid decisions, the Hon'ble Supreme Court has went a step further and has held that the decision if challenged, the Constitutional Court can interfere if the decision is perverse. However, the Constitutional Courts are expected to exercise restrain in interfering with the administrative decision and ought not to substitute its view for that of the administrative authority. Similar view has been taken by the Hon'ble Supreme Court in the case of Afcons Infrastructure Ltd (Supra).
[8.3] In the case of Central Coalfields Limited (Supra), the Hon'ble Supreme Court has further observed and held that the Court, as far as possible, avoid a construction which would render the words Page 34 of 67 HC-NIC Page 34 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT used by the author of the document meaningless and futile or reduce to silence any part of the document and make it altogether inapplicable. It is further observed and held that whether a term is essential or not is a decision taken by the employer, which should be respected and soundness of that decision cannot be questioned by Court. It is further observed in the case of Central Coalfields Limited (Supra) that it is well settled rule of interpretation applicable alike to documents as to statutes that, save for compelling necessity, the Court should not be prompt to ascribe superfluity to the language of a document and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use. It is further observed that to reject words as insensible should be the last resort of judicial interpretation, for it is an elementary rule based on common sense that no author of a formal document intended to be acted upon by the others should be presumed to use words without a meaning. Even in the case of Michigan Rubber (India) Limited (Supra), the decision which has been relied upon by the learned counsel for the petitioner, the Hon'ble Supreme Court has observed that the Court cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical.
The Hon'ble Supreme Court in the case of Central Coalfields Limited (Supra), in paras 31 to 38, 42 to 44, 47 to 49, 52, 55 and 56 has observed and held as under:
"31. We were informed by the learned Attorney General that 9 of the 11 bidders furnished a bank guarantee in the prescribed and correct format. Under these circumstances, even after stretching our credulity, it is extremely difficult to understand why JVC was unable Page 35 of 67 HC-NIC Page 35 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT to access the prescribed format for the bank guarantee or furnish a bank guarantee in the prescribed format when every other bidder could do so or why it could not seek a clarification or why it could not represent against any perceived ambiguity. The objection and the conduct of JVC regarding the prescribed format of the bank guarantee or a supposed ambiguity in the NIT does not appear to be fully above board.
32. The core issue in these appeals is not of judicial review of the administrative action of CCL in adhering to the terms of the NIT and the GTC prescribed by it while dealing with bids furnished by participants in the bidding process. The core issue is whether CCL acted perversely enough in rejecting the bank guarantee of JVC on the ground that it was not in the prescribed format, thereby calling for judicial review by a constitutional court and interfering with CCL's decision.
33. In Ramana Dayaram Shetty v. International Airport Authority of India, 1979 3 SCC 489 this Court held that the words used in a document are not superfluous or redundant but must be given some meaning and weightage: "It is a well settled rule of interpretation applicable alike to documents as to statutes that, save for compelling necessity, the Court should not be prompt to ascribe superfluity to the language of a document "and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use". To reject words as insensible should be the last resort of judicial interpretation, for it is an elementary rule based on common sense that no author of a formal document intended to be acted upon by the others should be presumed to use words without a meaning. The court must, as far as possible, avoid a construction which would render the words used by the author of the document meaningless and futile or reduce to silence any part of the document and make it altogether inapplicable."
34. In Ramana Dayaram Shetty case, the expression "registered IInd Class hotelier" was recognized as being inapt and perhaps ungrammatical; nevertheless common sense was not offended in describing a person running a registered II grade hotel as a registered II Class hotelier. Despite this construction in its favour, respondents 4 in that case were held to be factually ineligible to participate in the bidding process.
35. It was further held that if others (such as the appellant in that case) were aware that non fulfillment of the eligibility condition of being a registered II Class hotelier would not be a bar for consideration, they too would have submitted a tender, but were prevented from doing so due to the eligibility condition, which was relaxed in the case of respondents 4. This resulted in unequal Page 36 of 67 HC-NIC Page 36 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT treatment in favour of respondents 4 treatment that was constitutionally impermissible. Expounding on this, it was held:
"It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes no difference whether the exercise of the power involves affectation of some right or denial of some privilege."
36. Applying this principle to the present appeals, other bidders and those who had not bid could very well contend that if they had known that the prescribed format of the bank guarantee was not mandatory or that some other term(s) of the NIT or GTC were not mandatory for compliance, they too would have meaningfully participated in the bidding process. In other words, by rearranging the goalposts, they were denied the "privilege" of participation.
37. For JVC to say that its bank guarantee was in terms stricter than the prescribed format is neither here nor there. It is not for the employer or this Court to scrutinize every bank guarantee to determine whether it is stricter than the prescribed format or less rigorous. The fact is that a format was prescribed and there was no reason not to adhere to it. The goalposts cannot be rearranged or asked to be rearranged during the bidding process to affect the right of some or deny a privilege to some.
38. In G.J Fernandez v. State of Karnataka, 1990 2 SCC 488 both the principles laid down in Ramana Dayaram Shetty were reaffirmed. It was reaffirmed that the party issuing the tender (the employer) "has the right to punctiliously and rigidly" enforce the terms of the tender. If a party approaches a Court for an order restraining the employer from strict enforcement of the terms of the tender, the Court would decline to do so. It was also reaffirmed that the employer could deviate from the terms and conditions of the tender if the "changes affected all intending applicants alike and were not objectionable." Therefore, deviation from the terms and conditions is permissible so long as the level playing field is maintained and it does not result in any arbitrariness or discrimination in the Ramana Dayaram Shetty sense.
42. Unfortunately, this Court did not at all advert to the privilege of participation principle laid down in Ramana Dayaram Shetty and accepted in G. J. Fernandez. In other words, this Court did not Page 37 of 67 HC-NIC Page 37 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT consider whether, as a result of the deviation, others could also have become eligible to participate in the bidding process. This principle was ignored in Poddar Steel.
43. Continuing in the vein of accepting the inherent authority of an employer to deviate from the terms and conditions of an NIT, and reintroducing the privilege of participation principle and the level playing field concept, this Court laid emphasis on the decision making process, particularly in respect of a commercial contract. One of the more significant cases on the subject is the three judge decision in Tata Cellular v. Union of India, 1994 6 SCC 651 which gave importance to the lawfulness of a decision and not its soundness. If an administrative decision, such as a deviation in the terms of the NIT is not arbitrary, irrational, unreasonable, mala fide or biased, the Courts will not judicially review the decision taken. Similarly, the Courts will not countenance interference with the decision at the behest of an unsuccessful bidder in respect of a technical or procedural violation. This was quite clearly stated by this Court (following Tata Cellular) in Jagdish Mandal v. State of Orissa, 2007 14 SCC 517 in the following words:
"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 succor to thousands and millions and may increase the project cost manifold."Page 38 of 67
HC-NIC Page 38 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT This Court then laid down the questions that ought to be asked in such a situation. It was said :
"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";
(ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226."
44. On asking these questions in the present appeals, it is more than apparent that the decision taken by CCL to adhere to the terms and conditions of the NIT and the GTC was certainly not irrational in any manner whatsoever or intended to favour anyone. The decision was lawful and not unsound.
47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of the NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision "that no responsible authority acting reasonably and in accordance with relevant law could have reached" as held in Jagdish Mandal followed in Michigan Rubber.
48. Therefore, whether a term of the NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the Page 39 of 67 HC-NIC Page 39 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.
49. Again, looked at from the point of view of the employer if the Courts take over the decision making function of the employer and make a distinction between essential and non essential terms contrary to the intention if the employer and thereby rewrite he arrangement, it could lead to all sorts of problems including the one that were grappling with. For example, the GTC that we are concerned with specifically states in Clause 15.2 that "Any Bid not accompanied by an acceptable Bid Security/EMD shall be rejected by the employer as non responsive." Surely, CCL ex facie intended this term to be mandatory, yet the High Court held that the bank guarantee in a format not prescribed by it ought to be accepted since that requirement was a non essential term of the GTC. From the point of view of CCL the GTC has been impermissibly rewritten by the High Court.
52. There is a wholesome principle that the Courts have been following for a very long time and which was articulated in Nazir Ahmed v. King Emperor, 1936 AIR(PC) 253 namely "Where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all.
Other methods of performance are necessarily forbidden."
There is no valid reason to give up this salutary principle or not to apply it mutatis mutandis to bid documents. This principle deserves to be applied in contractual disputes, particularly in commercial contracts or bids leading up to commercial contracts, where there is stiff competition. It must follow from the application of the principle laid down in Nazir Ahmed that if the employer prescribes a particular format of the bank guarantee to be furnished, then a bidder ought to submit the bank guarantee in that particular format only and not in any other format. However, as mentioned above, there is no inflexibility in this regard and an employer could deviate from the terms of the bid document but only within the parameters mentioned above.
55. On the basis of the available case law, we are of the view that since CCL had not relaxed or deviated from the requirement of furnishing a bank guarantee in the prescribed format, in so far as the present appeals are concerned every bidder was obliged to adhere to the prescribed format of the bank guarantee. Consequently, the failure of JVC to furnish the bank guarantee in the prescribed format was sufficient reason for CCL to reject its bid.
56. There is nothing to indicate that the process by which the decision was taken by CCL that the bank guarantee furnished by JVC Page 40 of 67 HC-NIC Page 40 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT ought to be rejected was flawed in any manner whatsoever. Similarly, there is nothing to indicate that the decision taken by CCL to reject the bank guarantee furnished by JVC and to adhere to the requirements of the NIT and the GTC was arbitrary or unreasonable or perverse in any manner whatsoever."
[8.4] In the case of Maa Binda Express Carrier & Anr. vs. North Eastern Frontier Railway & Ors. reported in (2014)3 SCC 760, the Hon'ble Supreme Court had an occasion to consider the scope of judicial review in the matters relating to award of contracts by the State and its instrumentalities. In paras 8 to 11 the Hon'ble Supreme Court has observed and held as under :
"8. The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognize 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 non discriminatory 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 tailor made 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.
9. Suffice it to say that in the matter of award of contracts the Government and its agencies have to act reasonably and fairly at all points of time. To that extent the tenderer has an enforceable right in the Court who is competent to examine whether the aggrieved party has been treated unfairly or discriminated against to the detriment of public interest. (See Meerut Development Authority v. Assn. Of Page 41 of 67 HC-NIC Page 41 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT Management Studies4 and Air India Ltd. v. Cochin International Airport Ltd.
10. The scope of judicial review in contractual matters was further examined by this Court in Tata Cellular v. Union of India, Raunaq International Ltd. case and in Jagdish Mandal v. State of Orissa [Supra] besides several other decisions to which we need not refer."
[8.5] In the case of Tata Cellular (Supra), the Hon'ble Supreme Court in para 94 has observed and held as under:
"94. The principles deducible from the above are :
[1] The modern trend points to judicial restraint in administrative action.
[2] The court does not sit as s court of appeal but merely reviews the manner in which the decision was made.
[3] The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted, it will be subsisting its own decision, without the necessary expertise which itself may be fallible. [4] The terms of the invitation of tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
[5] The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasiadministrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
[6] Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
[8.6] In the case of Michigan Rubber [India] Limited (Supra), the Hon'ble Supreme Court has observed and held as under :
"24. It is also highlighted by the State as well as by the KSRTC that the tender conditions were stipulated by way of policy decision after due deliberation by the KSRTC. Both the respondents highlighted that the said conditions were imposed with a view to obtain good quality Page 42 of 67 HC-NIC Page 42 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT materials from reliable and experienced suppliers. In other words, according to them, the conditions were aimed at the sole purpose of obtaining good quality and reliable supply of materials and there was no ulterior motive in stipulating the said conditions."
[8.7] In the case of Tamil Nadu Generation & Distribution Corporation Limited [TANGEDCO] & Anr. vs. CSEPDITRISHE Consortium & Anr., reported in (2017) 4 SCC 318, the Hon'ble Supreme Court has observed and held that in a complex fiscal evaluation, the Court has to apply the doctrine of restraint. Several aspects, clauses, contingencies, etc., have also to be factored.
[9.0] In the case of Raunaq International Limited vs. I.V.R. Construction Ltd. and Ors. reported in (1999)1 SCC 492, it is observed and held by the Hon'ble Supreme Court that (a) before entertaining a petition, Court must be satisfied that some element of public interest is involved; (b) the dispute purely is not inter se private parties; (c) difference in price offer between the two tenderers may or may not be decisive in deciding the question of public interest; (d) where a decision is taken bonafide and the choice exercised on legitimate consideration, without any arbitrariness, Court should not show indulgence; (e) While granting interim injunction, Court must carefully weigh conflicting public interest; (f) where the decision making process stands structured and the tender conditions do set out requirements, Court is entitled to examine application thereof to the relevant fact circumstances; (g) relaxation if otherwise permissible, in terms of the conditions must be exercised for legitimate reasons; (h) nature and urgency in getting the project implemented is a relevant factor;
(i) judicial review is permissible only on the established grounds, Page 43 of 67 HC-NIC Page 43 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT including malafide, arbitrariness or unreasonableness of the variety of Wednesbury principle.
[9.1] The Hon'ble Apex Court in the case of Master Marine Services (P) Ltd. vs. Metlalfe & Hodg Kinson (P) Ltd. and another reported in (2005) 6 SCC 138 (Two Judges), Court reiterated the principles that: (a) State can choose its own method to arrive at a decision; (b) State and its instrumentalities have duty to be fair to all concerned; (c) even when some defect is found in decision making process, Court must exercise its extra ordinary writ jurisdiction with great caution and that too in furtherance of public interest; and (d) larger public interest in passing an order of intervention is always a relevant consideration.
[9.2] The Hon'ble Apex Court in the case of Jagdish Mandal vs. State of Orissa and others reported in (2007)14 SCC 517 (Two Judges), reiterated the aforesaid principles by stating that before interfering in a tender and contractual matter, in exercise of its power of judicial review, Court should pose itself the following question: "(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";
(ii) Whether public interest is affected."
If the answer is in the negative, there should be no Page 44 of 67 HC-NIC Page 44 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT interference under Article 226. Most recently the Hon'ble Supreme Court in the case of Central Coalfields Limited (Supra), observed that: "..........If an administrative decision, such as a deviation in the terms of the NIT is not arbitrary, irrational, unreasonable, mala fide or biased, the Courts will not judicially review the decision taken. Similarly, the Courts will not countenance interference with the decision at the behest of an unsuccessful bidder in respect of a technical or procedural violation....."
[9.3] In the case of Maa Binda Express Carrier and another (Supra), the Hon'ble Supreme Court relying upon its earlier decisions reiterated the following principles: "23... ...
(a) the basic requirement of Article 14 is fairness in action by the State, and nonarbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;
(b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;
(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted;
(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and
(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry Page 45 of 67 HC-NIC Page 45 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT on business with the Government...."
(Emphasis supplied) [9.4] The principles stand reiterated in Haryana Urban Development Authority and others vs. Orchid Infrastructure Developers Private Limited reported in (2017) 4 SCC 243 (Two Judges) and Reliance Telecom Limited and another vs. Union of India and another reported in (2017) 4 SCC 269 (Two Judges).
[9.5] In the case of International Trading Co. and Another (Supra), while emphasizing on national priorities, the Hon'ble Supreme Court has observed and held in paras 22 and 23 as under:
"22. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities and adopt trade policies. As noted above, the ultimate test is whether on the touchstone of reasonableness the policy decision comes out unscathed.
23. Reasonableness of restriction is to be determined in an objective manner and from the standpoint of interests of the general public and not from the standpoint of the interest of persons upon whom the restrictions have been imposed or upon abstract consideration. A restriction cannot be said to be unreasonable nearly because in a given case, it operates harshly. In determining whether there is any unfairness involved; the nature of the right alleged to have been infringed the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing condition at the relevant time, enter into judicial verdict. The reasonableness of the legitimate expectation has to be determined with respect to the circumstances relating to the trade or business in question. Canalization of a particular business in favour of even a specified individual is reasonable where the interests of the country are concerned or where the business affects the economy of the country. (See Parbhani Transport Coop. Society Ltd. v. Regional Transport Authority5, Shree Meenakshi Mills Ltd. v. Union of India6, Hari Chand Sarda v. Mizo District Council7 and Krishnan Kakkanth v. Govt. of Kerala8.)"
[9.6] In the case of Global Energy Ltd. and Another V/s. Adani Page 46 of 67 HC-NIC Page 46 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT Exports Ltd. and Others reported in (2005)4 SCC 435, it was observed that unless terms of a tender notice are wholly arbitrary, discriminatory or actuated by malice are not subject to judicial review. It was observed as under: "10. The principle is, therefore, well settled that the terms of the invitation to tender are not open to judicial scrutiny and the Courts cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. This being the position of law, settled by a catena of decisions of this Court, it is rather surprising that the learned Single Judge passed an interim direction on the very first day of admission hearing of the writ petition and allowed the appellants to deposit the earnest money by furnishing a bank guarantee or a bankers' cheque till three days after the actual date of opening of the tender. The order of the learned Single Judge being wholly illegal, was, therefore, rightly set aside by the Division Bench."
[9.7] In case of Siemens Aktiengeselischaft and Siemens Limited V/s. Delhi Metro Rail Corporation Ltd. and Others reported in (2014)11 SCC 288, the Hon'ble Supreme Court relying upon the decision in the case of Tata Cellular (Supra), observed as under:: "23. There is no gainsaying that in any challenge to the award of contact before the High Court and so also before this Court what is to be examined is the legality and regularity of the process leading to award of contract. What the Court has to constantly keep in mind is that it does not sit in appeal over the soundness of the decision. The Court can only examine whether the decision making process was fair, reasonable and transparent. In cases involving award of contracts, the Court ought to exercise judicial restraint where the decision is bonafide with no perceptible injury to public interest."
[9.8] In case of Association of Registration Plates V/s. Union of India and Others reported in (2005)1 SCC 679, the Hon'ble Supreme Court examined the validity of the qualifying conditions imposed by the State authorities for procurement of high security number plates for vehicles across the country. In this context, it was observed as under: Page 47 of 67 HC-NIC Page 47 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT "30. Looking to the huge vehicular population of the country, the capacity of the manufacturer has to be as great because plates are to be fitted to a very large number of existing vehicles within first two years. Thereafter, every year about one lakh vehicles in each State would be required to be fitted with the plates. If the bulk of contract is exhausted in the first two years, fresh manufacturers would not come forward to undertake the remaining work as it would not be cost effective. A longterm contract was necessitated for various reasons such as necessity of huge investment for building infrastructure, uninterrupted supply of plates in the first two years and thereafter every year and the investment of such infrastructure requiring recovery over a long duration by way of supply. If the contract period is lowered, the cost of plate might go up as the huge investment will have to be recovered in a shorter period.
35. Taking up first the challenge to the impugned conditions in the Notices Inviting Tenders issued by various State authorities, we find sufficient force in submissions advanced on behalf of the Union and the State authorities and the contesting manufacturers. The State as the implementing authority has to ensure that scheme of high security plates is effectively implemented. Keeping in view the enormous work involved in switching over to new plates within two years for existing vehicles of such large numbers in each State, resort to 'trial and error' method would prove hazardous. Its concern to get the right and most competent person cannot be questioned. It has to eliminate manufacturers who have developed recently just to enter into the new field. The insistence of the State to search for an experienced manufacturer with sound financial and technical capacity cannot be misunderstood. The relevant terms and conditions quoted above are so formulated to enable the State to adjudge the capability of a particular tenderer who can provide a failsafe and sustainable delivery capacity. Only such tenderer has to be selected who can take responsibility for marketing, servicing and providing continuously the specified plates for vehicles in large number firstly in initial two years and annually in the next 13 years. The manufacturer chosen would, in fact, be a sort of an agent or medium of the RTOs concerned for fulfillment of the statutory obligations on them of providing high security plates to vehicles in accordance with rule 50. Capacity and capability are two most relevant criteria for framing suitable conditions of any Notices Inviting Tenders. The impugned clauses by which it is stipulated that the tenderer individually or as a member of jointventure must have an experience in the field of registration plates in at least three countries, a common minimum net worth of Rs. 40 Crores and either jointventure partner having a minimum annual turnover of at least Rs. 50 Crores and a minimum of 15% turnover of registration plates business have been, as stated, incorporated as essential conditions to ensure that the manufacturer selected would be technically and financially competent to fulfill the Page 48 of 67 HC-NIC Page 48 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT contractual obligations which looking to the magnitude of the job requires huge investment qualitatively and quantitatively.
38. In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State authorities. Unless the action of tendering Authority is found to be malicious and misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of a class of intending tenderer under Article 19 of the Constitution. On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep out of field indigenous manufacturers. It is explained that on the date of formulation of scheme in rule 50 and issuance of guidelines thereunder by Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a long term basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates.
39. The notice inviting tender is open to response by all and even if one single manufacture is ultimately selected for a region or State, it cannot be said that the State has created monopoly of business in favour of a private party. Rule 50 permits, the RTOs concerned themselves to implement the policy or to get it implemented through a selected approved manufacturer.
40. Selecting one manufacturer through a process of open competition is not creation of any monopoly, as contended, in violation of Article 19(1)(g) of the Constitution read with clause (6) of the said Article. As is sought to be pointed out, the implementation involves large network of operations of highly sophisticated materials. The manufacturer has to have embossing stations within the premises of the RTO. He has to maintain a data of each plate which he would be getting from his main unit. It has to be crosschecked by the RTO data. There has to be a server in the RTO's office which is linked with all RTOs' in each State and thereon linked to the whole nation. Maintenance of record by one and supervision over its activity would be simpler for the State if there is one manufacturer instead of multi manufacturers as suppliers. The actual operation of the scheme through the RTOs in their premises would get complicated and confused if multimanufacturers are involved. That would also seriously impair the high security concept in affixation of new plates Page 49 of 67 HC-NIC Page 49 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT on the vehicles. If there is a single manufacturer he can be forced to go and serve rural areas with thin vehicular population and less volume of business. Multimanufacturers might concentrate only on urban areas with higher vehicular population."
Thus, the Courts have consistently held that the scope of judicial review in the context of conditions of tenders is limited to examination on the basis of the arbitrariness, discrimination or malice. Therefore, the Court before intervening in tender or contractual matters in exercise of powers 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" ?
And (ii) Whether the public interest is affected? If the answers to the above questions are in negative, then there should be no interference under Article 226?"
[9.9] Applying the law laid down by the Hon'ble Supreme Court in the aforesaid decisions to the facts of the case on hand, we are of the opinion that looking to the purpose and object of the supply of electric buses under the FAME Scheme and the main object and purpose of FAME Scheme is to encourage "Make in India", it cannot be said that the conditions impugned in the present petition can be said to be arbitrary and/or nonnexus with the object to be achieved. As such considering the law laid down by the Hon'ble Page 50 of 67 HC-NIC Page 50 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT Supreme Court in the aforesaid decisions it is ultimately for the employer to stipulate any conditions of eligibility criteria and the same is not required to be interfered with by the Courts in exercise of powers under Article 226 of the Constitution of India unless they are found to be so arbitrary and/or perverse which a prudent person would not impose. Looking to the nature of work the buses to be supplied under the FAME Scheme and that when the concerned supplier ultimately would be getting 65% subsidy, we are of the opinion that the conditions impugned in the present petition being condition Nos. Clause 4.1, Clause 7.1(a), Clause 7.3(a)(i), Clause 7.3(a)(ii) to VolumeI of the RFP and also Clause 7.1 and Clause 12.1.D to VolumeIII cannot be said to be either arbitrary and/or the same has no nexus at all. It cannot be said that the conditions are such that no prudent person would impose such conditions. Merely because the conditions / eligibility criteria might not suit the bidder like the petitioners and/or by such conditions a prospective bidder is likely to be ineligible and/or excluded from the zone of consideration, such conditions are not required to be amended and/or modified at the instance of such proposed bidder. Even if by such conditions if some class is likely to be benefitted, such conditions cannot be said to be tailormade to suit only those particular class.
[9.10] As observed by the Hon'ble Supreme Court in the case of Tata Cellular (Supra) when a conscious decision has been taken by the employer to impose certain conditions and/or provide the eligibility criteria and that too after obtaining the opinion of the Experts, normally the Court will not interfere with the same as the Court does not sit as a Court of Appeal but merely reviews the Page 51 of 67 HC-NIC Page 51 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT manner in which the decision was made. In the case of Tata Cellular (Supra), the Hon'ble Supreme Court has further observed that the Court does not have expertise to correct the administrative decision. It is further observed that if the review of administrative decision is permitted, it will be substituting its own decision, without necessary expertise which itself may be fallible. At this stage few para No.82 of the decision of the Hon'ble Supreme Court in the case of Tata Cellular (Supra) are required to be referred to and reproduced which are as under:
"82. Bernard Schwartz in Administrative Law, 2nd Edn., p. 584 has this to say :
"If the scope of review is too broad, agencies are turned into little more than media for the transmission of cases to the courts. That would destroy the values of agencies created to secure the benefit of special knowledge acquired through continuous administration in complicated fields. At the same time, the scope of judicial inquiry must not be so restricted that it prevents full inquiry into the question of legality. If that question cannot be properly explored by the judge, the right to review becomes meaningless. 'It makes judicial review of administrative orders a hopeless formality for the litigant.... It reduces the judicial process in such cases to a mere feint.' Two overriding considerations have combined to narrow the scope of review. The first is that of deference to the administrative expert. In Chief Justice Neely's words :
'I have very few illusions about my own limitations as a judge and from those limitations I generalize to the inherent limitations of all appellate courts reviewing rate cases. It must be remembered that this Court sees approximately 1262 cases a year with five judges. I am not an accountant, electrical engineer, financier, banker, stock broker, or systems management analyst. It is the height of folly to expect judges intelligently to review a 5000 page record addressing the intricacies of public utility operation.' It is not the function of a judge to act as a superboard, or with the zeal of a pedantic schoolmaster substituting its judgment for that of the administrator.Page 52 of 67
HC-NIC Page 52 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT The result is a theory of review that limits the extent to which the discretion of the expert may be scrutinised by the nonexpert judge. The alternative is for the court to overrule the agency on technical matters where all the advantages of expertise lie with the agencies, If a court were to review fully the decision of a body such as state board of medical examiners 'it would find itself wandering amid the maze of therapeutics or boggling at the mysteries of the Pharmacopoeia'. Such a situation as a state court expressed it many years ago 'is not a case of the blind leading the blind but of one who has always been deaf and blind insisting that he can see and hear better than one who has always had his eyesight and hearing and has always used them to the utmost advantage in ascertaining the truth in regard to the matter in question'.
The second consideration leading to narrow review is that of calendar pressure. In practical terms it may be the more important consideration. More than any theory of limited review it is the pressure of the judicial calendar combined with the elephantine bulk of the record in so many review proceedings which leads to perfunctory affirmably of the vast majority of agency decisions."
[9.11] In the present case the conditions are imposed and the eligibility criteria is prescribed in the RFP by the respondent Nos.2 and 3 after consulting the Expert - CEPT University and the conditions are imposed as suggested and/or opined by the Expert / Consultant.
[9.12] In the petition the petitioners seek to challenge the tender conditions contained in Clauses (i) No.4.1; (ii) No.7.1; (iii) No.7.2; (iv) No.7.3(a)(i); (v) No.7.3(a)(ii) of VolumeI; and (vi) Serial No.7.1; and (vii) Serial No.12.1.D of VolumeIII of the RFP dated 19.01.2018. Looking to the reliefs sought in the present petition the petitioners have requested to issue appropriate writ, direction and order directing the respondents to suitably amend / modify the aforesaid conditions which suits the petitioners' own Page 53 of 67 HC-NIC Page 53 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT convenience. Thus, it can be said that the petitioners seek to re write and redetermine certain tender conditions of the RFP, so as to tailormake the said tender conditions only with a view to suit the petitioners' own convenience. We are afraid that the petitioners can insist and/or pray to amend and/or modify the terms and conditions / eligibility criteria which suits the petitioners. We are afraid that such reliefs can be granted in exercise of powers under Article 226 of the Constitution of India, unless the eligibility criteria / conditions are found to be so arbitrary which no prudent person would impose and/or are found to be mainfestly tailormade to suit only a particular bidder and/or found to be malafide. In exercise of powers under Article 226 of the Constitution of India more particularly in a case where a prospective bidder / bidder has challenged the eligibility criteria as mentioned in the RFP, the Court is not required to consider each and every condition / eligibility criteria minutely.
[9.13] As observed by the Hon'ble Supreme Court in the case of Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Others reported in (2000) 5 SCC 287 the terms and conditions in the tender are prescribed by the Government bearing in mind the nature of contract and in such matters the authority calling for the tender is the best Judge to prescribe the terms and conditions of the tender. It is further observed that it is not for the Courts to say whether the conditions prescribed in the tender under consideration were better than the one prescribed in the earlier tender invitations. It is further observed and held that the terms of the invitation to tender are not Page 54 of 67 HC-NIC Page 54 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT open to judicial scrutiny, the same being in the realm of contract. It is observed that the Government must have a free hand in setting the terms and conditions of the tender, it must have a reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The Courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The Courts cannot strike down the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical. Thus, as observed hereinabove, the Court in exercise of powers under Article 226 of the Constitution of India is not required to minutely and in depth consider each and every terms and conditions / eligibility criteria more particularly when the terms and conditions / eligibility criteria have been prescribed / provided after getting the opinion of the expert and considering the object and purpose of FAME Scheme under which the electric buses are required to be supplied. In exercise of powers under Article 226 of the Constitution of India and while considering the challenge to the terms and conditions of the eligibility criteria the Court is required to consider whether the terms and conditions are so arbitrary and/or perverse which a prudent person would not impose and/or such conditions have no nexus at all with the object to be achieved.
[9.14] In the present case the respondents have tried to even justify each and every terms and conditions / eligibility criteria under challenge. It is the case on behalf of the respondents that Page 55 of 67 HC-NIC Page 55 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT while imposing some of the conditions / providing eligibility criteria more particularly Clause 4.1 and 7.1, two important aspects viz. (1) National Policy of the Government of India to encourage "Make in India" to promote manufacturing, production of goods and services in India with a view to enhancing income, employment, etc.; and (2) a scheme called FAME Scheme was kept in mind. It is also the case on behalf of the respondents that the objective of the tender inquiry in question is to select one of the best parties, which is technically and financially qualified to undertake the tender job in question and for achieving the said objective, appropriate tender conditions have been formulated at the behest of the Expert viz. CEPT University. Therefore, it is the case on behalf of the respondent Nos.2 and 3 that the terms and conditions of the RFP under challenge are to be decided on the touchstone of the FAME Scheme as well as "Make in India" concept promoted by the Government of India in National interest. At this stage it is required to be noted that each and every terms and conditions under challenge are sought to be justified by the respondents in the affidavit in reply. The justification of the relevant clauses under challenge is as under:
"Clause 4.1 of the RFP requires the bidder to submit its bid either singly or through consortium of maximum two bidders. In furtherance of Clause 4.1, Clause 7.2 provides for bidding conditions for single bidder and consortium. As per the requirement, if the bid is through consortium, then in that case, the consortium must mandatorily include an OEM and Bus Operator Member meeting respective qualifications. Pertinently, the RFP is for selection of the Bus Operator for Page 56 of 67 HC-NIC Page 56 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT procurement, operation and maintenance of MIDI AC Fully Built Pure Electric Buses on Gross Cost Contract Basis. The said RFP is, as can be seen, the conglomeration of Operation, Procurement and Maintenance. For smooth and efficient functioning of the said project having a period of 7 + 2 years of operation, presence of the manufacturer is very much imperative. Moreover, the RFP is on Gross Cost Contract Basis which means that the revenue risk will be borne by the authorities. On the said count also, with a view to ensuring the smoother and efficient product maintenance throughout the contract period, the presence of OEM is in place.
Similarly, Clause 7.1, i.e. the eligibility criteria, requires the participation by the foreign firm which is registered in India. As aforesaid, the present tender requires not only for supply of buses but also for operation and maintenance with all risks of O&M transferred to the OEM or consortium of OEM and Bus Operator. OEM is made mandatory part of the consortium inasmuch as the experience of the OEM as accumulated in manufacturing and servicing of large number of buses becomes readily available, given the requirement to operate buses with new charging infrastructure. Possibility of putting the purchaser in the disadvantageous position cannot be ruled out for, lockingin a particular technology partner from a foreign country may result in possible higher cost and monopoly of a particular type of technology."
[9.15] Considering the aforesaid facts and circumstances and Page 57 of 67 HC-NIC Page 57 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT the justification it cannot be said that the Clauses 4.1, 7.1 can be said to be arbitrary and/or perverse and/or has no nexus with the object to be achieved. If the petitioner who is the supplier of BYD Auto Industry Co. Ltd., China who according to the petitioner is the best, in that case, BYD Auto Industry Co. Ltd., China can have a manufacturing unit in the country like others and can thereafter participate through consortium with the petitioner. When one of the object and the purpose of the FAME Scheme of the Government of India is 'Make in India' so as to promote the manufacturing, production of goods and services in India with a view to enhancing income, employment, etc., such a condition cannot be said to be either perverse and/or arbitrary.
[9.16] So far as the challenge to Clause 7.3(a)(i) of VolumeI of RFP which requires that the bidder should have manufactured 500 Diesel / CNG buses is concerned, it is the case on behalf of the petitioners that the same is discriminatory and tailormade with a view to favour the local / Indian diesel / CNG bus manufacturers and with a view to exclude the new electric bus manufacturers in India. Merely because, because of one condition or the other a particular bidder or a class may become ineligible and/or may include some other class by that itself, it cannot be said that the said conditions are tailormade and/or discriminatory. As such it is ultimately for the employer to fix the eligibility criteria which suits it and/or as per the requirement more particularly when such conditions are after consulting with the Expert. The justification is that the electric bus technology is not completely different from bus technology. It is also required to be noted that as such there are Page 58 of 67 HC-NIC Page 58 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT vague allegations of conditions being tailormade which may not be sufficient to render the condition arbitrary. Such allegations are to be specific, loud and clear substantiated by the material on record. In the case of International Trading Company and Anr. (Supra), it is observed by the Hon'ble Supreme Court that the canalization of a particular business in favour of even specific individual is reasonable when the interest of the country is concerned or when business affects the economy of the country. At this stage even the decision of the Hon'ble Supreme Court in the case of Michigan Rubber (India) Ltd. (Supra) is also required to be referred to. In the case before the Hon'ble Supreme Court, the prequalification criteria has specified condition Nos.2(a) and 2(b) of the tender in question viz. in restricting the participation in the tender to OEM were under challenge on the ground that the same are unreasonable, arbitrary, discriminatory and incorporated to exclude the appellant Company and other similarly situated companies from the tender process on wholly extraneous grounds which is unsustainable in law. After considering the law on the subject more particularly considering the decision of the Hon'ble Supreme Court in the case of Tata Cellular (Supra), Raunaq International Ltd. (Supra) and International Trading Co. (Supra), the Hon'ble Supreme Court refused to set aside such pre qualification conditions. In the aforesaid decision in para 19 the Hon'ble Supreme Court considered and/or taken into consideration the observations made in paras 38 to 44 of the decision in the case of Association of Registration Plates (Supra).
Para 19 of the decision in the case of Michigan Rubber (India) Limited (Supra) reads as under:
Page 59 of 67HC-NIC Page 59 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT "19. While considering the above submissions, the three Judge Bench held as under: (Assn. of Registration Plates case12, SCC pp. 698701, paras 3840 & 4344) "38. In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State authorities. Unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of the class of intending tenderers under Article 19 of the Constitution. On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep indigenous manufacturers out of the field. It is explained that on the date of formulation of scheme in Rule 50 and issuance of guidelines thereunder by the Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a longterm basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates.
39. The notice inviting tender is open to response by all and even if one single manufacturer is ultimately selected for a region or State, it cannot be said that the State has created a monopoly of business in favour of a private party.
Rule 50 permits the RTOs concerned themselves to implement the policy or to get it implemented through a selected approved manufacturer.
40. Selecting one manufacturer through a process of open competition is not creation of any monopoly, as contended, in violation of Article 19(1)(g) of the Constitution read with clause (6) of the said article. As is sought to be pointed out, the implementation involves large network of operations of highly sophisticated materials. The manufacturer has to have embossing stations within the premises of the RTO. He has to maintain the data of each plate which he would be getting from his main unit. It has to be crosschecked by the RTO data. There has to be a server in the RTO's office which is linked with all RTOs in Page 60 of 67 HC-NIC Page 60 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT each State and thereon linked to the whole nation. Maintenance of the record by one and supervision over its activity would be simpler for the State if there is one manufacturer instead of multimanufacturers as suppliers. The actual operation of the scheme through the RTOs in their premises would get complicated and confused if multi manufacturers are involved. That would also seriously impair the high security concept in affixation of new plates on the vehicles. If there is a single manufacturer he can be forced to go and serve rural areas with thin vehicular population and less volume of business. Multi manufacturers might concentrate only on urban areas with higher vehicular population.
43. Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work. Article 14 of the Constitution prohibits the Government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim a fundamental right to carry on business with the Government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest. Undisputedly, the legal position which has been firmly established from various decisions of this Court, cited at the Bar (supra) is that government contracts are highly valuable assets and the court should be prepared to enforce standards of fairness on the Government in its dealings with tenderers and contractors.
44. The grievance that the terms of notice inviting tenders in the present case virtually create a monopoly in favour of parties having foreign collaborations, is without substance. Selection of a competent contractor for assigning job of supply of a sophisticated article through an open tender procedure, is not an act of creating monopoly, as is sought to be suggested on behalf of the petitioners. What has been argued is that the terms of the notices inviting tenders deliberately exclude domestic manufacturers and new entrepreneurs in the field. In the absence of any indication from the record that the terms and conditions were tailormade to promote parties with foreign collaborations and to exclude indigenous manufacturers, judicial interference is uncalled for." After observing so, this Court dismissed all the writ petitions directly filed in this Court and transferred to this Court from the High Courts."
Page 61 of 67HC-NIC Page 61 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT Under the circumstances, Clause 7.3(a)(i) is not required to be quashed and set said at the instance of the petitioner bidder on the ground submitted on behalf of the petitioners.
[9.17] Similarly, condition No.7.3(a)(ii) of VolumeI of the RFP providing for the bidder possessing networth of Rs.100 Crores also cannot be said to be unreasonable and/or arbitrary. The aforesaid cannot be said to be discriminatory. It is ultimately for the employer to insist for a networth of a particular amount with a view to seeing that the bidder is financially viable and possesses the said power. Merely because one of the bidder may be declared ineligible in fulfilling the aforesaid criteria is no ground to set aside such condition. It is ultimately for the employer to fix the norms / eligibility criteria with respect to the networth. The Court in exercise of powers under Article 226 of the Constitution of India is not required to determine and/or suggest what would be the required networth. Neither the Court nor even the petitioner can suggest what can be the amount with respect to networth. In a given case, even some other figure would have been provided, in that case another bidder, who is not fulfilling the same may even suggest another amount. Considering the law laid down by the Hon'ble Supreme Court in catena of decisions referred to hereinabove as such in the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State Authorities, except when the action of the tendering authorities is found to be malicious and a misuse of its statutory powers, interference by Court is not warranted. It is also observed and held by the Hon'ble Supreme Page 62 of 67 HC-NIC Page 62 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT Court that certain preconditions or qualification for tenders have to be laid down to ensure that the contractor has capacity and/or resources to successfully execute the work.
[9.18] Now, so far as the challenge to one of the condition which specifies requirement of wheel base of 5000 mm +/ 200 mm is concerned, it appears that the same is challenged by the petitioner as the petitioner is not likely to fulfill that criteria as the petitioner in its electric bus manufacturing has the wheel base of 4400 mm. For the reasons stated hereinabove and the limited scope of interference and the greater latitude to be given to the employer, the said condition is also not required to be set aside at the instance of the petitioner and that too in exercise of powers under Article 226 of the Constitution of India. Even otherwise it is ultimately for the employer to provide for such an eligibility criteria as per the requirement and neither the petitioner nor the Court can suggest what type of equipment and/or wheel base the employer should provide / insist.
At this stage it is required to be noted that as such the petitioner has preferred the present petition challenging the impugned conditions as the petitioner is likely to be declared ineligible on nonfulfillment of the impugned conditions. It appears that the petitioner is not fulfilling the eligibility criteria contained in Clause 7.3(a)(i), 7.3(a)(ii) and Clause 7.1 (requirement of wheel base of 5000 mm +/ 200 mm). It appears that the petitioner itself as a standalone does not possess the networth of Rs.100 Crores. As the petitioner is not fulfilling the eligibility criteria / conditions impugned the petitioner has challenged Clause Page 63 of 67 HC-NIC Page 63 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT 4.1 and 7.1 and has requested to modify and/or amend the conditions suitably so as to enable the BYD Auto Industry Co. Ltd., China - supplier of the petitioners who admittedly is a foreign firm not registered in India to participate as a consortium with the petitioners. Therefore, as such the petitioner is not fulfilling any of the eligibility criteria contained in Clause 7.3(a)(i), 7.3(a)(ii) and 7.1 of the RFP.
As observed by the Punjab & Haryana High Court in the case of G.R.L. Engineers (Supra), turnover is an important criteria to determine the financial viability as well as staying power of an enterprise. So is the networth of the manufacturer. It is further observed that it is reasonable to presume that the higher the turnover and greater the networth, the less possibility of enterprise suffering a setback and in the event of its suffering a setback, the greater possibility of revival. Under the circumstances, we are unable to say that the impugned criteria are unreasonable or irrational.
[10.0] Now, so far as the reliance placed upon the decision of the High Court of Himachal Pradesh in CWP No.601/2017, by the learned Counsel appearing on behalf of the petitioners is concerned, considering the entire judgment as a whole, we are of the opinion that the said judgment shall not be applicable to the facts of the case on hand and/or assist the petitioners. In the case before the High Court of Himachal Pradesh, the petitioner after participating in the tender process and after submitting bids and thereafter having been unsuccessful challenged some of the terms and conditions and the Letter of Award of contract. To the Page 64 of 67 HC-NIC Page 64 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT aforesaid the Division Bench observed and held that once having participated on the basis of the amendment in the eligibility criteria as per the 2nd Corrigendum, it was not open for the participant bidder to challenge the same subsequently. On facts the Division Bench held that the change in conditions by way of Corrigendum were not tailormade with a view to suit the successful bidder. Therefore, the entire judgment of the Himachal Pradesh High Court is required to be considered from the aforesaid angle and from the aforesaid point of view.
[10.1] Even the decision of the Karnataka High Court in the case of Esteco Coal Services Limited (Supra) relied upon by the learned Counsel appearing on behalf of the petitioners, with respect and in light of the law laid down by the Hon'ble Supreme Court in the aforesaid decisions, we do not agree with the view taken by the Karnataka High Court. It appears that before the Karnataka High Court the decision of the Hon'ble Supreme Court in the case of Tata Cellular (Supra) was not pressed into service and/or was not brought to the notice of the High Court. There are binding decisions of even this Court in the case of Aahna Air Services Pvt. Ltd. (Supra) and Tractors & Farm Equipment Ltd. (Supra) taking a contrary view.
[11.0] Before parting with the present judgment, we may observe that in the present case the RFP has been issued for the selection of the bus operators for procurement, operation and maintenance of MIDI AC Fully Built Pure Electric Buses on Gross Cost Contract Basis. 65% of the subsidy is to be paid by the Central Page 65 of 67 HC-NIC Page 65 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT Government under the FAME Scheme and as per the approval granted by the Central Government / Union of India, the LOI is required to be issued to the OEMs / suppliers of the selected cities on or before 28.02.2018, failing which the respondent Nos.2 and 3 shall lose the subsidy. Even otherwise if at that stage the impugned terms and conditions are interfered with and the respondents are directed to reissue the RFP with modified conditions as suggested by the petitioners, in that case, there shall be further delay and the respondent Nos.2 and 3 are likely to lose a huge sum by way of subsidy to the extent of approximately Rs.30 Crores to Rs.40 Crores, which will not be in the larger public interest. Even otherwise as observed hereinabove the petitioners are not fulfilling any of the terms and conditions / eligibility criteria impugned in the present petition.
[12.0] In view of the above and for the reasons stated above, when it is found that the impugned eligibility criteria / conditions in question contained in the RFP cannot be said to be perverse and/or arbitrary and/or unreasonable and/or so unreasonable that no prudent person can think of imposing such conditions and it cannot be said to be with a view to favour any other bidders and/or class and having a very limited scope of judicial review as per the catena of decisions of the Hon'ble Supreme Court referred to hereinabove, we see no reason to interfere with the impugned eligibility criteria / conditions contained in the RFP, in exercise of powers under Article 226 of the Constitution of India. The petitioners - as a bidder are not entitled to the reliefs as sought in the present petition more particularly a writ of mandamus directing Page 66 of 67 HC-NIC Page 66 of 67 Created On Thu Feb 22 22:55:57 IST 2018 C/SCA/2097/2018 CAV JUDGMENT the respondent Nos.2 and 3 to modify and/or amend the terms and conditions / eligibility criteria in the RFP, as suggested by the petitioners - bidder. Under the circumstances, present petition fails and the same deserves to be dismissed and is, accordingly, dismissed. Rule is discharged. No costs.
sd/ (M.R. SHAH, J.) sd/ (A.Y. KOGJE, J.) Ajay** Page 67 of 67 HC-NIC Page 67 of 67 Created On Thu Feb 22 22:55:57 IST 2018