Kirloskar vs Chief on 27 October, 2010

[Cites 21, Cited by 0]

Gujarat High Court

Kirloskar vs Chief on 27 October, 2010

1. The petitioner Company is aggrieved by the decision of respondent No.2, Sardar Sarovar Narmada Nigam Ltd. (for short, SSNNL ), to scrap the tenders received in response to Notice Inviting Tenders (NIT) No.1/2006-2007 and issuance of fresh NIT dated 05.07.2010. The petitioner and only one other company were the bidders in response to NIT No.1/2006-2007 which was floated for supply, installation, commissioning and O&M service of three pumping stations on and for Kachchh Branch Canal (KBC). The other company was considered to be not meeting the qualification requirements as laid down in the bid documents; while the validity period of the bid as well as bid security of the petitioner was extended from time to time. SSNNL took a decision to scrap the tenders invited, as aforesaid, and to invite fresh tenders in separate packages for each of the three pumping stations, providing implementation period of not more than two years. It was also decided that the work should be awarded by 15.09.2010. Thus, the petitioner's tender dated 04.01.2008 was rejected and, according to the petitioner, new tender with such modifications in the scope of work and other qualifying conditions was floated as to favour only one prospective bidder, who is not joined as a party in the petition.

2. It is the case of the petitioner that SSNNL had earlier selected a technology after extensive consideration and consultation with National Thermal Power Corporation Ltd. (for short, NTPC ); but with the ulterior object of favouring a multi- national American company, i.e. ITT, pumps of a different kind with different technology were also included and allowed in the scope of work. Similarly, the eligibility of bidders was changed in the new tender so as to allow only a contractor, who has entered into a joint venture consortium between him and the manufacturer of pumps of the required type and capacity, or a manufacturer of such pumps who has entered into a joint venture consortium with an EPC Contractor (EPC:

Engineering, Procurement and Commissioning); thus requiring the bidder to be a consortium of only two parties. Similarly, the minimum qualifying criteria is also changed in the new tender so as to require the experience of supplying, commissioning and successful operation of pumps of higher capacity. The scrapping of the earlier tender of the petitioner and the changes brought about in the stipulations in the new tender conditions are alleged to be mala fide and tailored to favour only one prospective bidder, i.e. ITT, who is not made a party herein and who may or may not bid or be successful at the end of the new tendering process.

3. In support of the above case of the petitioner, it was vehemently argued by learned senior advocate Mr.S.B.Vakil, appearing for the petitioner, that, while SSNNL is a wholly government owned company engaged in an extremely important project of providing water to remote areas of the State by the largest network of canals, its important decision to scrap the tender of the petitioner was taken by respondent No.3, the Managing Director, SSNNL, without following and in violation of the resolutions of SSNNL itself. He submitted that such unilateral decision of the Managing Director was not only mala fide and motivated, but ultra vires and without the authority of SSNNL. Such decision could not be ratified afterwards by SSNNL, according to the submission. Learned counsel relied upon the Minutes of 139th and 141st Meetings of the Board of Directors of SSNNL, held on 14.12.2009 and 26.04.2010, to submit that special Committees, such as Purchase & Tender Committee and Project Committee, were constituted by SSNNL and the Managing Director was only one of the members of such Committees; and he had no right or authority to take any decision on his own to scrap the tender which was under consideration for about three years after the petitioner's bid was accepted as technically qualified.

3.1 It was submitted for the petitioner that, even as technical bids pursuant to the previous tender No.1/2006-2007 were opened on 16.01.2008 and the bid of the petitioner was kept alive, ITT had written a letter (Annexure-G) to SSNNL on 24.9.2007 and, according to that letter, ITT was putting up a manufacturing facility at Baroda, specifically in response to invitation extended by the Hon'ble Chief Minister of Gujarat during his visit to the USA; and the Chairman of ITT had met the Hon'ble Chief Minister during his Vibrant Gujarat Exhibition on 12.01.2007. That company clearly wrote that they intended to supply their pumps for the KBC, but had issues about pre-qualification conditions and the type of pumps specified therefor. It was specifically stated by ITT that only Concrete Volute Pumps (CVPs) were specified for the project which were required to be changed to Concrete Volute Pumps or Metallic Vertical Pumps (MVPs). That company also wanted modification of qualifying condition No.1.1A to allow experience of any type of pump of 14 cumecs or more capacity so as to, in effect, include the type of pumps manufactured by them in the qualification criteria. Relying on that, it was stated that, while SSNNL had already approved the CVP technology as appropriate for the project after consultation with NTPC, new consultants, namely, Tata Consultancy Engineers (TCE), were selected and appointed in January 2010 to obtain the opinion that it would be avisable to allow both concrete and metallic options (CVPs AND MVPs) in competitive bidding as that would lead to better competition. It was further submitted that, whereas the earlier NIT was a global tender, the new tender was a national one having limited competition for ITT who has, by now, set up a plant and office in Gujarat, India. Thus, in short, SSNNL had shut its doors for other foreign manufacturers of pumps by restricting the number of joint venture partners and allowing and adopting the technology of pumps manufactured by ITT in India, while completely ousting the petitioner from the new bidding process, because it could not fulfill the revised qualification criteria as it did in the earlier process. It was also submitted that the new NIT was issued on 05.7.2010 in a hurry when even the tender documents were not fully formulated and ready, so as to foreclose the petitioner's challenge to scrapping of the earlier tender.

4. As against the above case and contentions, in substance, of the petitioner, it is submitted on the basis of affidavits of Deputy General Manager of SSNL and respondent No.3, the Managing Director of SSNNL, that the matter of evaluation of tenders and awarding of contracts are essentially commercial decisions and this Court may not exercise its extraordinary jurisdiction under Article 226 of the Constitution to interfere with the bona fide and reasonable decisions taken in larger public interest by SSNNL. The terms of NIT could not be a matter of judicial review by this Court and the petitioner does not even otherwise have the locus standi to move this Court inasmuch as, even in the earlier tendering process, the petitioner's own participation in the consortium as a bidder was only to an extent of 5% of the total contract value. It was submitted by learned Advocate General, appearing for the respondents, that for large pumping installations of the kind of pumping stations on the KBC, civil work was significantly important from the point of view of structural soundness for taking load of vibrations, earthquake resistance and implementation period. SSNNL had initially appointed NTPC as its project consultant for pre-tender and post-tender engineering services and NTPC had earlier recommended both the options of CVPs and MVPs. However, at an earlier point of time, SSNNL had taken a decision to adopt technology comprising CVP of 20 cumecs capacity. The estimated cost of the project in the earlier tender was Rs.518,73,00,000/- and the time of completion was 36 months. As early as on 14.12.2007, the then Joint Managing Director of SSNNL had put up a detailed note and expressed doubts about the technology suggested by NTPC. As the Chairman and Managing Director did not agree with the observations of the Joint Managing Director, it was suggested that the Hon'ble Chief Minister should call a meeting of all full time Directors and Consultants and evolve a common opinion on the issue of design and technology. However, technical bids were opened on 16.01.2008 pursuant to the earlier tender process and NTPC had recommended that the petitioner's consortium could be considered for qualification for further process, whereas the other bidder was not meeting the qualification requirements.

4.1 SSNNL had, however, not taken any final decision on the recommendation of the Technical Evaluation Committee for opening the price bid and awarding the contract. As SSNNL was left with a single tender of the petitioner, the validity period of bid and bank guarantee was extended, pending final decision with regard to qualification of the bidder. On 14.2.2008, Adviser (Water Resources) to the Hon'ble Chief Minister suggested that SSNNL should take appropriate decision in the matter or seek advise from a group of eminent technical experts. In order to obtain additional independent expert opinion on the subject of technology and availability of different kinds of pumps, NTPC and TCE were asked to give their offer for providing consultancy service as experts. NTPC did not give their offer till August, 2010 and quoted fee of Rs.3 crores, as against Rs.18 lakhs quoted by TCE. NTPC offered to complete the assignment within nine months as against three months offered by TCE. Having regard to the reputation and experience of TCE, SSNNL appointed TCE to make a comparative study between Metallic Volute and Concrete Volute Pumps for high discharge low head pumping applications upto 40 cumecs in specific context of KBC Pumping Stations. The interim report of TCE was discussed in the meeting held on 03.6.2010 of Managing Director, Joint Managing Director (Finance), Director (Civil), Director (Canals), Chief Engineer (Electrical and Mechanical) and Advisors (Water Management) of SSNNL. On the basis of the recommendations of TCE in its first report, the entire senior management of SSNNL took a policy decision on 10.6.2010 by consensus to scrap the previous tender enquiry and float a fresh tender. Further discussions were held between TCE and senior officers of SSNNL for preparing fresh tender for appropriate competitive bidding.

5. It was further submitted for the respondent that the approach and methodology for completion of Sardar Sarovar Project, including KBC, has been revised by SSNNL in consultation with the State Government and such revised approach has been approved by the Planning Commission as well as the Water Resources Department of the Government of India. Pursuant to that, with a view to put in place a foolproof mechanism for qualitative and time-bound project implementation, EPC (Engineering, Procurement, Construction and Commissioning) mode, based on the internationally accepted conditions of contract, is adopted and SSNNL has decided to invite fresh tenders by adopting EPC route, giving three options of technology on a neutral basis. Thus, the earlier tender enquiry was cancelled in the public interest and in the interest of the project with the necessary modifications in the scope of work summarized as under:

(i) In both the cases of the tenders that are rejected and the re-invited tender, the scope of work was for design, engineering, manufacture, supply, erect, commission pumps with necessary civil works;

(ii) In the earlier tenders, the contractor was required to operate and maintain the system for five years. Now the contractor will be required to operate and maintain the system for ten years;

(iii) Time of completion in the earlier tender was 36 months, and now the period is prescribed as 24 months; and

(iv) Earlier tender was a comprehensive single tender for three pumping stations.

Now, the single tender is split into three separate tenders, one each for each of the pumping stations.

5.1 With the above backdrop, the decision to scrap the previous tender process was communicated to the petitioner vide letter dated 28.6.2010. The general conditions contained in the bid document of the previous tender clearly mentioned that: SSNNL reserves the right to accept or reject any or all the bids without assigning any reason .

5.2 It is categorically denied for the respondents that pursuant to the letter dated 24.9.2007 of ITT, Joint Managing Director of SSNNL had submitted a note to oblige ITT or that the decisions to cancel the earlier tender enquiry, reject the petitioner's tender dated 04.01.2008 and to invite fresh tenders were contrary to law, mala fide or calculated to favour ITT, as alleged by the petitioner. It was further submitted in that context that invitation to tender and submission of tenders do not create and legal right in favour of a tenderer to claim that his tender should be accepted as a matter of course. It was also submitted that the new tender enquiry was amended by a corrigendum to make it global in nature to permit all parties from all over the world which are qualified as per the requirements to participate in the tendering process. On the other hand, the petitioner still has an opportunity to participate by making a fresh bid through a joint venture consortium, provided they fulfill the qualification criteria. As elaborated in the aforesaid affidavit, the major and minor changes were required in the new tender for good reasons and not with a view to award any contract to ITT, as alleged by the petitioner. The intention of SSNNL is to take advantage of the competitive environment that now prevails in the market and get better prices and better technological options . It was also submitted that prices of essential inputs and services have widely fluctuated during the period of last three years and there is no substance in the allegation of the petitioner that inviting fresh tenders would necessarily result in additional financial burden.

5.3 Respondent No.3, the Managing Director of SSNNL personally joined as a party, has denied on oath the allegations made against him and clarified that he took over charge as Managing Director of SSNNL only on 09.11.209. According to him, one of the main objectives in floating the fresh tender was to harness the benefit of competitive market environment and to take advantage of the best and most appropriate technology system, including pumping system now available in India without any technical and non-technical barriers. In reply to the petitioner's rejoinder, it is clarified that the decision to scrap the tender process was taken on the file that was moved by Deputy General Manager (Hydro Power) which was vetted by Chief Engineer, Technical Directors, Joint Managing Director (Administration), Joint Managing Director (Finance) and Managing Director of SSNNL and it was a collective decision. As for the prevalent practice in SSNNL, it is clarified that the tender enquiries were segregated in two broad categories, viz. (i) matters upto pre-qualification stage and (ii) evaluation of financial bid for acceptance and approval of tender. It is the second category which fell within the purview of the Project & Tender Committee (P&T). In the case of earlier tender enquiry, the stage upto technical pre-qualification of bidders was not completed, when the decision to scrap the tender enquiry was taken. Recently, at the meeting held on 07.09.2010 of the Board of Directors of SSNNL, the issue regarding pre-qualification practice was raised and it was decided to continue the practice of approval of draft tender papers, laying down the parameter of technical pre-qualification and finalizing the bid documents; and it was confirmed that only financial bid should be submitted to the Purchase & Tender Committee or Project Committee for approval. It is further stated on oath that ITT is not the only pump manufacturer in the country of 20 cumecs capacity, but there are five other foreign pump manufacturers operating in the country who have shown their interest in the new tender enquiry.

6. It is clear from the averments, allegations and submissions made on behalf of the petitioner that the sole basis of the rights and claims of the petitioner lies in there having been a sole qualified bidder pursuant to the previous tender enquiry and the grievance lies in scrapping of the earlier tendering process. The decision to scrap the tender of the petitioner is alleged to have been taken by respondent No.3, arbitrarily and without authority of SSNNL, and that argument is based upon the petitioner's interpretation of resolutions passed in 139th and 141st Meeting of the Board of Directors of SSNNL (dated 14.12.2009 and 26.04.2010). As against that, the respondents have relied upon their expressly stipulated right to accept or reject any or all bids without assigning any reason, and Clause 24.1 of the Instructions to Bidders contained in the previous tender, which read as under:

24.1 The employer reserves the right to accept or reject any bid and to annul 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 ground for the employer's action.

The respondents have also relied upon the prevalent practice in SSNNL, according to which matters upto the stage of appraisal of technical ability are always finally decided at the management level, whereas approval of financial bids is referred to the P&T Committee. Accordingly, the decision taken by the Managing Director, in a collective fashion, to scrap the earlier tender enquiry and float fresh tenders was in order and SSNNL has come forward to defend those decisions. It was pointed out in that context that SSNNL was run as a commercial enterprise and not as a statutory authority with strict and meticulous delegation of powers. However, there was broad delegation of powers approved by the Board of Directors vide resolution dated 17.8.1992, which was superseded by resolution dated 26.9.2006. According to that latter resolution, full powers to accept tenders in respect of original works and repairs were delegated to the Board of Directors; whereas the power to accord technical sanction to original and revised estimates was delegated to the Managing Director. The power to approve draft tender papers was delegated to the Chief Engineer. Thus, the Managing Director of SSNNL was stated to have been authorized and competent to take the impugned decisions.

6.1 As for the contention of the petitioner that there was no compelling reason to scrap the first tender process and commence a new one, it is the case of the respondent that SSNNL was entitled and required to initiate the new tender process in the interest of the project and in public interest so as to take the benefit of all available technologies and healthy competition. As for the contentions of the petitioner that the decisions of the respondent to scrap the earlier tender, to float the new tender enquiry and revising the conditions and stipulations in the new tender were mala fide and tailer-made to favour one prospective bidder, it is the case of the respondent that the decisions were taken in good faith, in public interest and for the reasons elaborated in the pleadings. The allegations of the petitioner based on the letter dated 24.9.2007 of ITT could not establish the plea of mala fide, insofar as the earlier tendering process was carried on upto the stage of considering the technical qualifications of bidders and it had taken more than two years of internal dissent, deliberations and fresh opinion of the consultants to arrive at the decision to scrap the earlier tender. The allegations that time was consumed, mala fide, before opening the financial bid of the petitioner, that new consultants were selected and appointed only for approving inclusion of different technology of the pumps and that scope of work and qualification criteria in the new tender were all calculated to favour only one prospective bidder appear at this stage to be conjectures and not based upon any concrete facts, particularly when new tenders are open for bidding by all the parties who can fulfill the qualification criteria. It would be highly improper and premature at this stage, when the new tender is still open for bidding, to presume that the bidders in the tendering process will face any discrimination, without any bidder raising such an issue. In fact, the real grievance of the petitioner, as articulated in their rejoinder dated 13.9.2010, is that the tender conditions of the new impugned tender allows three alternative types of pumps, qualifying criteria has been revised to require experience of providing and operating pumps of higher capacity and only joint venture of maximum two parties are allowed to bid. These changes in the qualification criteria practically disallow the petitioner from participating in the new tendering process. It is as yet not established that the above changes will render all Indian pump manufacturers or suppliers of imported pumps ineligible to bid for any of the three contracts in which the project is now divided.

7. In the context of the above facts and contentions, the following judgments and important observations made therein, as quoted below, are relevant and provide binding guidelines:

(a) In Punjab University v. V.N.Tripathi and Another [(2001) 8 SCC 179], the Apex Court observed:

8. .......The ratification has the effect of relating back to the time when the action was taken without authority. Despite the ratification by the competent authority, refusal to examine the matter on merits, would in no way serve the ends of justice. It would only be hankering to the technicalities rather than to be concerned with the intent and the substance.

(b) In Maharashtra State Mining Corporation v. Sunil [(2006) 5 SCC 96], three-Judge bench of the Supreme Court observed, in the context of a service matter:

10. In the present case, the Managing Director's order dismissing the respondent from the service was admittedly ratified by the Board of Directors on 20.2.1991 and the Board of Directors unquestionably had the power to terminate the services of the respondent. On the basis of the authorities noted, it must follow that since the order of the Managing Director had been ratified by the Board of Directors such ratification related back to the date of the order and validated it.

G.S.Investments and another [(2007) 1 SCC 477], the Apex Court observed:

10. The other question which requires consideration is what are the contours of power which the High Court would exercise in a writ petition filed under Article 226 of the Constitution where the challenge is to cancellation of an auction held by a public body where the prime consideration is fairness and generation of public revenue. This question has been examined in a catena of decisions of this Court. In a recent decision rendered in Master Marine Services (P) Ltd. v. Metcafe & Hodgkinson (P) Ltd. {(2005) 6 SCC 138} where after consideration of several earlier decisions, the Bench to which one of us was a party, summarised the legal principle as under in paras 11 to 15 of the said Report:

11. The principles which have to be applied in judicial review of administrative decisions, especially those relating to acceptance of tender and award of contract, have been considered in great detail by a three-Judge Bench in Tata Cellular v. Union of India [(1994) 6 SCC 651]. It was observed that the principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose, the exercise of that power will be struck down.

12. After an exhaustive consideration of a large number of decisions and standard books on Administrative Law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made. 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. 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 principles of reasonableness but must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. .

13. In Sterling Computers Ltd. v. M&N Publications Ltd. [(1993) 1 SCC 445], it was held as under:

'18.While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the decision-making process .... By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time .....the courts can certainly examine whether decision-making process was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.

19. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after objective consideration of different options available taking into account the interest of the State and the public, then court cannot act as an Appellate Authority by substituting its opinion in respect of selection made for entering into such contract.'

14. In Raunaq International Ltd. v. I.V.R.Construction Ltd. [(1999) 1 SCC 492] it was observed that 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 of paramount importance are commercial considerations, which would include, inter alia, the price at which the party is willing to work, whether the goods or services offered are of the requisite specifications and whether the person tendering is of the ability to deliver the goods or services as per specifications.

15. The law relating to award of contract by the State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd. [(2000) 2 SCC 617] and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should interfere.

11. The sale of plots by the Rajasthan Housing Board by means of an auction is essentially a commercial transaction. Even if some defect was found in the ultimate decision resulting in cancellation of the auction, the Court should exercise its discretionary power under Article 226 of the Constitution with great care and caution and should exercise it only in furtherance of public interest. The Court should always keep the larger public interest in mind in order to decide whether it should interfere with the decision of the authority. In the present case, there was enough material before the State Government to show that in the past plots in the area had fetched a price of Rs.10,000 per square metre and the highest bid made by the respondent in the present case was nearly half i.e. Rs.5750 per square metre, which clearly indicated that the auction had not been conducted in a fair manner. If in such a case the State Government took a decision to disapprove the auction held and issued a direction for holding of a fresh auction, obviously the said decision was taken in larger public interest. In these circumstances, there was absolutely no occasion for the High Court to entertain the writ petition and issue any direction in favour of the contesting respondent. The orders passed by the learned single Judge on 4.8.2004 and the order passed by the Division Bench of the High Court on 23.9.2004 are clearly erroneous in law and are liable to be set aside.

(d) In Jagdish Mandal v. State of Orissa [(2007) 14 SCC 517, the Apex Court observed:

22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made lawfully and not to check whether choice or decision is sound . When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold.

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. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.

(e) In Haryana State Agricultural Marketing Board v. Sadhu Ram [(2008) 16 SCC 405], the Apex Court observed:

13. In the present case, it is not in dispute that the plots auctioned by the appellants belonged to the instrumentalities of the State Government, which must be expected to protect the financial interests of the State. In Rajasthan Housing Board v. G.S.Invesments [(2007) 1 SCC 477], after thoroughly considering the earlier decisions of this Court including the decision in Tata Cellular v. Union of India [(1994) 6 SCC 651], considered the contours of power which the High Court would exercise in a writ petition filed under Article 226 of the Constitution when the challenge was to the cancellation of auction held by a public body where the prime consideration was fairness and generation of public revenue and held that even if some defect was found in the ultimate decision resulting in cancellation of the auction, the court should exercise its discretionary power under Article 226 with great care and caution and should exercise it only in furtherance of public interest. It was also held in that decision that when the Chairman of the Housing Board had the final authority regarding acceptance of the bid, a person who had made the highest bid in the auction did not acquire any right to have the auction concluded in his favour until the Chairman had passed an order to that effect.

Learned senior advocate Mr.Vakil has relied upon the following judgments:

(a) The Marathwada University v. Seshrao Balwant Rao Chavan [AIR 1989 SC 1582]

(b) East and West Insurance Co. Ltd. v. Mrs.Kamla Jayantilal Mehta [(1956) 26 Comp. Cases 313 (Bom.)]

(c) Smt.Sulochana Dadaji v. Commissioner, Nagpur Division, Nagpur [AIR 1968 Bom.88]

(d) State of Uttar Pradesh v. Shri Anand Swarup [AIR 1974 SC 126]

(e) Nanalal Girdharlal v. Gulamnabi Jamalbhi Motyorwala [13 GLR 880]

(f) Mulamchand v. State of Madhya Pradesh [AIR 1968 SC 1218]

(g) Glaxo Laboratories (India) Ltd. v. Glaxo Staff Association and others [1974 (2) LLJ 389]

(h) Glaxo Laboratories (India) Ltd. v. Glaxo Staff Association 1973 Law Suit (All) 248 (I) (2004) 52 SCL 762 (Guj)

(j) Floating Services Ltd. v. M.V.San Fransceco DI Paola [2004 Law Suit (Guj) 139].

but they are not discussed in detail at the bar or herein as they are not directly related to the major points in issue.

8. Learned senior advocate Mr.Vakil has referred to voluminous record of the petition and made several fine points with his characteristic perseverance and precision to bring home the basic contention that the impugned decisions were mala fide, unauthorized and amounted to arbitrary exercise of power violating Article 14 of the Constitution. However, it could not be gainsaid that SSNNL is implementing an extremely important project under a corporate management wherein decisions had to be taken on commercial considerations and in larger public interest. Even as there is significant and largely unexplained delay in finalizing the contracts for the KBC Project, mere delay in or defects in the decision making process could not lead to the conclusion of mala fide or arbitrary exercise of power. As held by the Supreme Court in K.Nagraj v. State of Andhra Pradesh [AIR 1985 SC 551], the reasonableness of a decision, in any jurisdiction, does not depend upon the time which it takes. On the other hand, no legally vested right or interest has accrued in favour of the petitioner for grant of the contract even as their tender was surviving on the lifeline of extensions granted by the respondent. It could not be gainsaid that the petitioner was the sole technically qualified bidder in the previous process and, therefore, there was no competition which was by itself a good ground for the respondent to look for the alternatives and better options for better and quicker implementation of the KBC Project. It would be improper and impermissible for the court to enter into the arena of technical evaluation of the alternative technologies and express any opinion on the suitability or commercial viability of any particular type of pump. However, there is sufficient material on record to suggest that the scope of work and minimum qualification criteria as revised in the new tender enquiry were based on expert opinion, rational and calculated to achieve better results in terms of performance and quicker completion of the project.

8.1 Although the decision making process in relation to the impugned decisions was not structured as it ideally ought to have been and ratification of the impugned decisions by SSNNL is not specifically pleaded, the fact remains that it has come forward to defend them as a legal entity and, therefore, violation of any internal rules of business, delegation of powers, or defects in the decision making process pale into insignificance when the final decisions are found to be rational and in the larger public interest. Under such circumstances, it is very difficult to conclude that any interference under Article 226 of the Constitution would be justified in public interest, even though some technical and formal lapses in the decision making process could be established.

9. Therefore, following the principles affirmed in Rajasthan Housing Board (supra) and the principles laid down in Jagdish Mandal (supra) and in Haryana State Agricultural Marketing Board (supra), the petition is required to be dismissed. It may be noted here for the record that while the petition was being heard in extenso for final disposal, by consent of the parties on both sides, the last date for submission of bids in response to the new NIT was extended from time to time. Therefore, this judgment is dictated and declared within three days of conclusion of the arguments which were intermittently carried on over a period of about two weeks. Accordingly, in the facts and for the reasons discussed hereinabove, the petition is dismissed in limine, with no order as to costs.

Sd/-

( D.H.Waghela, J.) Sd/-

( Smt.Abhilasha Kumari, J.) (KMG Thilake)cv Top

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