Gujarat High Court
M-Tech Innovations vs State Of Gujarat on 16 March, 2022
Author: Aravind Kumar
Bench: Aravind Kumar, Ashutosh J. Shastri
C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 14695 of 2021
With
CIVIL APPLICATION (FOR VACATING INTERIM RELIEF) NO. 1 of
2021
In R/SPECIAL CIVIL APPLICATION NO. 14695 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR
and
HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI
=======================================
1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
=======================================
M-TECH INNOVATIONS
Versus
STATE OF GUJARAT
=======================================
Appearance:
MR NIRUPAM NANAVATY, SENIOR ADVOCATE WITH MR PRATIK Y
JASANI(5325) for the Petitioner(s) No. 1
MS MANISHA LAVKUMAR SHAH, GOVERNMENT PLEADER WITH MR
CHINTAN DAVE, AGP for the Respondent(s) No. 1,2
MR NANDISH CHUDGAR WITH MR BHAVESH B CHOKSHI(3109) for the
Respondent(s) No. 3
===============================================
CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND
KUMAR
and
HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI
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C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022
Date : 16 /03/2022
CAV JUDGMENT
(PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR)
1. Respondent No.2 - Commissioner of Transport issued Request For Proposal (RFP), i.e. tender for selection of service provider for centralised issuance of Driving Licences in the form of laminated card type without a chip on 25.06.2021 prescribing last date for submission of queries as 01.07.2021 and the date for pre-bid meeting was scheduled to be held on 05.07.2021 and the last date for online submission of bid was 28.07.2021 and opening of the technical bid was scheduled to be held on 02.08.2021. The said process was scrapped which was intimated to all the bidders vide communication dated 07.09.2021 (Annexure-G) which is under challenge in this petition and further direction is sought to quash the fresh tender bearing RFP No.480749 (Annexure-B) called for and restoration of the first tender is sought for with a prayer to conclude the same by undertaking the requisite formalities including allotment of contract.
2. Brief background of the case:
2.1 The Commissioner of Transport - respondent No.2 Page 2 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 issued Request For Proposal (RFP), i.e. tender for selection of service provider for centralised issuance of Driving Licences in the form of laminated card without chip. The said tender was divided into four parts, wherein the conditions and obligations between the parties as well as respondent No.2 were crystallised. The eligibility criterion to be made by prospective bidders, inter alia, was that the card material shall be having composition of 60% Polyethylene Terephthalate (PET) and 40% Polyvinyl Chloride (PVC) used for card body and top polyester patch of 1 mil (minimum) to be applied above thermal printing layer for durability of printing. The Schedule of dates fixed for the purpose of Tender No.469145-RFP are as under:
25/06/2021 Date of issue of Tender Document 01/07/2021 Last Date of Submission of Queries 05/07/2021 Date of Pre-Bid Meeting 28/07/2021 Last date of online Submission of Bid 29/07/2021 Last date of Physical Submission of Bid 30/07/2021 Opening of Technical Bid 19/08/2021 Opening of Financial Bid 2.2 For Tender ID No.48079, the following dates were fixed :Page 3 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022
C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 07/09/2021 Date of issue of Tender Document 13/09/2021 Last Date of Submission of Queries 15/09/2021 Date of Pre-Bid Meeting 29/09/2021 Last date of online Submission of Bid 30/09/2021 Last date of Physical Submission of Bid 01/10/2021 Opening of Technical Bid 14/10/2021 Opening of Financial Bid 14/10/2021 Proposal for DPC/SPC to department of Ports and Transport. A copy of the said proposal is annexed hereto and marked as ANNEXURE R4.
2.3 Petitioner submitted its online bid enclosing unconditional bank guarantee having validity of 9 months for an amount of Rs.42,00,000/- and also paid non-refundable bid processing fee of Rs.15,000/-. Petitioner claims to have met all the specified criteria and the technical bid was opened and petitioner was allowed to participate in the financial bidding.
Petitioner forwarded a communication dated 27.07.2021 (Annexure-E) to respondent No.2 apprising that it would be difficult to get the exact composition of 60:40% with respect to PET:PVC without any variation and as such sought for addendum to Clause 32 being issued. In all, there were 8 bidders including petitioner, out of which 1 bidder was technically disqualified and financial bids of 7 companies came to be opened. Petitioner was declared as L1.
Page 4 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 2.4 Petitioner is said to have approached respondent No.2 for execution of the final contract. On account of there being no progress in execution of the contract, petitioner is said to have approached respondent Nos.1 and 2 on several occasions. Petitioner received a communication dated 07.09.2021 (Annexure-G) from respondent No.1 intimating petitioner and others that the tender bearing RFP No.469145 had been scrapped and the authority had decided to re-publish the same with revised provision on the ground of ambiguity of PET : PVC percentage of card specifications. 2.5 Hence, fresh tender bearing RFP No.480749 was issued, whereunder last date for submission of query has been mentioned as 30.09.2021 and the composition of minimum 60:40% with respect to PET:PVC was varied upto 70:30. On the ground that there was no justification to scrap the earlier tender and calling for fresh tender when there existed Clause 32 enabling respondent No.2 to issue addendum for varying composition of PET:PVC, petitioner has approached this Court by filing this Special Civil Application.
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3. On being notified, respondents have appeared and filed their reply affidavits viz. Respondent Nos.2 and 3 denying the averments made in the petition, except to the extent expressly admitted thereunder. Respondent No.3 has contended that even in the earlier tender viz. first tender floated deviation / difference in the chemical composition / mixture of the sample cards of the respondent as compared to the standard of 60:40 criteria, was merely -0.55%, whereas deviation of other bidders ranged from -0.90% to -63.80% and that of the petitioner - 4.63%.
4. Respondent No.2 has contended that Commissioner of Transport has absolute right / power of scrapping the tender by virtue of clause 27 of Section 11 of the tender condition and by virtue of such power vested, tender has been scrapped and petitioner after having participated in the second tender process, has no right to invoke the writ jurisdiction of this Court. It is also contended that petitioner who has participated as a bidder in the tender does not have any right accrued much less vested in it. It is also contended that eligibility criterion which was required to be made by the prospective bidders, inter alia, that the card material should have composition of Page 6 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 60% PET and 40% PVC and the proposal to process the Departmental Purchase Committee was sought from the Ports and Transport Department who ordered for scrapping the tender and it is based on the departmental level meeting held, wherein it was observed that there is ambiguity in PET:PVC ratio mentioned in the tender document and maximum limits had not been specified for PET:PVC material to be used as it was not possible to correct the tender condition after opening the technical and financial stages on e-procuring portal. Hence, it was resolved to scrap the tender and re-issue tender with financially clear and maximum limits for PET:PVC material and accordingly, all the tenderers were informed including petitioner. It is further stated by respondent No.2 that fresh tender came to be floated and eligibility criteria prescribed was minimum 60% PET and 40% PVC and maximum allowable variation upto 70% PET and 30% PVC and the said process was justified and sought for dismissal of the petition.
5. Whereas respondent No.3 in its reply affidavit has sought to justify the action of respondent No.2. It is also contended that Clause 6 as well as Clause 20 of Section 1 to the Page 7 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 invitation for bid provided that financial bids of only eligible bidders whose samples found to be as per standards specified in Rules 16(1), 16(2) and 48 of the Central Motor Vehicles Rules, 2019 (Second Amendment) and verified by Central Instituted of Plastics Engineering and Technology (CIPET), Chennai would be opened. It is also contended that in the earlier or first tender process, financial bid of respondent No.3 was not opened on the ground that it had not been selected at the evaluation of technical stage and this fact was uploaded in the website of the Commissioner of Transport and immediately respondent No.3 submitted a representation stating thereunder that they had offered the card as per the tender requirement of 60:40 composition ratio and requested respondent No.2 for reconsideration of its decision by representation dated 21.08.2021 (Annexure-A3). On account of its representation having not been considered, respondent No.3 approached this Court by filing Special Civil Application No.12982 of 2021 and advance copy was served on the learned Government Pleader and by the time the petition was listed on 09.09.2021. Respondent No.2, vide communication dated 07.09.2021, had informed respondents as well as all other bidders that the Page 8 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 tender process had been scrapped due to ambiguity in the ratio of PET:PVC percentage of the card specification and in these changed circumstances, the respondent had withdrawn Special Civil Application on 09.09.2021.
6. It is contended that on new tender being floated, wherein it provided that the card to be supplied should have minimum 60% PET and 40% PVC with a maximum variance allowable upto 70% PET and 30% PVC and not more than that, respondent No.3 had submitted its technical and financial bid on 29.09.2021 and after technical scrutiny of the bid documents and sample cards, the technical bid of respondent No.3 along with three others including petitioner had been opened and found to be eligible and financial bids of the parties opened by respondent No.2 was uploaded on the official website and the price offered by respondent No.3 being the lowest or L1 bidder was declared as eligible for award of the tender. Denying the averments made in the petition, respondent No.3 has sought for its dismissal.
7. We have heard the arguments of Mr.Nirupam Nanavaty, learned Senior Counsel assisted by Mr.Pratik Y. Page 9 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 Jasani, learned counsel appearing for the petitioner, Mrs.Manisha Luvkumar Shah, learned Government Pleader assisted by Mr.Chintan Dave, learned Assistant Government Pleader appearing for respondent Nos.1 and 2 and Mr. Nandish Chudgar, learned counsel assisted by Mr.Bhavesh B. Choksi, learned counsel appearing for respondent No.3.
8. It is the contention of Mr.Nirupam Nanavaty, learned Senior Counsel appearing with Mr.Pratik Jasani, Advocate for the petitioner that the impugned order is arbitrarily passed in colourable exercise of powers and to favour the third respondent. He would further contend that the entire exercise of scrapping the old tender process and issuance of new tender is at the instance of the third respondent and it is not an independent decision of the Commissioner of Transport, but taken at the instance of the State Government to favour respondent No.3 and it is without authority of law. He would further contend that respondent No.3 was not qualified in the technical bid in the first tender (No.469145-RFP) and instead of resorting to Clause 32 by issuing clarification and/or addendum the second respondent has scrapped the tender process and called for fresh tender with an intention to help the third Page 10 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 respondent. He would contend that entire exercise is arbitrary and has taken place after opening of the financial bid of all the bidders wherein petitioner was found to be lowest one (L1). He would elaborate his submissions by contending that Clause 27 no doubt gives powers to cancel the tender process but such power has to be exercised for justifiable and valid reasons and it cannot be resorted to, specially when the process is at the advance stage that too after opening of the financial bids and this course adopted by second respondent would smack of malafides. In support of his submissions, he has relied upon the following judgments :
(i) Vice Chairman and Managing Director, City and Industrial Development Corporation of Maharashtra Ltd. and another vs. Shishir Realty Private Limited and others, reported in 2021 SCC Online SC 1141.
(ii) Uflex Ltd. vs. Government of Tamil Nadu and others, reported in 2021 SCC Online SC 738.
9. By referring to the aforesaid authoritative pronouncements of the Hon'ble Apex Court and relying upon the annexures produced along with the petition, he would pray for allowing the Special Civil Application. Page 11 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022
10. Per contra, Ms.Manisha Lavkumar Shah, learned Government Pleader assisted by Mr.Chintan Dave, learned Assistant Government Pleader has opposed the petition primarily on the ground that petitioner has no locus standi to file the petition as petitioner had failed to disclose about having participated in the fresh tender process and if same had been disclosed, this Court would have probably not passed the interim order and as such, she prays for this Court not to exercise extraordinary jurisdiction. She has further contended that even before the contract could be awarded, the grievance of petitioner ought not to be entertained.
11. On facts she would submit that on account of there being ambiguity with regard to parameters/combination of PET:PVC, no bidder had fulfilled such criteria in either form and as such a conscious decision was taken by the authority by assigning appropriate reasons to call for fresh tenders by scrapping the earlier tender process and as such contention raised by the petitioner that respondent State was favouring any person is without any basis. She would also submit that PET:PVC ratio having not been fulfilled by any of the bidders and later on after the process being concluded, no variation or Page 12 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 modification of the terms being permissible in any form, a conscious decision was taken to issue fresh tender with modification to avoid further complications and as such she has prayed for rejection of the petition.
12. She would also draw the attention of the Court to Clause 27 of Section (ii) of first tender wherein a special power is available with the authority to accept or reject any bid and to cancel the bidding process and reject all bids at any time prior to award of the contract without incurring any liability and there was ambiguity with regard to PET:PVC ratio in the first tender issued and the rules of the game could not have been changed in the midst and as such, the tender inviting authority has taken a conscious decision to call for fresh tenders by relying upon Clause 27 of the tender notification and conditions stipulated under the notice inviting tender.
13. She would also submit that tender amount being more than Rs.01.00 Crore, the State authorities would require to be consulted and 2nd respondent having undertaken said exercise, a conscious decision was taken to scrap the first tender and republish the revised tender and it was served upon Page 13 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 all the bidders and as such the allegation of arbitrariness or favoritism as alleged by petitioner is out of context. She would also draw the attention of the Court to the original proceedings placed on record to contend that Commissioner of Transport was very much party to the decision making process and submits that petitioner is not justified in contending that the decision to cancel the earlier tender process and initiate afresh is at the dictum of the State.
14. She would further contend that in the fresh tender process, petitioner along with third respondent had also qualified in the technical bid and as such it is incorrect to contend that with a view to favour third respondent fresh tender process had been undertaken. She would also submit that the contract has not been awarded so far to any bidder and petitioner has not acquired any legal right to challenge the course of action adopted by the State.
15. She would also submit that eligibility criteria being technical in nature and in the realm of experts and issuing an addendum as suggested by petitioner would result in the change of rules during the tender process namely it would exclude Page 14 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 others, and as such a conscious decision was taken by the Department of Transport to call for fresh tender by scrapping earlier tender and as such no malice or arbitrariness or favouritism can be attributed to the decision making process. She would also deny the contention of petitioner that in a hurried manner fresh tender is issued by submitting that the earlier contract had come to an end on 10.03.2021 and the extension granted also had come to an end and as such calling for fresh tender process had become inevitable. She would submit that fresh tender process is at the advance stage and same is being concluded which is in the public interest and but for the interim order the process would have been completed and prays for vacating the interim order and dismissal of the petition.
16. In support of her submissions, she has relied upon the following judgments :
(i) Maa Binda Express Carrier and another vs. North-East Frontier Railway and others, reported in 2014 (3) SCC 760.
(ii) State of Jharkhand and others vs. CWE-Soma Consortium, reported in 2016 (14) SCC 172.Page 15 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022
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17. Mr.Nandish Chudgar, learned counsel with Mr.Bhavesh Chokshi, Advocate appearing for the third respondent has supported the stand of the State. He would contend that in the first tender process all bidders were not fulfilling the eligibility criteria namely composition with regard to PET:PVC and said factor being the core component, a decision appears to have been taken by respondent Nos.1 and 2 and as such, third respondent was disqualified resulting in protest being lodged by submitting a representation on 21.08.2021 and challenging the disqualification, Special Civil Application No.12982 of 2021 was filed on 04.09.2021 and by the time the petition came up for consideration, the respondent authorities placed on record the communication dated 07.09.2021 which reflected the scrapping of the first tender which had been communicated to all the bidders including third respondent and hence, Special Civil Application No.12982 of 2021 was not pressed by third respondent. He would also submit that petitioner having participated in the re-tender process, has no locus standi to challenge the process and in fact petitioner has sought for refund of the EMD and other process charges and thereby petitioner is estopped from challenging the Page 16 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 process that too after having participated in the proceedings.
18. Having heard the learned advocates appearing for the parties, it would be apt to note that petitioner is an ISO 9001:2015, ISO/IEC 27001:2013, ISO 20000-1:2011, CMMI-DEV V.1.3 and TS 16949:2016 certified company, manufacturing all types of plastic cards like smart cards, smart card based application, in-mould decoration etc. and is said to have offered specially designed software applications to various business requirements and is also said to have catered various States and had issued driving licences. The second respondent issued a tender on 25.06.2021 for selection of service provider for centralized issuance of driving licences in the form of laminated card type without a chip for the State of Gujarat and the last date for submission of queries was 01.07.2021.
19. Some of the key clauses of the tender which may be relevant are extracted hereinbelow :
"23. Methodology & Criteria for evaluation COT/COT will form an evaluation Committee or it may be done by Committee which will evaluate the proposals submitted by the bidders for a detailed scrutiny. During evaluation of proposals, COT/COT, may, at its discretion, ask the bidders for Page 17 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 clarification of their Technical Proposals.
Note: - Every page of Technical Compliance Sheet will be signed by Bidder without overwriting. Whenever required the proof for every commitment has to be submitted, Technical brochures should be attached whereever available).
The bidder shall quote single rate for Issuance of Driving Licenses in form of laminated card type without a chip. No different rates required for Driving Licenses in form of laminated card type without a chip.
The sample of the card submitted by the bidders as a part of technical bid shall be tested by CIPET, Chennai only. The cost of the testing shall be borne by the bidder.
Bidder has to submit the entire solution, implementation plan including training and application / technical support for the successful completion of the project.
The financial bids of only eligible bidders whose sample card shall be found as per Standards by CIPET, Chennai will be opened.
The Financial Bids will be opened online on nprocure. The name of bidder & bid prices will be available online on nprocure on stipulated date and time.
The bidder with lowest one (L1) quotation in the Financial Bids will be invited for negotiations for awarding the contract. In case of a tie where two or more bidders have quoted the same price, COT will re-invite the financial bid among those bidders.
27. COT/COT's Right to Accept Any Bid and to reject any or All Bids COT/COT reserve the right to accept or reject any bid, and to cancel the bidding process and reject all bids at any time prior to award of Contract, without thereby incurring any liability to the affected Bidder Page 18 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 or bidders or any obligation to inform the affected Bidder or bidders of the grounds for COT' action.
32. Interpretation of the clauses in the Tender Document / Contract Document In case of any ambiguity in the interpretation of any of the clauses in Bid Document or the Contract Document, COT's interpretation of the clauses shall be final and binding on all parties.
13. Contract Amendments 13.1 No variation in or modification of the terms of the Contract shall be made except by written amendment signed by the parties. However Department shall, as the situation warrants, in consultation and agreement with bidder shall make major additions to the scope and agree for suitable payments."
20. The technical specification as prescribed under the tender document would also be of the relevance as the tender process initiated which came to be cancelled was on account of none of the bidders were meeting the prescribed criteria. Hence, the technical specification stipulated under the tender which would have bearing on the rival contention raised is extracted hereinbelow :
"Section X: Minimum Technical Specification Below are the minimum specifications of the equipment's required for the implementation of the project.
Page 19 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 ** Item Name Minimum Specifications LAMINATED Card Material and design: CARDS Card design and specifications shall
WITHOUT CHIP be as per Ministry of Road Transport and Highway notification no. G.S.R. 174(E) dated 01 March 2019.
Card material shall be having composition of 60% PET and 40% PVC used for card body and top polyester patch of 1 mil(minimum) need to be applied above thermal printing layer for durability of printing. Sample card should be attached with physical bid and COT office shall have right to select this sample card for verification and quality and compliance. COT shall also have rights to select any sample card from future bulk supplied as and when dim fit.
21. It is true and correct that at the first instance when the technical bid was opened on 30.07.2021, the third respondent was disqualified and subsequently on 19.08.2021 the financial bid was opened. On 21.08.2021, a proposal was forwarded by the second respondent for processing of the Departmental Project Committee (IT)(DPC) from the Ports and Transport Department in the State Government namely first respondent explaining in detail that the minimum technical specification specified in the tender notification was to the effect that the card material should have composition of 60% PET and 40% PVC. On 06.09.2021, the first respondent has ordered for Page 20 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 scrapping of the tender process and the reason which can be discerned is found in the original record disclosing that at the departmental level meeting it was observed that there is ambiguity in PET and PVC ratio mentioned in the tender document and minimum and maximum limits having not been specified in the tender document, it was not possible to alter the tender condition on opening of technical and financial bid which was on nprocure portal and as such it was resolved to scrap or cancel the tender and reissue fresh tender by clearly defining the minimum and maximum limits for PET and PVC material. The decision to scrap the tender was intimated to all the tenderers including petitioner and third respondent. The technical specification as quoted by all the tenderers including petitioner is as under :
No. Name PET PVC
1 M-Tech Innovations Pvt.Ltd. 61.85% 38.15%
2 Silver Touch Technologies 59.67% 40.33%
3 Rosemetra Technologies 60.71% 39.29%
4 Gujarat Infotech Pvt.Ltd. 63.53% 36.47%
5 MCT Cards 61.74% 32.86%
6 Pho-com net 60.36% 39.64%
7 VCT & Tirth (Consortium) 69.57% 30.43%
8 KL-High Tech Pvt. Ltd. 85.52% 14.48%
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22. Thus, it would clearly emerge from the above tabular column that none qualified in respect of prescribed composition of PET:PVC in the first tender. As noticed hereinabove, the decision taken for scrapping and issuance of amended clause of composition is a collective decision which is taken by the three officers. The said decision has been taken by virtue of Clause 27 of the tender inviting condition which empowers the tender inviting authority to reject the tender. In the instant case the tender inviting authority after having arrived at a conclusion that the original tender notification did not specify or indicate the maximum allowable variance and none of the tenders having met the prescribed criteria, it cannot be gainsaid by the petitioner that the tender inviting authority ought to have issued an addendum and could not have commenced the tender process afresh, inasmuch as the change of the rules of the game in the midst is impermissible.
23. Mr.Nirupam Nanavaty, learned Senior Counsel appearing for the petitioner has relied upon the judgment of the Hon'ble Apex Court in the matter of Vice Chairman and Managing Director, City and Industrial Development Page 22 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 Corporation of Maharashtra Ltd. and another vs. Shishir Realty Private Limited and others, reported in 2021 SCC Online SC 1141, to contend that whole process of issuance of fresh tender is tainted inasmuch as the financial bids in the first tender was opened and respondent Nos.1 and 2 with an intention to help the 3rd respondent have cancelled the first tender process which was not warranted. A perusal of the said judgment would indicate that during June, 2008, City and Industrial Development Corporation of Maharasthra (For short "CIDCO") invited a tender to lease the land within its jurisdiction for the purpose of development of necessary infrastructure such as hotels etc. around Navi Mumbai Airport. The Metropolis Hotel was declared as the highest bidder and letter of allotment was issued in its favour. On execution of two separate Lease Deeds, certain complaints are said to have been received by the Principal Secretary, Urban Development Department. Based on an inquiry, show cause notice came to be issued to the bidder namely Metropolis Hotel and M/s.Shishir Realty Private Limited as the assignment of lease in favour of said companies had been approved by CIDCO. The notice contemplated cancellation of Lease Deeds on account of alleged Page 23 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 breach of tender conditions by the bidder. In this background, the Hon'ble Apex Court has held that illegal procedure was adopted and as such it had vitiated the subsequent order passed by the Vice Chairman as the irregularity goes to the root of the matter. Hence, the Hon'ble Apex Court held that after conducting the tender process and receiving money, the Government had backtracked which led to the prolonged litigation. It was also held by the Hon'ble Apex Court that annulling the allotment on hyper-technical grounds cannot be sustained as being contrary to the doctrine of fairness.
24. However, in the instant case the authorities after having found that none of the bidders had met the composition criteria prescribed under the tender notification, had resorted to cancel the tender process and resolved to call for fresh tender instead of changing the rules of the game in the midst. This course undertaken by the respondent Nos.1 and 2 cannot be termed or construed as arbitrary exercise of power, but on the other hand it has to be held as being fair not only to the petitioner and 3rd respondent but also to all other bidders. Page 24 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022
25. The Hon'ble Supreme Court in the case of State of Jharkhand and others vs. CWE-Soma Consortium, reported in (2016) 14 SCC 172, has held that there is no obligation on the part of person issuing tender notice to accept any tender or even lowest tender. It has also been held that so long as bid is not accepted, highest bidder acquires no vested right to have auction concluded in his favour.
26. It is further held thereunder that :
"13. In case of a tender, there is no obligation on the part of the person issuing tender notice to accept any of the tenders or even the lowest tender. After a tender is called for and on seeing the rates or the status of the contractors who have given tenders that there is no competition, the person issuing tender may decide not to enter into any contract and thereby cancel the tender. It is well-settled that so long as the bid has not been accepted, the highest bidder acquires no vested right to have the auction concluded in his favour (vide Laxmikant and Ors. v. Satyawan and Ors. (1996) 4 SCC 208; Rajasthan Housing Board and Anr. v. G.S. Investments and Anr. (2007) 1 SCC 477 and uttar Pradesh Avas Evam Vikash Parishad and Ors. v. Om Prakash Sharma (2013) 5 SCC 182).
14. The appellant-state was well within its rights to reject the bid without assigning any reason thereof. This is apparent from clause 24 of NIT and clause 32.1 of SBD which reads as under:-
"Clause 24 of NIT: 'Authority reserves the right to reject any or all of the tender(s) received without assigning any reason thereof.' Page 25 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 Clause 32.1 of SBD: '...the Employer reserves the right to accept or reject any Bid to cancel the bidding process and reject all bids, at any time prior to award of Contract, without thereby incurring any liability to the affected Bidder or Bidders or any obligation to inform the affected Bidder or Bidders of the grounds for the Employer's action'."
In terms of the above clause 24 of NIT and clause 32.1 of SBD, though Government has the right to cancel the tender without assigning any reason, appellant-state did assign a cogent and acceptable reason of lack of adequate competition to cancel the tender and invite a fresh tender. The High Court, in our view, did not keep in view the above clauses and right of the government to cancel the tender.
15. The State derives its power to enter into a contract under Article 298 of the Constitution of India and has the right to decide whether to enter into a contract with a person or not subject only to the requirement of reasonableness under Article 14 of the Constitution of India. In the case in hand, in view of lack of real competition, the state found it advisable not to proceed with the tender with only one responsive bid available before it. When there was only one tenderer, in order to make the tender more competitive, the tender committee decided to cancel the tender and invited a fresh tender and the decision of the appellant did not suffer from any arbitrariness or unreasonableness."
27. It has also been held that right to refuse the lowest or any other tender is always available to the government.
28. In the matter of Silppi Constructions Contractors vs. Union of India and another, reported in (2020) 16 SCC Page 26 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 482, it was held that terms of invitation to tender cannot be open to judicial scrutiny. It has been further held :
"7. In Tata Cellular vs. Union of India1, it was held that judicial review of government contracts was permissible in order to prevent arbitrariness or favouritism. The principles enunciated in this case are:
"94. .......
(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 Page 27 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 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. In Raunaq International Ltd. vs. I.V.R. Construction Ltd.2, this Court held that superior courts should not interfere in matters of tenders unless substantial public interest was involved or the transaction was mala fide.
9. In Air India Limited vs. Cochin International Airport Ltd.3, this Court once again stressed the need for overwhelming public interest to justify judicial intervention in contracts involving the State and its instrumentalities. It was held that Courts must proceed with great caution while exercising their discretionary powers and should exercise these powers only in furtherance of public interest and not merely on making out a legal point.
10. In Karnataka SIIDC Ltd. vs. Cavalet India Ltd.4 it was held that while effective steps must be taken to realise the maximum amount, the High Court exercising its power under Article 226 of the Constitution is not competent to decide the correctness of the sale affected by the Corporation.
11. In Master Marine Services (P) Ltd. vs. Metcalfe & Hodgkinson (P) Ltd.5 it was held that while exercising power of judicial review in respect of contracts, the Court should concern itself primarily with the question, whether there has been any infirmity in the decision- making process. By way of judicial review, Court cannot examine details of terms of contract which have been entered into by public bodies or State.
12. In B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd.6 it was held that it is not always necessary that a contract be awarded to the lowest tenderer and it must be kept in mind that the employer is the best judge Page 28 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 therefor; the same ordinarily being within its domain. Therefore, the court's interference in such matters should be minimal. The High Court's jurisdiction in such matters being limited, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the face of the record."
29. It is only the decision making process if found to be flawed which would be interfered by judicial review and not the decision by itself. Evaluating the 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 bonafide and is in public interest and not being tainted with malafides, Courts would refuse to exercise the power of judicial review even if there are minor procedural abrasion or error. If the State or its instrumentalities have acted reasonably, fairly and in public interest in awarding contract, interference by the Court would be restricted and normally the Court should not interfere with the policy decisions.
30. In this background when we re-look at the facts on hand, it would clearly emerge from the records that all the participants in the first tender process did not meet the Page 29 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 standard criteria 60:40. The difference in percentage of criteria of each of the bidders are as under :
Sr. Vendor PET/PVC PET/PVC N=N Differen Differen No. Ratio Ratio eares ce in ce in % (with t to points Rounding 60:40 off the ratio digit) 1 Silver Touch PET:59.67 PET:60 N1 Zero -0.55% Technologies PVC:40.3 PVC:40 points Ltd. - 3rd 3 respondent 2 Pho-Com-Net PET:60.36 PET:60 N1 Zero -0.90% Private Limited PVC:36.6 PVC:40 points 4 3 MCT Cards and PET:67.14 PET:67 N5 7 points -17.85% Technology Pvt. PVC:32.8 PVC:33 Ltd. 6 4 Gujarat Infotech PET:63.53 PET:64 N4 4 points -1.33% Ltd. PVC:36.4 PVC:36 7 5 Rosemerta PET:60.71 PET:61 N2 1 point -1.78% Technologies PVC:39.2 PVC:39 Ltd. 9 6 KL Hi-tech PET:85.52 PET:86 N7 6 points -63.80% Secure Print PVC:14.4 PVC:14 Ltd. 8 7 M-Tech PET:61.85 PET:62 N3 2 points -4.63% Innovation Ltd. - PVC:38.1 PVC:38 petitioner 5 8 Versatile Card PET:69.57 PET:70 N6 10 -23.93% Technologies PVC:30.4 PVC:30 points Pvt. Ltd. 3
31. On account of the third respondent having not met the criteria, technical bid was refused or in other words the third respondent was disqualified in technical bid. Hence, a Page 30 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 representation came to be submitted by respondent No.3 before the department which resulted in meetings being held on 02.09.2021. It was found that there was no clarification in the tender regarding disqualification on account of PET:PVC percentage. Hence, respondent Nos.1 and 2 to avoid any legal complications resolved to scrap the tender process and publish tender afresh by bringing about amendment in the provision for PET:PVC. The amendment was brought to the following effect :
"Card material shall be having composition of minimum 60% PET and 40% PVC used for card body. Maximum allowable variance is upto 70% PET and 30% PVC cards having PVC more than 40% or less than 30% as per CIPET report shall not be eligible for qualification. (If PET percentage increases then, corresponding PVC percentage will be decreased proportionally) Top polyester patch of mil (minimum) need to be applied above thermal printing layer on both side of card for durability of printing (It is lamination not overlay)."
32. On account of technical specification criteria requiring to be changed in the middle of the tender process was impermissible, it was resolved by respondent Nos.1 and 2 to cancel the tender issued at the first instance and issue fresh tender. The Hon'ble Apex Court in Maa Binda Express Carrier and another vs. North-East Frontier Railway and others, Page 31 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 reported in 2014 (3) SCC 760 has held :
"8. The scope of judicial review in matters relating to award of contracts by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognise that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and 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."
33. In the subsequent tender process petitioner having participated and being unsuccessful cannot now turn around and take a stand to assail the process of tender as being flawed. In fact, third respondent had also pursued his grievance by Page 32 of 33 Downloaded on : Thu Mar 17 01:29:31 IST 2022 C/SCA/14695/2021 CAV JUDGMENT DATED: 16/03/2022 filing Special Civil Application No.12982 of 2021 before this Court challenging the very disqualification on technical ground and during the pendency of the said Special Civil Application, a decision had been taken by the State to scrap the tender and issue fresh tender process, which resulted in the withdrawing of Special Civil Application No.12982 of 2021. In that view of the matter, we do not find any good ground to interfere with the impugned order.
34. Hence, we proceed to pass the following ORDER
(i) The Special Civil Application stands dismissed.
Notice discharged. Consequently, connected Civil Application/s stands consigned to record.
(ii) No orders as to costs.
(ARAVIND KUMAR, CJ)
(ASHUTOSH J. SHASTRI, J)
GAURAV J THAKER / BHARAT
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