Gujarat High Court
Ravi Industries Through Authorised ... vs Gujarat Rural Industries Marketing ... on 8 July, 2019
Equivalent citations: AIRONLINE 2019 GUJ 420
Author: J. B. Pardiwala
Bench: J.B.Pardiwala, A.C. Rao
C/SCA/6886/2019 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6886 of 2019
With
CIVIL APPLICATION (FOR DIRECTION) NO. 1 of 2019
In R/SPECIAL CIVIL APPLICATION NO. 6886 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 8545 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR.JUSTICE A.C. RAO
==========================================================
1 Whether Reporters of Local Papers may be allowed to see the
judgment ? YES
2 To be referred to the Reporter or not ?
YES
3 Whether their Lordships wish to see the fair copy of the
judgment ? NO
4 Whether this case involves a substantial question of law as to
the interpretation of the Constitution of India or any order made
NO
thereunder ?
==========================================================
RAVI INDUSTRIES THROUGH AUTHORISED SIGNATORY SAGAR BEHL
S/O SUBHASH BEHL
Versus
GUJARAT RURAL INDUSTRIES MARKETING CORPORATION LTD THRU.
MANAGING DIRECTOR
==========================================================
Appearance:
MR SN SHELAT, SENIOR ADVOCATE WITH MR VISHWAS K SHAH(5364)
for the Petitioner(s) No. 1
MR KAMAL TRIVEDI, ADVOCATE GENERAL WITH MR ANUJ K TRIVEDI,
ADVOCATE WITH MS ANKEETA RAJPUT ADVOCATE FOR MR MAHAVIR
M GADHVI, ADVOCATE (8025) for the Respondent(s) No. 1
==========================================================
Page 1 of 77
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C/SCA/6886/2019 CAV JUDGMENT
CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR.JUSTICE A.C. RAO
Date : 08/07/2019
CAV JUDGMENT
(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1 Since the issues raised in both the captioned writ applications are the same, those were heard analogously and are being disposed of by this common judgement and order.
2 For the sake of convenience, the Special Civil Application No.6886 of 2019 is treated as the lead matter.
3 By this writ application under Article 226 of the Constitution of India, the writ applicant, a partnership firm, through its authorized signatory, has prayed for the following reliefs:
"9(a) Be pleased to quash and set aside condition clause No.4 introduced by way of Corrigendum from Tender dated 28.02.19 floated by Respondent No.1 Corporation.
(b) Pending admission, bearing and final disposal of this Petition be pleased to stay the opening of the bids of the Tender floated by Respondent No. ] Corporation.
(c) Pending admission, hearing and final disposal of this Petition, be pleased to stay condition clause No. 4 of Tender dated 28.02.19 floated by Respondent No. 1 Corporation and be further pleased to permit Respondent No. 1 Corporation to proceed for opening the bids.
(d) Costs of this Petition to be awarded. Page 2 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT (e) Such further and other relief, order or direction which may be just,
fit, proper and equitable in the facts and circumstances of the Petition."
4 The case of the writ applicant, in his own words, as pleaded in the writ application, is as under:
"2.1 The Petitioner is Partnership Finn established in the year 1967, having registered office at Ludhiana, Punjab and it manufactures bicycles.
2.2 The Respondent No. 1 is Government of Gujarat Undertaking which regularly floats tenders to purchase bicycles. 2.3 The Petitioner states that by way of corrigendum dated 05.03.19, minimum actual production of average 6,00,000 per annum bicycles in each of three accounting years I.e. 201516, 201617 and 201718 was added. To amplify the proof of production, insistence was placed on ERl or any other return submitted to Excise authority.
2.4 The Petitioner states that by way of another corrigendum dated 27.03.19 the aforesaid condition of produced bicycles was altered from 600,000 to 500,000 in last three years I.e. 201516, 201617 and 2017 18 and minimum production capacity of 10,00,000 bicycles per annum.
2.5 The Petitioner states that by way of another corrigendum dated 29.03.19 the aforesaid condition of produced bicycles was altered 5 lacs bicycles in last three years ( aggregate 15 lacs ) I.e. 201516,201617 and 201718.
2.6 The Petitioner states and submits that it has submitted its bid for the tender on 01.04.19. The closing date of bid was 01.04.19.
2.7 That the Petitioner states and submits that details of sales of Petitioner is also provided to Respondent No. 1 Corporation. The eligibility criteria of no. of units produced is brought by corrigendum to specifically eliminate Petitioner from the race. The said clause is arbitrary and illogical. Admittedly, Petitioner does not fulfill eligibility criteria of production introduced by way of Corrigendum. The case of Petitioner is what is relevant is production capacity of the unit factory and not actual production of unit factory. In any case, Petitioner's production capacity is more then the requirement of Respondent No. 1 Corporation and thus it can meet the demand of Respondent No. 1 Corporation smoothly if Page 3 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT awarded the contract on being L1. Thus the logical aspect is production capacity of the unit and not the no. of units manufactured per annum.
2.8 That in Tender document of 201617, no such eligibility clause was there. In the case on hand, it is added with Oblique motive and to favour some parties only. The theme and aim of such Corrigendum is to restrict the race between few parties only and not to allow healthy competition, with a sequator that Govt. undertaking pays more for the bicycle. Thus the Corrigendum is against public policy and discriminatory. That the Petitioner states and submits that if condition no. 4 is given go bye, Petitioner is confident to become Ll. Thus the case of Petitioner is that it is in public interest that entity giving Ll offer is given the contract, expunging clause No. 4. However if condition No. 4 is allowed to have its full play, for no fault, Petitioner will stand disqualified."
5 Thus, it appears from the pleadings that the writ applicant seeks to challenge the legality, validity and correctness of the action on the part of the respondent in adding, or, to put it in other words, modifying, by way of corrigendum, the eligibility criteria in the Tender document dated 28th February 2019 floated by the respondent - Corporation for the purchase of 2,60,000 Bicycles.
6 The original bid document reads thus:
BID DOCUMENT Bid Details Bid End Date /Time '11032019 21:00:00 Bid Life cycle (from publish 90 (Days) Date) Bid officer validity (from end 60 (Days) date) Ministry / State Name Gujarat Department Name Industries and Mines Department Gujarat Organisation Name N/a Office Name GRIMCO Gandhinagar Page 4 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT Total quantity 260000 Item Category Bicycle Average Turnover (last 3 4386 Lakh(s) years) OEM Average Turnover (last 4386 Lakh (s) 3 Years) MSE Exemption for Years of No Experience and Turnover Startup Exemption for Years No of Experience and turnover Document required from Annual Turnover Certificate (Requested seller in ATC) OEM Authorization Certificate OEM Annual Turnover.
7 It appears that the respondent - Corporation, thereafter, on 5th March 2019, issued a corrigendum to the original bid document specifying the special terms and conditions for procurement of bicycles. It reads thus:
"SPECIAL TERMS AND CONDITIONS FOR PROCUREMENT OF BICYCLES BID NO.GEM/2019/B/194020
1. The total quantity of 260000 nos. of Ladies Bicycles will be procured during the FY 201920 for which delivery period is prescribed as under: Qty. In Nos. Delivery Remarks (Ladies Bicycles period 2,60,000 90 Days The successful tendered shall have to supply bicycle within sixty days or Date of Shala Praveshtosav whatever is earlier bidder have to supply 60% of total quantity offered to bidder and remaining 40% within 90 days.
2. As per above detail 2,60,000 Bicycles are to be supplied to the Page 5 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT consignees located at Gujarat and consignee is mentioned on Annexure1.
3. Bicycle shall be supplied in Deep Saffron colour (RGB colour code:
R:249, 6:138 & 8:20) for Ladies Bicycles with Logo qf "Shala Praveshtosav2019" and write up "Gujarat Sarkar" in Gujarati at the prescribed place of bicycles.
Eligibility criteria 4 The bidder should have the minimum actual production of average 6,00,000 bicycles per annum in each of three accounting years I.e., Minimum Actual Production of 6,00,000 bicycles in 201516, 6,00,000 bicycles in 201617 and 6,00,000 bicycles in 201718.
In this regards, you have to submit copy of E.R.1 or any other return in this regard duly submitted to the concerned central Excise Authority. (Please refer Annexure3). GRIMCO may accept any other document clearly showing actual production.
5. My firm has not been banned / debarred /black listed at least for three years (excluding the current financial year) by any Government Department / State Government /Government of India / Board / Corporation/Government Financial Institution in context to purchase procedure through tender. Annexure2.
6. Shifting of Bicycle If required, Supplier has to shift the Bicycle to another place free of cost within the places assigned to the supplier. Such shifting will not exceed to the extent of 3% of the total quantity of the Supply Order.
7 Warranty Period: 24 months."
8 Thereafter, once again, a second corrigendum was issued dated 27th March 2019 with regard to the special terms and conditions for procurement of bicycles. The same reads thus:
"SPECIAL TERMS AND CONDITIONS FOR PROCUREMENT OF BICYCLES BID NO.GEM/2019/B.194020 Page 6 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT
1. The total quantity of 260000 nos. of Ladies Bicycles will be procured during the FY 21920 for which delivery period is prescribed as under: Qty. In Nos. Delivery Remarks (Ladies Bicycles period 2,60,000 90 Days The successful tendered shall have to supply bicycle within sixty days or Date of Shala Praveshtosav whatever is earlier bidder have to supply 60% of total quantity offered to bidder and remaining 40% within 90 days.
2. As per above details 2,60,000 Bicycles are to be supplied to the consignee located at Gujarat and consignee is mentioned on Annexure1.
3. Bicycle shall be supplied in Deep Saffron colour (RGB colour code:
R:249, 6:138 & 8:20) for Ladies Bicycles with Logo of "Shala Praveshtosav2019" and write up "Gujarat Sarkar" in Gujarati at the prescribed place of bicycles.
Eligibility Criteria
4. The bidder should have at least an average production of 5 lac bicycles in the last three years i.e. 201516, 201617 & 201718.
In this regards, you have to submit copy of E.R.1 or any other return in this regard duly submitted to the concerned central Excise Authority. (Please refer Annexure3). GRIMCO may accept any other document clearly showing actual production.
5. You should have the minimum production capacity of 10,00,000 nos. bicycles per annum. In this regard, you have to submit document proof given by recognized authority.
6. My firm has not been banned / debarred / black listed at least for three years (excluding the current financial year) by any Government Department / State Government / Government of India / Board / Corporation/Government Financial Institution in context to purchase procedure through tender. Annexure2.
Shifting of Bicycle Page 7 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT
7. If required, Supplier has not shift the Bicycle to another place free of cost within the places assigned to the supplier. Such shifting will not exceed to the extent of 3% of the total quantity of the Supply Order.
8. Warranty period : 24 months."
9 It is the case of the writ applicant that it is a partnership firm having its registered office at Ludhiana, Punjab. It is in the business of manufacturing bicycles. The respondent No.1 is a Government of Gujarat Undertaking, and on regular basis, it floats Tenders to purchase bicycles. The grievance voiced by the writ applicant is that in the first bid document dated 28th February 2019, there was no condition prescribed that the bidder should have the minimum actual production of average 6,00,000 bicycles per annum in each of the three accounting years i.e. 201516, 201617 and 201718. It is the case of the writ applicant that later, by way of corrigendum dated 5th March 2019, the eligibility criteria came to be altered or changed providing that the bidder should have the minimum actual production of average 6,00,000 bicycles per annum. Later, once again, by a second corrigendum dated 27th March 2019, the average production was reduced from 6,00,000 to 5,00,000 bicycles. The writ applicant submitted its bid for the Tender on 1st April 2019, as the closing date of bid was 1st April 2019. It is alleged that the eligibility criteria came to be changed at the last minute only with a view to eliminate the writ applicant from the competition. According to the writ applicant, the amended eligibility criteria could be termed as arbitrary and illogical. The writ applicant has conceded to the fact that he does not fulfill the eligibility criteria i.e. production of average 6,00,000 bicycles per annum in each of the three accounting years referred to above.
10 Being dissatisfied with the decision of the Corporation with regard Page 8 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT to the eligibility criteria, the writ applicant has come before this Court with the present writ application under Article 226 of the Constitution of India.
● SUBMISSIONS ON BEHALF OF THE WRIT APPLICANT:
11 Mr. S.N. Shelat, the learned senior counsel assisted by Mr. Vishwas K. Shah, the learned counsel appearing for the writ applicant vehemently submitted that in the original Tender document, the eligibility clause of the bicycles produced, as a benchmark, was absent and a new eligibility criteria could not have been included by way of corrigendum. Mr. Shelat submitted that by issuing a corrigendum providing for altogether a different eligibility criteria, the Corporation could be said to have changed the rules of the game midway. It is argued that the corrigendum is discriminatory and is tainted with mala fide. Mr. Shelat submitted that the policy, underlying the corrigendum, has no nexus with the objects of the Tender document.
12 Mr. Shelat submitted that the condition No.4 with regard to the eligibility criteria, as provided in the corrigendum, is onerous and contrary to the doctrine of "level playing field". Mr. Shelat would submit that when Article 19(1)(g) of the Constitution confers fundamental right to carry on business to a company or a partnership firm, it is entitled to invoke the said doctrine of "level playing field". Mr. Shelat submitted that Article 14, which refers to the principle of "equality", should not be read as a stand alone item, but, it should be read in conjunction with Article 21, which embodies several aspects of life.
13 Mr. Shelat submitted that the doctrine of "level playing field" is an important doctrine, which is embodied in Article 19(1)(g) of the Page 9 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT Constitution and the Corporation, by prescribing a very onerous eligibility criteria, could be said to have frustrated the doctrine of "level playing field".
14 Mr. Shelat submitted that his client, indisputably, is not fulfilling the eligibility criteria of minimum actual production of average 6,00,000 bicycles per annum in each of the three accounting years referred to above. The argument of Mr. Shelat is that the requirement of the Corporation is supply of 2,60,000 bicycles, which, his client can easily adhere to with all other terms and conditions of the Tender document. According to Mr. Shelat, what is important to be considered is the production capacity of the unit / factory of the writ applicant and not the actual production. It is submitted that the production capacity of the writ applicant is more than the requirement of the respondent - Corporation, and in such circumstances, it can meet the demand of the Corporation smoothly. It is submitted that the bid of the writ applicant is the lowest. The writ applicant was at L1.
15 Mr. Shelat submitted that if the condition No.4 of the corrigendum is declared as arbitrary or discriminatory or not providing the "level playing field, then the writ applicant could be said to be at L1. If the condition No.4 remains, then the writ applicant stands disqualified, thereby, frustrating the very concept of "level playing field", as embodied in Article 19(1)(g) of the Constitution of India.
16 In such circumstances referred to above, Mr. Shelat, the learned senior counsel appearing for the writ applicant prayed that there being merit in this writ application, the same be allowed and the eligibility criteria, as provided in clause No.4 of the corrigendum, deserves to be deleted.
Page 10 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT17 Mr. Shelat, the learned senior counsel appearing for the writ applicant, in support of his submissions, has placed reliance on the following decisions:
[1] Reliance Energy Limited and others vs. Maharashtra State Road Development Corporation Limited [2007 (8) SCC 1] [2] MAA Binda Express Carrier and another vs. North East Frontier Railway and another [(2014) 3 SCC 760] [3] Central Coal Field Limited and another vs. S.L.L. SML (Joint Venture Consortium) and Ors. [AIR 2016 SC 3814] ● SUBMISSIONS ON BEHALF OF THE CORPORATION:
18 On the other hand, this writ application has been vehemently opposed by Mr. Kamal Trivedi, the learned Advocate General appearing for the respondent - Corporation. Mr. Trivedi submitted that none of the submissions canvassed on behalf of the writ applicant merits any consideration. According to Mr. Trivedi, the eligibility clause provided in the corrigendum, the same being the subject matter of challenge, by any stretch of imagination, cannot be termed as per se illegal being contrary to the doctrine of "equality" as enshrined under Article 14 and also the doctrine of opportunity enshrined under Article 21 of the Constitution. Mr. Trivedi would submit that awarding of contract is essentially a commercial transaction irrespective of the fact whether the said contract is by a private party or by a public body or by the State. Mr. Trivedi submitted that the Apex Court, in many decisions, has reminded that the Courts should not struck down the terms of the Tender prescribed by the Government and its authorities because it feels that some other terms in Page 11 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT the Tender would have been fair, wiser or logical. According to Mr. Trivedi, the Courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide. Mr. Trivedi would submit that the Court has no power to rewrite the Tender document.
19 According to Mr. Trivedi, the allegation levelled by the writ applicant that the impugned eligibility clause came to be inserted by way of corrigendum only with a view to oust the writ applicant from bidding, is absolutely baseless, frivolous and vexatious. The State can choose its own method to fix the terms and conditions and take an appropriate decision in that regard. Unless the decision is arbitrary, mala fide and against public interest, the judicial scrutiny is not permissible.
20 Mr. Trivedi would submit that if the power has been exercised for collateral purpose, the Court may be justified in annulling of the State action as all the State action must confirm to Article 14 of the Constitution of India, of which the nonarbitrariness is a fundamental facet. Mr. Trivedi submitted that there is no doubt that the State is expected to exercise the powers vested in it fairly and reasonably though some discretion "play in the joints" have to be given to it. Mr. Trivedi submitted that where the decision is taken on legitimate considerations and not arbitrary, then there is very limited scope for interference by the Court in the matter like the one on hand. It is submitted that the respondent - Corporation, through the Tender process, undertakes every year the procurement of ladies and gents bicycles for various schemes of the Government of Gujarat mainly "Shala Praveshtosav". It was pointed out that the Corporation has been procuring cycles for the various departments of the State Government since 200910. Earlier, the only requirement of eligibility was that the bidder should be a manufacturer of cycles. It was clarified by Mr. Trivedi that there was no requirement as Page 12 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT to the production capacity as one of the eligibility criteria in the Tenders prior to 201415. Mr. Trivedi submitted that a policy decision was taken while finalizing the terms and conditions of the Tender for the year 201415 that the "production capacity" of the manufacturer in proportion to the requirement of the cycles should be added in the eligibility criteria. According to Mr. Trivedi, such a decision cannot be termed as arbitrary, discriminatory or not adhering to the doctrine of "level playing field". Mr. Trivedi would submit that doctrine of "level playing field" is always subject to public interest.
21 In what manner the decision was taken and its justification has been exhaustively explained in the affidavitinreply filed on behalf of the Corporation duly affirmed by one Jayeshkumar Parmar, Manager, Gujarat Rural Industries Marketing Corporation Limited. We may quote the relevant averments:
""3.3 I respectfully say that the course of earlier Tender Inquiry floated on 31 05 2014 for the supply of 2,00,000 Lady Cycle in one year during the course of program called "Garib Kalyan Mela2014", one of the eligibility criteria contained in paraõ was the production capacity, reading as under:
"You should have the minimum production capacity of 10,00,000 Nos. Bicycle Per Annum. In this regard, you have to submit a brief note and necessary data of installed and production capacity of your products along with a copy of ISOO9001 mark registration certificate and ISI Certificate. "GRIMCO' may ask for and accept other evidence, if required."
3.4 While finalizing the terms and conditions of the tender inquiry for the year 201516; various grievances ventilated by several departments of the State Government were considered and then it was realized that instead of relying only on the production capacity of the cycle manufacturer. Its previous productions as well as sale of bicycles and too in favour of the Governments and the public sector undertakings etc., may be taken into account˙ so that it can easily be verified from the Governments etc., about Page 13 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT the true position as regards the supply effected in their favour, instead of verifying the said details from the private parties and the manufacturer while selling its cycles in favour of the Governments etc., may also in process. Become conversant for dealing with Government bodies.
35 It was m view of the aforesaid that while floating Tender Inquiry, bearing No. 01/2015 on 06.01.2015 for procuring approximately 2 lakh customized Lady Cycles for delivering the same to respective Offices before June, 2015 with a view to supplying the same during the "Shaala Praveshoosav", the following main criteria as regards capacity and supply to Governmental bodies etc., came to be fixed in Para 3(b) and Para3(c) of tender documents.
"3(b) You should have the minimum production capacity of 10,00,000 nos. bicycles per annum. In this regard, you have to submit a brief note and necessary date of installed and production capacity of your products along with a copy of ISO9001 mark registration certificate and ISI Certificates. "GRIMCO" may ask for and accept other evidence, if required (AnnexureZ).
3(c) Manufacturing firm should have produced and sold to any State or Central Government. Public Sector Undertaking or autonomous bodies a minimum of 10.00.000 bicycles per annum in the specific financial year for a period of last 3 years (201112. 201213 and 201314). (documentary proof in terms of Purchase order copies and/or a certificate of satisfactory supplies of specified number of bicycles from those purchasers to be enclosed)"
3.6 I respectfully say that after considering the concerns raised in the prebid meeting. And after due deliberation, the Respondent Corporation issued second amendment dated 17.01.2015, wherein the requirement of supply of 10,00,000 cycles per annum was reduced to 6,00,000 cycles total in last three years. In addition to the aforesaid relaxatíon, two new conditions were imposed, wherein Earnest Money Deposit of Rs.50,00,000 was required to be deposited along with technical bids and a list of district wise authorized dealer names was to be submitted as well. For ready reference, text of second amendment is set out hereunder:
"Condition 1 Manufacturing firm should have produced and sold to any state or central Government, Public Sector Undertaking or autonomous bodies a minimum of 6,00,000 (Six Laos) Bicycle in last three years. (documentary proof in Page 14 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT terms of Purchase order copies and/or a certificate of satisfactory supplies of specified number of bicycle from those purchasers to be attached).
Condition 2 Manufacturing firm should have submitted 50,00,000 (fifty lacs). Earnest money deposit along with the Technical Bid from of Demand Draft or Banker's Cheque in favour of "Managing Director GUJARAT RURAL INDUSTRIES MARKETING CORPORATION LIMTED"
Payable at Gandhinagar, Gujarat.
1. No interest will be paid on Earnest money deposit.
2. Earnest Money Deposit of the unsuccessful tender will be returned after the acceptance of successful tender at the expense of the tender within a reasonable time. Earnest money deposit will not bear my interest thereon. For this purpose, the tenderer is advised to send along with the original tender itself. An Advance Stamped Receipt for the Earnest Money Deposit amount, so as to avoid delay in refund. 3. For successful tender. The Earnest Money Deposit can also be converted into Security Deposit.
Condition 3.
Manufacturer firm should have to submit District wise authorized Dealer name in Gujarat with company personal name and contract number."
3.7 I respectfully say and submit that in years prior to 201516, the Respondent Corporation received several complaints from various Government Departments with respect to irregular supply of cycles and inappropriate behaviour of the authorized employees/ agents of the supplier. In light of these complaints and in light of the fact that the successful bidder would have to supply the cycles within 90 days I.e. before June2015, the Respondent Corporation, to ensure that such problems do not occur again and to ensure that the school going girls students promptly receive cycles under the scheme during 'Shaala Praveshootsav', decided that in addition to production capacity, actual sales experience specifically to government machineries is essential. The aforesaid condition was challenged before this Hon'ble Court in Special Civil Application No.3605 of 2015 and the Hon'ble Court were pleased to dismiss the petition vide Order / Judgment dated 09.03.2015 passed in Special Civil Application No.3605 of 2015 by this Hon'ble Court is annexed hereto and marked as ANNEXURER1.
3.8 Thereafter, the eligibility conditions have been reviewed and formulated for each year by a high level committee of the State Page 15 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT Government comprising of Heads of different departments of the State Government, considering the previous experience and also keeping in view the conditions imposed by other state Governments.
3.9 For the year 201718, the eligibility criteria were formulated by the high level committee in meeting dated 01.03.2017. A copy of the minutes of the meeting dated 01.03.2017 is annexed hereto and marked as ANNEXURER2. It was decided that one of the criterion should be that the bidder shall have actually produced at least 12,00,000 (Twelve Lakhs) bicycles in each of the last three years. Apart from this criterion. some other conditions as to ISI certification as well as warranty card etc. were stipulated.
3.10 Accordingly, the tender was floated by the Respondent Corporation for the year 201718 on 21.03.2017. However, the Respondent Corporation received only one bid within the stipulated time period, that too came to be rejected for technical reasons. During the prebid meeting, several companies made representations to the Respondent Corporation to ease the condition as to the actual production of cycles. Considering these representations and considering the aspect of not getting any successful bidder for the tender process, the Respondent Corporation forwarded the concerns to the State Government. Considering this, the High Level Committee of the State Government, in a meeting dated 15.04.2017, decided to ease the condition to the extent that each bidder shall have actually produced 6.00.000 (Six Lakhs) bicycles each year in the last three years. A copy of the minutes of the meeting dated 15.04.2017 is annexed hereto and marked as ANNEXURER3.
3.11 The Respondent Corporation does not formulate any eligibility criteria, it is the High Level Committee (Secretary Purchase Committee) of the State Government that formulates the criteria after considering several aspects such as previous years experience and problems faced, conditions imposed by other State Governments etc. Even after undertaking the tender process, it is the committee that may further negotiates the prices and distribute supply among more than one bidder. The same was done for the year 201718. A copy of the minutes of the meeting dated 25.04.2017 is annexed hereto and marked as ANNEXURER4.
3.12 Thereafter, for the year 201819. it was decided by the committee to impose the same conditions as imposed for the year 201718. in a meeting dated 03.01.2018, in a meeting dated 03.01.2018. A copy of the minutes of the meeting dated 03 01.2018 are annexed hereto and marked as ANNEXURERS.
4. I respectfully state and submit that the eligibility criteria and other Page 16 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT relevant conditions imposed for the procurement of bicycles for the State of Gujarat. Are part materia. If not less stringent. As compared to those imposed by various other State Governments in India. For example. The relevant conditions imposed by various State Governments are reproduced hereafter for ready reference:
ANDHRA PRADESH :
(i) 8 years of manufacturing experience
(ii) Average Annual Turnover for last three years to be not less than Rs 300.00 crores per annum.
(iii) Actual production of 1,00,000 cycles per month.
(iv) Actual supply of 3 lakh cycles per annum in last three years.
(v) Bidder should have supplied cycles to State I Central Governments or PSUs last 3 years.
WEST BENGAL:
(i) Average Annual turnover of Rs 250 crores m last three years, and minimum annual turnover of Rs 200 crores in each of the last 3 years
(ii) Actually manufactured 10,00,000 (ten lakhs) bicycles in each of the last three years TAMIL NADU:
(i) Annual turnover of Rs.60.00 crores and above in each of the last 3 years.
(ii) Should have produced and sold to any State / Central Government or PSUs or autonomous bodies a minimum of 2 Iakh bicycles per annum in last three years or total of 6 lakhs bicycles m last three years.
MADHYA PRADESH:
(i) Average Annual Turnover of Rs 200 crores in last three financial years
(ii) Minimum experience of 10 years of manufacturing cycles
(iii) At least average production of 6.70 lakh bicycles in each of the last three years Page 17 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT
(iv) Supply of at least 1.70 lakh bicycles in any of the last 3 financial years to State / Central Government Department or their undertaking.
ASSAM
(i) Experience of successfully carrying out supply and warranty at least one year in any five Government Organizations / Government PSUs
(ii) At least Average Annual Turnover of Rs 2 5 crores in each of the last 3 years
(ii) Bidder must have executed work order of Rs.2.50 crores for supply of bicycle to Government undertakings and agencies in last 5 years A copy of the tender documents of the abovereferred five States is annexed hereto and marked as ANNEXURER6 (COLLY).
5 I respectfully say and submit that the Respondent Corporation and the Gujarat State Government. In order to promote healthy competition and to encourage MSMEs. Have imposed much liberal conditions as compared to those imposed by other States. However. The conditions have to balance this aspect along with ensuring timely delivery and good quality of cycles. More so in light of the fact that the cycles have to be supplied within a maximum period of 90 days, where majority portion (60%) is to be supplied within 60 days from the date of the purchase order or on the date of Shaala Praveshotsav, whichever is earlier.
6 I respectfully say and submit that the State of Gujarat has always procured bicycles at the lowest rate as compared to several other States.
7 I say and submit that in order to ensure timely delivery and to promote healthy competition, the supply of bicycles is not given only to the lowest bidder L1, but it is divided among all other successful bidders who are ready and willing to supply the same at the L1 rate. For the year 201516, out of the 7 successful bidders (total 7 bids received), three companies agreed to supply cycles at L1 rate therefore the supply was distributed between the 3 companies. For the year 201617, out of the 6 successful bidders (total 9 bids received), four companies agreed to supply cycles at L1 rate therefore the supply was distributed between the 4 companies. For the year 201718, out of the4 successful bidders (total 4 bids received). two companies agreed to supply cycles at L1 rate therefore the supply was distributed between the 2 companies. For the previous year I.e. 201819, out of the 3 successful bidders (total 4 bids received), apart from the L1 bidder, no other company agreed to supply cycles at L1 rate Page 18 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT (which was further negotiated down), therefore the supply was awarded to the L1 bidder at the negotiated rate, similar situation arose in 201819 where other bidders refused to supply at L1 rate.
8 I respectfully submit that earlier the tender process was on the basis of "Annual Rate Contract", and the same was floated on "nProcure" portal of the Government. However, under the new directives from the State Government, since last year the procurement is through GeM Portal (Government eMarketplace). In nProcure, the tender inviting authority had the option to upload the entire tender document and thus. All necessary conditions were incorporated in the tender document itself. The same was applicable for GeM until last year. However, there are several technical limitations when procurement is done through GeM. Presently, GeM portal does not allow uploading of entire tender document. The quantity and specifications are to be input in preset fields of the portal. The General Terms and Conditions are also predefined by GeM and the tender inviting authority has the only option to select the relevant conditions by checking the check box provided for preset fields.
9. In light of these technical hurdles, the Respondent Corporation had sent the entire tender document to GeM authorities on 18.02.2019 so that all the conditions can be incorporated. However, on 25.02.2019, the GeM authorities sent a mail stating that the Respondent Corporation has to revise the terms and conditions and select from the preset parameters as the terms sent by the Respondent Corporation are in a nature of annual rate contract and are not in accordance with GeM General Terms and Conditions. Accordingly, the terms and conditions were revised and sent back to GeM authorities. The Respondent Corporation sent a reminder on 28.02.2019, to urgently decide the same. The request for the specific eligibility criterion was pending approval from GeM Authorities and due to paucity of time, the tender was floated without incorporating the same. The GeM authorities approved the conditions and necessary corrigendum was published on 05.03.2019, by GeM. Thus, it is not the case that the corrigendum was issued to favour any particular bidder or to oust any particular bidder. Copies of the said email communications are attached hereto and marked collectively as ANNEXURER7 (COLLY.).
10. In light of the aforesaid corrigendum providing for special conditions, the Respondent authority received several representations from the industry to Iighten the eligibility criteria. In light of the representations, & high level committee of the State Government (Secretary Purchase Committee) met on 22.03.2019, and reduced the criteria from 6 lakh bicycles per annum in last three years to average 5 lakhs bicycles per annum in last three years (total 15 lakh cycles). Following the said decision of the committee, corrigendum was published on 27.03.2019. Copies of the Minutes of the Meeting dated 22.03.2019 of Page 19 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT SPC and consequential corrigendum published by GeM on 27.03.2019, are annexed herewith and collectively marked as ANNEXURER8 (COLLY.). However, due to ímproper wording of the corrigendum, confusion was created as to whether 5 lakh cycles are to be produced in each of the three preceding years or over the period of three years, hence another corrigendum was published on 29.03.2019, to remove the confusion. A copy of the corrigendum published on 29.03.2019, is annexed hereto and marked as ANNEXURER9.
11. I respectfully submit that there is no malafide or arbitrariness on part of the Respondent Corporation. Nor is there any favouritism. The eligibility criteria are set by the Secretary Purchase Committee of the State Government as per the need and urgency of procurement. The condition as to actual production of bicycles is not a new condition being added for the first time, the condition was part of earlier tender inquiries floated. In fact, the condition is modified to increase competition by relaxing the criterion from 6 lakhs cycles per annum in past three years to average 5 lakhs cycles per annum in last three years.
12. I respectfully submit that the technical bids came to be opened and came to be technically scrutinized by the Scrutiny Committee only on 30.05.2019, and therefore, prior thereto, the Respondent Corporation was not aware about the eligibility of any of the bidders out of the total 8 (eight) bids received, more particularly when the 2nd corrigendum was initially published on 27.03.2019 and thereafter, the corrected version was published on 29.03.2019. Therefore, the contention that the eligibility criteria is changed in order to eliminate the Petitioner does not hold any truth. As the Respondent Corporation was not aware about the actual production. Turnover etc. of the Petitioner, at the material time. After examination and evaluation of technical bids of 8 different parties, a decision was taken to technically qualify the following 5 parties and to open their price bids:
(1) S. K. Bikes Pvt. Ltd.
(2) Avon Cycle Pvt. Ltd.
(3) Hero Cycle Pvt. Ltd.
(4) Hero Ecotech Ltd.
(5) Sheth Industrial Corporation Whereas the following 3 parties including the Petitioner came to be disqualified owing to the specified reasons:
(1) Ravi Industries Petitioner herein Page 20 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT (2) Kohinoor Cycles Pvt. Ltd.
(3) Jindal Fine Industries Further, on opening the price bids of the technically qualified parties referred to above, the following L1 and L2 bidders were found.
(1) L1 Bidder Sheth Industrial Corporation (2) L2 Bidder Hero Ecotech Ltd.
Since the lower rate quoted by the L1 Bidder per cycle was Rs.3355/ (inclusive of GST, Inclusive of GST, Inspection Charges and Transportation Charges for delivering cycles at various destinations throughout the State); 60% of the total requirement was decided to be supplied by it, whereas, L 2 Bidder was persuaded to match this rate and supply the rest 40% of the requirement. For ready reference, a copy of the minutes of the meeting of Scrutiny Committee held on 30.05.2019 along with the determination of L1 and L2 Bidders are annexed hereto and collectively marked as ANNEXURER10 (COLLY.).
13. Thereafter, the whole matter was placed before SPC in its meeting held on 01.06.2019 for taking a final decision in the matter. The SPC after having taking into account all the aspects, approved the award of the work in question at the approved rate to L1 and L2 Bidders. A copy of the minutes of the meeting of SPC held on 01.06.2019 is annexed hereto and marked as ANNEXURER11.
14. ln view of the above, both the abovenamed L1 and L2 Bidders were issued the workorders on 03.06.2019, copies whereof are annexed herewith and collectively marked as ANNEXURER12 (COLLY.).
15. After the placement of the aforesaid workorders, both the above parties have not only procured their manufactured cycles of the requisite quantity, but also dispatched the same at various destinations in the State for the purpose of distribution thereof as per the preannounced programme of "Shaala Praveshootsav' being held from tomorrow i.e. 13th June to 15th June, 2019 at all the Government / Grantable schools for the girlstudents entering the 9th standard in their respective schools."
22 Mr. Trivedi, thereafter, invited the attention of this Court to the chart scrutinizing the technical bid for the ladies bicycles for the year 201920:
Page 21 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT"Technical Bid Scrutinized FOR Ladies Bicycles for the Year 201920 Sr. Details of Name of the Bider No. document 1 2 3 4 5 6 7 8 Company's Name S.K. BIKES AVON HERO HEROECO SETH RAVI JINDAL KOHINO PVT LTD CYCLES CYCLE LTD TECH LTD INDUSTRI INDUSTRI FINE OR LTD AL ES INDUST CYCLE CORPORA RIES PVT LTD TION 1 E.M.D.DD/BG Exempted Exempted Exempted Exempted Exempted Exempted Exempt Exempted Rs.2,63,17,200/ but but but but but ed or BG valid upto submitted submitted submitted submitted submitted 12 months 2 Minimum Yes Yes Yes Yes Yes Yes Not Yes Production submitt capacity of ed 10,00,000 bicycles per annum 3 The bidder Not should 2015 9,14,967 20,37,944 53,03,519 4,81,589 6,86,250 89827 submitt 1,34,649 have at 16 ed least an average producti on of 5 lac Not 2016 bicycles 9,96,787 17,42,929 43,14,607 8,52,489 4,47,459 1,07,350 submitt 2,65,217 17 per ed annum in the last three years Not (aggrega 2017 10,34,115 21,83,034 40,16,461 5,32,192 6,06,359 1,00,185 submitt 1,53,944 te 15 lac 18 ed bicycles) 4 E.R.1 or any other return in this regard duly Not submitted in the Yes Yes Yes Yes Yes Yes submitt Yes concerned central ed Excise Authority Annexure - 3 5 Turnover 2016 305.45 656.6 1696.47 344.67 179.4 61.45 Not 103.49 Details 17 submitt (Rs. in ed Crore) 2017 322.68 762.87 1722.89 286.39 313.88 53.38 Not 87.7 Annexur 18 submitt e4 ed 6 Self declaration Yes Yes Yes Yes Yes Yes Not Yes duly signed by the submitt Tenderer as per ed Annexure2 7 Photocopy of valid Yes Yes Yes Yes Yes Yes Not Yes Manufacturing submitt License under ed Factories Act 8 Accepted / Not ACCEPTED ACCEPTED ACCEPTED ACCEPTE ACCEPTED REJECTE REJECT REJECTE accepted D D ED D Page 22 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT Sd/ sd/ sd/ sd/ (J.D. PARMAR) (SAGAR SONI) (M.K. SOLANKI) (N.L. BAGDA) MANAGER REG. MANAGER DY. DIRECTOR DYDIRECTOR M.D. MKYCycle Office of OBC Cast (SC) sd/ Sd/ sd/ sd/ (R.K. PATEL) (K.R ZALA) (G.I. DESAI) (M.K. DAMOR) G.M.K.R.T.I. DY. DIRECTOR Jt. Ind. Commi. Jt. Commi.
Class (OBC) Office of the Ind. Office of the SC
Commissioner
sd/ sd/
(P..G. PATEL) (M.D. KANZARIYA)
M.D. Chairman
GRIMCD GRIMCO"
23 Mr. Trivedi, thereafter, invited the attention to the document,
which is at page : 142 of the paper book. The same being the list of technically qualified sellers:
S. Seller Name Offered Item Total price Awar Details No. ded 1 SETH INDUSTRIAL Item '523380000.00 L1 3355/ CORPORATION Categories : (60%) bicycle 2 HERO ECOTECH Item Category : '349336000.00 L2 3359/ LIMITED bicycle (40%) 3 S K BIKES PRIVATE Item Category : '873860000.00 L3 3361/ LIMITED bicycle 4 AVON CYCLES LTD Item Category : '875160000.00 L4 3366/ bicycle 5 HERO CYCLES Item '876720000.00 L5 3372/ LIMITED Categories :
bicycle 24 Thereafter, the attention of this Court was invited to the impugned corrigendum, which is at Annexure : P/5 (page : 47), which reads thus:Page 23 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT
"CORRINGENDUM BID NO GEM/2019/B/194020 SPECIAL TERMS AND CONDITONS FOR PROCUREMENT OF BICYCLES CLAUSE NO.4 (Change) The bidder should have at least an average production of 5 lac bicycles per annum in the last three years (aggregate 15 lac bicycles) i.e. 201516, 201617 & 201718.
In this regards, you have to submit copy of E.R.1 or any other return in this regard duly submitted to the concerned central Excise Authority. (Please refer Annexure3). GIMCO may accept any other document clearly showing actual production."
25 Mr. Trivedi, the learned Advocate General, thereafter, clarified something very important going to the root of the matter. Mr. Trivedi submitted that indisputably, in the original Tender document, there was no condition prescribed that the bidder should have the minimum annual production of average 6,00,000 bicycles per annum in each of the three accounting year i.e. 201516, 201617 and 201718. Mr. Trivedi clarified that it is not that the specific eligibility criteria was not in the mind of the Corporation, but the same was pending for approval from the GeM authorities. The original Tender came to be floated without incorporating the impugned eligibility criteria on account of paucity of time. Mr. Trivedi submitted that no sooner the same was approved by the GeM authorities, then the impugned corrigendum to that effect was published. In such circumstances, according to Mr. Trivedi, it cannot be said that the impugned condition incorporated by way of corrigendum was with an oblique motive and tainted with mala fide. The aforesaid aspect has been very well explained and stated on oath by way of an affidavitinsurrejoinder duly affirmed by Shri Jayeshkumar Parmar, Manager, Gujarat Rural Industries Marketing Corporation Limited is as under:
Page 24 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT"15. I respectfully state that the contents of paras 8 to 10 are denied. Pertinently, since the specific eligibility criterion prescribed by the Respondent Corporation to be incorporated in the tender, was pending approval from the GeM Authorities, the tender came to be floated without incorporating the same owing to paucity of time. No sooner the same was approved by the GeM Authorities, the necessary Corrigendum to that effect was published. There is no basis for the Petitioner to allege that the condition incorporated by way of Corrigendum was with an oblique motive and tainted with malafides. Pertinently, the eligibility criterion in question was very much in place before all the Bidders in the tender inquiry in question in advance when they submitted their bids and that there has been no deviation therein after the bids were submitted and opened on 30.05.2019. lt may be noted that one of the eligibility criteria was initially published by way of a Corrigendum on 05.03.2019 and reduction therein was further issued by way of another Corrigendum on 27.03.2019, followed by further Corrigendum on 29.03.2019. As against this, L1 Bidder submitted its bid on 31.03.2019 whereas, on 01.04.2019, the Petitioner and L2 Bidder submitted their respective bids. Thus, no prejudice of whatsoever nature can be said to have caused to the Petitioner in issuance of the said Corrigenda, more particularly when a IeveIplaying field was consistently maintained amongst all the Bidders including the Petitioner herein. Thus, the Petitioner's parochial perception in respect of the whole tender process as undertaken under the auspices of GeM Authorities deserves to be discarded. In the present case, rules of game are not changed after the submission of the bids by all the Bidders, as alleged. It is denied that the changes were effected earlier to unduly favour big companies, and to oust small efficient players, as alleged or otherwise. The Petitioner has a misconceived notion that the Respondent Corporation intends to oust small companies and favour big companies, however, there is no basis whatsoever to substantiate the said allegation.
16. I respectfully state that the contents of paras 11 and 12 are not admitted and denied as introduction of a condition by Corrigendum is not reflective of any favouritism since there is a rationale behind the same and similar condition has always been a part of the earlier tenders floated in the previous years. It is also pertinent to take note of the fact that the technical bids came to be opened only on 30.05.2019 and therefore, the Respondent Corporation was not aware of specifications of any bids prior to the said date. The Respondent Corporation has made all efforts to see that its decisionmaking process is fair and transparent in all aspects as has been comprehensively explained in its affidavitinreply."
26 In such circumstances, Mr. Trivedi submitted that there being no Page 25 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT merit in both the writ applications, those deserve to be rejected.
27 Mr. Trivedi, in support of his submissions, has placed reliance on the following decisions:
[1] Afcons Infrastructure Ltd v. Nagpur Metro Rail Corporation Ltd. and Anr. [AIR 2016 SC 4305] (paras 13 and 18) [2] Municipal Corporation, Ujjain and Anr. vs. BVG India Limited and Ors. [(2018) 5 SCC 462] (para 45) [3] TATA Cellular vs. Union of India [(1994) 6 SCC 651] (paras 82 and 94) [4] Directorate of Education and Ors. vs. Educomp Datamatics Ltd and Ors. [(2004) 4 SCC 19] (paras 5, 11, 12 and 13) [5] Reliance Energy Ltd and Anr. vs. Maharashtra State Road Development Corpn. Ltd. and Ors. [(2007) 8 SCC 1] [6] Raunaq International Ltd. vs. I.V.R. Construction Ltd and Ors.
[(1999) 1 SCC 492] [7] Larsen and Toubro Limited vs. Gujarat State Petroleum Corporation Limited [2001(2) GLR 934] [8] Michingan Rubber (India) Limited vs. State of Karnataka and Ors. [(2012) 8 SCC 216] [9] Central Coalfields Limited and Anr. vs. SLLSML (Joint Page 26 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT Venture Consortium) and Ors. [(2016) 8 SCC 622] [10] Tractors and Farm Equipment Limited vs. Union of India and Ors. [Special Civil Application No.18153 of 2017 decided by this Court on 11th October 2017] (paras 4.2, 4.3, 6.1, 7.2, 8 and 9) [11] Aahna Air Services Pvt Ltd and Anr. vs. State of Gujarat and Anr. [Special Civil Application No.5338 of 2016 decided by this Court on 29th April 2016] (paras 14 and 15) [12] Larsen and Toubro Limited vs. Gujarat State Petroleum Corporation Limited [2000(2) GLR 1814] (paras 10.3 and 10.4) 28 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the writ applicant is entitled to any of the reliefs, as prayed for, in this writ application.
29 Having regard to the materials on record, the picture that emerges is as under:
Date Particulars 31.05.2014 Tender inquiry was successfully floated in the year 2014 for supply of 2 lakh Lady Cycles for the program called "Garib Kalyan Mela 2014"` One of the eligibility criteria was minimum production capacity of 10 lakh bicycles per annum '06.01.2015 Another Tender inquiry was floated in the year 2015 for supply of 2 lakh Lady Cycles during `Shaala Praveshootsav'. Bidders were required to have minimum production capacity of 10 lakh bicycles per annum and should have produced and sold a minimum of 10 lakh bicycles per annum in the specific financial year for a period Page 27 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT of last 3 years of 201112, 201213 and 201314 to any State or Central Government Public Sector Undertaking. '08.01.2015 In view of representations from the prospective bidders as regards number of bicycles to have been produced and supplied only to one type of customers i.e. Government instrumentalities, second amendment was issued in the aforesaid Tender inquiry wherein the requirement of supplying 10 lakh bicycles to Government instrumentalities was reduced to 6 lakh bicycles.
'09.03.2015 The aforesaid tender requirement came to be challenged in SCA No. 3605 of 2015. which was dismissed vide judgment dated 09.03.2015.
'01.03.2017 Eligibility criteria for similar Tender inquiry floated for the year 201718, was formulated by the High Level Committee called Secretary Purchase Committee ("SPC" for short). where one of the eligibility conditions was that the bidder should have manufactured 12 lakh bicycles in each of the last 3 preceding years.
Note: The aforesaid Tender iquiry was not followed up since only one bud was received.
'15.04.2017 In view of the above. another meeting of SPC was convened, wherein it reduced the requirement of actual production from 12 lakh to 6 lakh bicycles. m each of the last 3 financial years '25.04.2017 Meeting of SPC was held wherein it was decided to approve the decision and price of Rs.3050.25 including tax but excluding handling charges for lady bicycles to be supplied by (i) Atlas Cycle (Haryana) Pvt. Ltd. and (ii) S.K. Bikes Pvt. Ltd.. Ludhiana in the supply proportion of 60% and 40% respectively.
'14.08.2017 State Government issued a resolution and issued a new direction for conducting the tender process through "GeM Portal" (GovernmenteMarketplace Portal) in place of earlier arrangement of "(n)Procure Portal".
Note: In the earlier arrangement of (n)Procure Portal, the Tender Inviting Authority ("TW for short) had an option to upload the entire Tender document containing the general terms and conditions. Whereas, the GeM Portal. does not allow uploading of entire Tender document and instead, the TIA only has the option to select the relevant terms and conditions. specifications and quantity by selecting check box provided for the preset fields. Further. for any other special terms and conditions that may be required by TIA and are not included in the preset fields, separate mail Page 28 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT containing the same has to be sent to GeM Authorities for approval.
'03.01.2018 A meeting of SPC was held wherein various decisions were taken including the decision to adopt the prevalent tender conditions of previous year for floating tender inquiry for the year 201 819 in the matter of purchase of cycles. '18.02.2019 ln view of the above, Respondent Corporation sent an email to GeM Authorities and sent therewith. the entire bid document for floating a Tender inquiry for lady bicycles for the year 201819.
'25.02.2019 ln response to the above, GeM Authorities sent an email to the Respondent Corporation stating interalia that the Respondent Corporation has to revise the terms and conditions and select from the preset parameters as the terms and conditions contained in the bid document sent by the Respondent Corporation are in the nature of annual rate contract and not in accordance with the General Terms and Conditions ("GTC" for short) of GeM, with a request to look at and reframe the same '27.02.2019 GeM Authorities sent further mail to the Respondent Corporation reiterating its request for modifying the special/additional terms and conditions in the tender document in question m accordance with GTC of GeM.
'28.02.2019 Respondent Corporation responded to GeM Authorities by sending email, requesting therein to ignore previous special/additional terms and conditions and consider new ones sent therewith after having made all corrections for being implemented for bicycle bid.
'28.02.2019 Respondent Corporation published the Bid bearing No. (00:16:27 GEM/ 2019/B/194020. containing 'Bicycle Technical morning) Specifications' as well as 'Buyer Specific Additional Terms and Conditions', inbuilt in the GeM Portal. However, while doing so, the Respondent Corporation ticked only Condition nos.1 to 4 of "Buyer Specific Additional Terms and Conditions' from the preset fields of the GeM Portal, instead of ticking all available eight conditions.
Note: Pertinently, the Respondent Corporation's Special Terms and Conditions for Procurement of Bicycles (i.e. Eligibility Criteria) could not be published on 28.02.2019, since the same were pending for approval from GeM.
'28.02.2019 In view of the above, GeM published 'Bíd Corrigendum' on (19:11:54 the same day containing all its eight "Buyer Specific Evening) Additional Terms and Conditions'.
Page 29 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT'02.03.2019 Thereafter, Respondent Corporation sent an email to the GeM Authorities and once again sent its special / additional terms and conditions (i.e. eligibility criteria), while informing that they need to be implemented for the tender inquiry in question on GeM Portal.
'05.03.2019 ln response to the above, GeM Authorities published the Respondent Corporation's Special Terms and Conditions as Corrigendum wherein, one of the eligibility criteria, i.e. condition No.4 provided as under:
"The bidder should have the minimum annual production of average 6 lakh bicycles per annum in each of 3 accounting years i.e. Minimum Actual Production of 6 lakh bicycles in the year 201516, 6 lakh bicycles in the year 201617, and 6 lakh bicycles in the year 20171 8".
'10.03.2019 Mode! Code of Conduct was in operation and hence, tender to inquiry in question could not be finalized.
27.05.2019 '11.03.2019 Bidenddate was extended to 22.03.2019. '22.03.2019 In view of representation received to ease the eligibility criteria. the SPC in its meeting. reduced the requirement of 6 lakh bicycles to average 5 lakh bicycles per annum in last 3 years (i.e. total 15 lakh bicycles) and also extended bid enddate upto 01.04.2019.
'23.03.2019 ln furtherance of the above, Respondent Corporation sent an email to GeM Authorities for publishing a Corrigendum with reference to the modification of above referred eligibility condition.
'27.03.2019 Another Corrigendum was published by GeM incorporating interalia the aforesaid decision relating to condition No. 4 reading as under:
"the bidder should have at least the average production of 5 lakh bicycles per annum in last 3 years i.e. in the year201516, 201617 and 201718".
'28.03.2019 Since the aforesaid condition No.4 providing the production of 5 lakh bicycles in last 3 years did not contain the expression "per annum" and was creating confusion, Respondent Corporation sent an email to issue further corrigendum as per the draft attached therewith.
'29.03.2019 ln view of the above, further Corrigendum containing amended condition No.4 came to be published by GeM providing interalia as under:
Page 30 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT"the bidder should have at least the average production of 5 lakh bicycles per annum in last 3 years (aggregate 15 lakh bicycles) i.e. in the year 201516, 201617 and 201718".
'31.03.2019 One Mls. Sheth Industrial Corporation submitted its bid. '01.04.2019 Petitioner submitted its bid for the Tender inquiry in question.
'01.04.2019 M/s. Hero Ecotech Ltd. submitted its bid for the Tender inquiry in question.
'04.04.2019 Petitioner herein filled the captioned writ petition challenging the terms and conditions of the Tender inquiry in question, more particularly, on the ground that tender permission should have been with reference to production capacity and not with reference to the number of bicycles having been manufactured within the specified period and that it ts not legal and proper to publish the eligibility conditions after publishing the tender document '29.05.2019 Pursuant to the specific inquiry made by the Respondent Corporation with its Advocate so as to enable it to proceed further in the Tender inquiry in question (since the period of Model Code of Conduct was over), Advocate of Respondent Corporation categorically informed that in the absence of any stay or interim relief orders of the Hon'ble High Court, it is open for the Respondent Corporation to proceed further with the finalization of the tender in question.
'30.05.2019 In view of the above, Technical bids of the parties were opened, and the same were critically examined and evaluated by the Scrutiny Committee of the Respondent Corporation in its meeting held for the said purpose, wherein, out of total 8 bidders, 3 bidders namely (i) Petitioner, (ii) Kohinoor Cycles Pvt. Ltd. and (iii) Jindal Fine Industries were technically disqualified.
'30.05.2019 After the conclusion of the examination of technical bids, price bids of remaining 5 bidders came to be opened, wherein, it was found that M/s. Sheth Industrial Corporation was L1 bidder (Rs.3355/per bicycle inclusive of GST, Inspection Charges, Transportation and Handling Charges), whereas, Mls. Hero Ecotech Ltd. was L2 bidder (Rs.3359/per bicycle inclusive of all the aforesaid charges), and demonstrated the said result in form of a chart annexed with the minutes of the said Committee in its meeting held on 30.05.2019.
'01.06.2019 Meeting of SPC was convened for considering and Page 31 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT approving the decision taken by the Scrutiny Committee in its meeting held on 30.05.2019 referred to above, wherein, SPC after having examined all the aspects, decided to confirm the award of the tender work to the abovenamed L1 and L2 bidders at the approved rate of Rs.3355/per bicycle (inclusive of all charges and expenses) in the order of 60% 40% respectively.
'03.06.2019 Work orders were issued to L1 and L2.
'13.06.2019 L1 and L2 bidders referred to above, supplied 5% of their allocated quota of bicycles of different 33 districts in the State as stipulated.
30 In the aforesaid factual backdrop, we think it apposite, before dwelling upon the facts that have emerged from the pleadings to appreciate the rival submissions raised at the Bar to refer to certain citations in two spheres, namely, the law relating to the acceptance or rejection of a Tender, the essential condition in a notice inviting the Tender, the ancillary condition in the domain of Tender, etc, and the duty of the Court, while scrutinizing the Tender document.
31 First, we shall refer to the authorities, which deal with the principles relating to the acceptance and other aspects of Tender. In Reliance Energy Limited (supra), the Supreme Court emphasised on the doctrine of "level playing field". The Supreme Court, in the facts of the said case, took the view that when Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". The Supreme Court, however, clarified that the said doctrine is subject to public interest. The Supreme Court held as follows:
"36. We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Page 32 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT Constitution embodies the principle of "nondiscrimination". However, it is not a freestanding provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to "right to life". It includes "opportunity". In our view, as held in the latest judgment of the Constitution Bench of nineJudges in the case of I.R. Coelho v. State of Tamil Nadu (2007) 2 SCC 1, Article 21/14 is the heart of the chapter on fundamental rights. It covers various aspects of life. "Level playing field" is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". We may clarify that this doctrine is, however, subject to public interest. In the world of globalization, competition is an important factor to be kept in mind. The doctrine of "level playing field" is an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equallyplaced competitors are allowed to bid so as to subserve the larger public interest. "Globalization", in essence, is liberalization of trade. Today India has dismantled licenceraj. The economic reforms introduced after 1992 have brought in the concept of "globalization". Decisions or acts which results in unequal and discriminatory treatment, would violate the doctrine of "level playing field"
embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of "equality" should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of "level playing field". According to Lord Goldsmith commitment to "rule of law" is the heart of parliamentary democracy. One of the important elements of the "rule of law" is legal certainty. Article 14 applies to government policies and if the policy or act of the government, even in contractual matters, fails to satisfy the test of "reasonableness", then such an act or decision would be unconstitutional."
"38. When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This "legal certainty" is an important aspect of the rule of law. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment. It may violate doctrine of "level playing field". "
32 In Central Coalfields Limited (supra), the question before the Supreme Court was whether furnishing a bank guarantee in the formate prescribed in the bid document was an essential requirement in the bidding process of the Central Coal Field Limited and whether a bid not Page 33 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT accompanied by a bank guarantee in the formate prescribed in the bid document of the Central Coal Field Limited could have been treated as nonresponsive in view of the clause 15.2 of the general terms and conditions governing the bid process. The argument before the Supreme Court was that although the bank guarantee provided by the JVC might not be in the formate prescribed by the CCL, yet, as there was substantial compliance with the requirement of the bank guarantee, the rejection of the JVC's bid was unjustified. It was further argued that the bank guarantee, which was furnished by JVC, had stricter terms than the bank guarantee in the formate prescribed by the CCL. The Supreme Court, while setting aside the judgement passed by the Division Bench of the Jharkhand High Court and allowing the appeals of Central Coalfields, held as follows:
"29. What is extraordinary about this case is that the employer, that is CCL, seeks to adhere to the terms of the NIT and the GTC issued by it, but the submission of JVC is that CCL should actually deviate from the terms of these documents so as to benefit JVC. Indeed, in spite of a specific requirement that the bank guarantee should be submitted in the prescribed format, JVC claims an entitlement to a deviation in this regard on the ground that the prescribed format was a nonessential term of the NIT and the GTC. Who is to decide this issue of essentiality? Does CCL with whom the contract has to be entered into by the successful bidder have no say in the matter? Before adverting to this, it is necessary to get clarity on some circumstances.
30. The first and the foremost aspect of the case that must be appreciated is that, as mentioned above, JVC was certainly not computer illiterate. Like every bidder, it was required to have a Digital Signature Certificate which clearly indicates that any bidder (including JVC) had some degree of comfort with etenders and the use of computers for bidding in an etender. It is this familiarity that enabled JVC to access the" incorrect" format of a bank guarantee. Under these circumstances, it is extremely odd that JVC was not able to access the correct and prescribed format of the bank guarantee. The excuse given by JVC that the NIT was vague and that it was not clear which was the prescribed format of the bank guarantee appears to be nothing but a bogey. A simple reading of the GTC and the terms of the bank guarantee would have been enough to indicate the correct prescribed format and the "incorrect" format.Page 34 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT
31. Secondly, the heading mentioned in both the GTCs was different. The correct GTC bore the heading Governing Hiring of Equipment for removal of Overburden, Extraction of Coal, Transportation and loading in Areas of Central Coalfields Limited while the not relevant GTC bore the heading "Governing Contractual Transportation & Loading in Areas of Central Coalfields Limited" while the not relevant GTC bore the heading "Governing Contractual Transportation and Loading in Areas of Central Coalfields Limited.". There is a substantial difference between the two GTCs and anyone bidding for the work "Out sourcing for Overburden Removal (1050.00 L. CuM) and Coal Extraction (975.00 L. Te) and transportation by deploying surface miner at Ashok OCP, Piparwar Area for a period of 8 years" could immediately see which GTC is relevant and which is not.
32. In this context and thirdly, it is important to note that if JVC had any doubt with regard to the format of the bank guarantee to be furnished, it could have and ought to have sought a clarification from the concerned authority as mentioned in the NIT. Moreover, JVC could have and ought to have at least made a representation to CCL that the prescribed format for the bank guarantee was either not available or that the NIT was ambiguous or that it lacked clarity with regard to the prescribed format of the bank guarantee. JVC neither sought any clarification nor did it make any representation to CCL. It is difficult to understand the conduct of JVC in the situation presented before us, particularly with reference to a contract for about Rs. 2000 crores for eight years.
33. 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 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.
34. 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 Page 35 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT court and interfering with CCL's decision.
35. 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 wellsettled 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."
In that 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.
36. It was further held that if others (such as the appellant in that case) were aware that nonfulfillment 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 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 Page 36 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT involves affectation of some right or denial of some privilege."
(Emphasis given) 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.
39. Poddar Steel was a rather interesting case and added a new dimension to the discourse. The decision of the Allahabad High Court records that the relevant clause in the NIT gave the bidder the option of depositing the earnest money in cash or by a "demand draft drawn on DLW Branch of SBI in favour of Assistant Chief Cashier, DLW/ Varanasi". As many as 21 parties had responded to the NIT, but 8 of them had not deposited any earnest money at all and the remaining 13 bidders had "deposited the earnest money by one mode or the other but not necessarily in the manner provided in the NIT except perhaps a few." [Ganesh Engineering Works v. Union of India and others, 1990 All. LJ 1140.] The Tender Committee deviated from the terms of the NIT and considered the bids of these 13 bidders and accepted the bid of Poddar Steel, who had Page 37 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT given the earnest money not by cash or a demand draft but by "a loose cheque drawn on its C/D account in the Union Bank of India, Sonarpura, Varanasi." On the issue of discriminatory treatment, the contention of the employer was that since all the 13 bidders who had made the earnest money deposit were treated equally, there was no issue of any discriminatory treatment.
40. However, the High Court took the view, following Ramana Dayaram Shetty (AIR 1979 SC 1628) and the privilegeofparticipation principle, that it was possible that if those who did not deposit any earnest money had known that a crossed cheque (drawn on a bank other than SBI) towards earnest money was acceptable to the employer, they too could have been in the fray. Under these circumstances, the High Court held that excluding them from competition, through this unannounced deviation affecting bidders and potential bidders alike, rendered the bidding process unfair. The High Court introduced an "essential term" concept and held that the clause in the NIT relating to deposit of earnest money was an essential term thereof and could not be deviated from. The Allahabad High Court held:
"The mere fact that all the tenderers who had deposited the earnest money, whether in terms of Clause 6 or not had been treated alike cannot make any difference. It is quite possible to visualise that the parties who had failed to deposit the earnest money may also have been in the fray had they known that earnest money through cheque was also acceptable. Thus they have obviously been deprived from competing with others and this makes the action of Respondents 1 to 5 unfair when condition No. 6 of the NIT so specifically points out that deposit of earnest money in any other mode except in cash or by demand draft would not be acceptable. It leads us to think that this was an essential precondition for submitting tenders and the Respondents were not entitled to deviate from this. All tenders which were not accompanied by deposit of earnest money strictly in the manner indicated in the NIT deserved to be rejected. We reject the contention of the Respondents that the earnest money could be accepted even when it was deposited by some mode other than those in NIT. We also hold that Clause 6 of NIT is not merely ancillary or subordinate condition but in view of the language in which is couched the same was a crucial and essential terms of the tender which could not be deviated from."
41. In appeal, this Court accepted the theory of essential and nonessential or ancillary or subsidiary terms of an NIT. It was held that the cheque of the Union Bank of India issued by Poddar Steel (though a deviation from the terms of the NIT) was sufficient for meeting the conditions of the NIT, Page 38 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT the condition being ancillary or subsidiary to the main object to be achieved by the condition and that the employer could waive the "technical literal compliance" of the earnest money clause of the NIT "specially when it was in its interest not to reject the said bid which was the highest." In other words, this Court concluded that an essential term of the tender document could not be deviated from but an ancillary or subsidiary or nonessential term could be deviated from, and that the deviation could be without any reference to potential bidders.
42. Unfortunately, this Court did not at all advert to the privilegeof participation principle laid down in Ramana Dayaram Shetty (AIR 1979 SC 1628) and accepted in G. J. Fernandez (AIR 1990 SC 958). In other words, this Court did not 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 re introducing the privilegeofparticipation 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 threejudge 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 Page 39 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT 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."
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.
45. Rashmi Metaliks was a comparatively different case inasmuch as clause (j) of the NIT was the subject matter of consideration. This clause required a bidder to submit "Valid PAN No., VAT No., copy of acknowledgment of latest income tax return and professional tax return." The employer interpreted this to be an essential term for qualifying in the bidding process. This view was upheld by a learned Single Judge and the Division Bench of the Calcutta High Court. This Court reversed in the following words:
"We think that the income tax return would have assumed the character of an essential term if one of the qualifications was either the gross income or the net income on which tax was attracted. In Page 40 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT many cases this is a salutary stipulation, since it is indicative of the commercial standing and reliability of the tendering entity. This feature being absent, we think that the filing of the latest income tax return was a collateral term, and accordingly the Tendering Authority ought to have brought this discrepancy to the notice of the appellant Company and if even thereafter no rectification had been carried out, the position may have been appreciably different."
Essentially therefore, this Court substituted its view for that of the employer who interpreted this term of the NIT to be mandatory for compliance. Rashmi Metaliks followed Poddar Steel (AIR 1991 SC 1579) and apparently overlooked the dictum laid down in Ramana Dayaram Shetty (AIR 1979 SC 1628), G. J. Fernandez (AIR 1990 SC
958), Tata Cellular (AIR 1996 SC 11) and Jagdish Mandal and must be confined to its own peculiar facts. In any event, this decision does not advance the case of any of the parties before us.
46. It is true that in Poddar Steel and in Rashmi Metaliks a distinction has been drawn by this Court between essential and ancillary and subsidiary conditions in the bid documents. A similar distinction was adverted to more recently in Bakshi Security and Personnel Services Pvt. Ltd. v. Devkishan Computed Pvt. Ltd., 2016 (7) SCALE 425 through a reference made to Poddar Steel. In that case, this Court held a particular term of the NIT as essential (confirming the view of the employer) and also referred to the "admonition given in Jagdish Mandal followed in Michigan Rubber (India) Limited v. State of Karnataka,(2012) 8 SCC 216. Thereafter, this Court rejected the challenge to the employer's decision holding Bakshi Security and Personnel Services ineligible to participate in the tender.
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 (AIR 1979 SC 1628) 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 (AIR 1996 SC 11) 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.
Page 41 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT48. 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 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 decisionmaking function of the employer and make a distinction between essential and nonessential terms contrary to the intention of the employer and thereby rewrite the arrangement, it could lead to all sorts of problems including the one that we are 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 nonresponsive." 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 nonessential term of the GTC. From the point of view of CCL the GTC has been impermissibly rewritten by the High Court.
50. Yet another problem could be faced by an employer (such as CCL) if the language used in the terms of the NIT or the GTC is not adhered to and its plain meaning discarded. A problem could be faced by an employer if every bidder furnishes a bank guarantee in a different format or one that it is comfortable with. In such a situation, CCL would have to scrutinize each bank guarantee to ascertain whether it meets with its requirements and the NIT and the GTC. Apart from the text of the bank guarantee, minor changes could be made by a bidder such as enforceability in a place other than Ranchi (but in Jharkhand) etc. This would place an avoidable and undue burden on the employer particularly if there are a large number of bidders.
51. Not only this, any decision taken by the employer in accepting or rejecting a particular bank guarantee in a format not prescribed by it could lead to (avoidable) litigation requiring the employer to justify the rejection or acceptance of each bank guarantee. This is hardly conducive to a smooth and hasslefree bidding process.
Page 42 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT52. There is a wholesome principle that the Courts have been following for a very long time and which was articulated in Nazir Ahmad v. King Emperor, AIR 1936 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.
53. Nazir Ahmed has been followed in dozens of decisions rendered by this Court and by other constitutional Courts in the country. The Central Vigilance Commission has accepted this principle in a modified form as a guiding principle in its circular dated 31st December, 2007 wherein it is mentioned that all organizations ought to evolve a procedure for acceptance of bank guarantees that is compatible with the guidelines of banks and the Reserve Bank of India. One such requirement is that the bank guarantee should be in a proper prescribed format and should be verified verbatim on receipt with the original. Adherence to this principle of verbatim verification would not only avoid undue problems for the employer but would also virtually eliminate subjectivity on the part of the employer.
54. In this context, and in the present times, it is important to note that the World Bank has ranked India extremely low in matters relating to enforcement of contracts and ease of doing business. Out of 189 countries worldwide, India is ranked 178 in the matter of enforcement of contracts and 130 in the matter of ease of doing business [www.doingbusiness.org/rankings (World Bank Group)]. One of the possible reasons for this extremely low ranking given to our country is the failure of all parties concerned in strictly adhering to the terms of documents such as the NIT and the GTC. In so far as the present case is concerned, the NIT was floated on 5th August, 2015 and one year later, we are still struggling with the issue of acceptance of a bank guarantee for a contract of about Rs. 2000 crores certainly not a small sum.
Conclusion
55. On the basis of the available case law, we are of the view that since Page 43 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT 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 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."
33 In Poddar Steel Corporation v. Ganesh Engineering Works & Ors. (1991) 3 SCC 273, a twojudges Bench of the Apex Court has held as follows:
"......As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases."
34 In Sterling Computers v. M.N. Publications Ltd., (1993) 1 SCC 445 = AIR 1996 SC 51, the Apex Court, while dealing with the concept of judicial review in respect of contracts entered into on behalf of the State, had expressed the view as follows:
"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 Page 44 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT 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 as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans (supra), 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 an objective consideration of different options available 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."
35 In New Horizons Ltd & Anr. v. Union of India & Ors. (1995) 1 SCC 478, the Apex Court in para 17 opined thus:
"17. ..... The decision of this Court, therefore, insist that while dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licenses or granting other forms of largesse, the Government cannot act arbitrarily at its sweet will and like a private individual, deal with any person it pleases, but its action must be in conformity with the standards or norms which are not arbitrary, irrational or irrelevant. It is, however, recognized that certain measure of "free play in the joints" is necessary for an administrative body functioning in an administrative sphere [See : Ramanna Dayaram Shetty v. The International Airport Authority of India (1979) 3 SCC 489; Kasturi Lal Lakshmi Reddy v. State of J&K : (1980) 4 SCC 1; Fasih Chaudhary v. Director General, Doorshan (1989) 1 SCC 89; Sterling Computers Ltd. v. M&N Publications Ltd. and Anr (supra); Union of India v. Hindustan Development Corporation (1993) 3 SCC 499]."
It is worth noting that in the said case, their Lordships ruled that the terms and conditions of a tender should be construed from the standpoint of a prudent businessman and the terms of the offer of the tenderer should be first considered and if found suitable, then only its credentials and ability to perform the work should be considered from a Page 45 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT practical point of view.
36 In Tata Cellular v. Union of India, AIR 1996 SC 1, the Apex Court has laid down as follows:
"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 facets 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.
37 In Asia Foundation and Construction Ltd. v. Trafalgar House Construction (I) Ltd. And Others, (1997) 1 SCC 738, it has been held that the principles of judicial review cannot be denied to be applicable to contractual powers of government bodies but it is intended to prevent Page 46 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT arbitrariness or favouritism and it is to be exercised in the larger public interest.
38 In Raunaq International Ltd. v. I.V.R. Construction Ltd., (1999) 1 SCC 492, the Apex Court, while laying emphasis on public interest and commercial consideration in the award of contract, expressed thus:
"11. When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation....."
And again:
".....Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the court should not intervene WP(C) 4196/2010 Page 30 of 52 under Article 226 in disputes between two rival tenderers."
In the said case, their Lordships also emphasised upon the fact that an expert committee has special knowledge which plays a decisive role in deciding as to which is the best offer. The past record of the tenderers, the quality of the goods or services which are offered and the assessment of such quality on the basis of the past performance of the tenderer have an important role in deciding to whom the contract should be awarded.
39 In Air India Ltd. v. Cochin International Airport Ltd. (2000) 2 SCC 617, their Lordships expressed the view that the award of a contract, whether by a private party or by the State, is essentially a commercial transaction. It was held therein that when even some defect is found in the decision making process, the Court must exercise its discretionary powers under Article 226 of the Constitution with great caution and should exercise it only in the furtherance of public interest.
Page 47 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENTEmphasis was laid, apart from the legal point, on the public interest. The Apex Court has observed that in the matters of award of contract, the larger public interest has to be kept in view and when it is vivid that public interest commands that there has to be interference, then the Court should interfere.
40 In M/s Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation and others, AIR 2000 SC 2272, the Apex Court held that if a term of the tender is deleted after the players entered into the arena, it is like changing the rules of the game after it had begun and, therefore, if the Government or the Municipal Corporation was free to alter the conditions, fresh process of tender was the only alternative permissible. By reason of deletion of a particular condition, the wider net will be permissible and a larger participation or more attractive bids could be offered.
41 In Centre for Public Litigation & another v. Union of India & others, (2000) 8 SCC 606, after referring to a passage from Kasturi Lal Lakshmi Reddy v. State of J&K, (1980) 4 SCC 1, it has been held thus:
"20. It is clear from the above observations of this Court that it will be very difficult for the courts to visualise the various factors like commercial/technical aspects of the contract, prevailing market conditions, both national and international and immediate needs of the country etc. which will have to be taken note of while accepting the bid offer. In such a case, unless the court is satisfied that the allegations leveled are unassailable and there could be no doubt as to the unreasonableness, mala fide, collateral considerations alleged, it will not be possible for the courts to come to the conclusion that such a contract can be prima facie or otherwise held to be vitiated so as to call for an independent investigation, as prayed for by the appellants. Therefore, the above contention of the appellants also fails."Page 48 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT
42 In W.B. State Electricity Board v. Patel Engineering Co. Ltd. and Ors., (2001) 2 SCC 451, the Apex Court emphasised on maintaining the sanctity and integrity of the process of tender / bid and also the award of a contract. Adherence to the instructions cannot be given a goby as the very purpose of issuing rules / instructions is to ensure their enforcement, lest the rule of law should be a casualty.
43 In State of NCT of Delhi & Anr. v. Sanjeev (alias Bitto), (2005) 5 SCC 181, while dealing with the scope of judicial interference in the matters of administrative decisions, the Apex Court has held that the authority must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it the power to act, and must not act arbitrarily or capriciously.
44 In Laxmi Sales Corporation v. Bolongir Trading Co. & Ors. AIR 2005 SC 1962, the Apex Court disallowed the order passed by the High Court which had held that the rejection of the offer made by the second respondent therein was arbitrary and unfair. The Apex Court took note of the fact that the necessary documents were not filed along with the tender form solely on the ground that the same were not mandatory. Thereafter, their Lordships proceeded to state that on a reading of the various conditions in the tender form and the annexures annexed thereto, it was quite clear that the proof of turnover of the firm over the last two relevant years with supporting documents were to be filed.
45 In M/s. B.S.N. Joshi and Sons Ltd. v. Nair Coal Services Ltd., Page 49 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT AIR 2007 SC 437, their Lordships reiterated the principles of judicial review which have been developed for interference in contractual matters. The Apex Court summarized the principles as follows:
"(i) If there are essential conditions the same must be adhered to:
(ii) If there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully:
(iii) If, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing:
(iv) The parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction.
(v) When a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with.
(vi) The contractors cannot form a cartel. If despite the same their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority.
(vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restraint."
46 In Jagdish Mandal v. State of Orissa and Others, 2007 (8) SCJ 359, the Apex Court opined that the power of judicial review in administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. It was further opined that when exercising the power of judicial review in the matters relating to tender Page 50 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT or award of contract, certain special features should be kept in mind regard being had to the fact that a contract is a commercial transaction. Emphasis was laid on the fact that it is essential to consider whether the process adopted or the decision taken is so arbitrary or irrational that it could be said with certitude that no responsible authority acting reasonably and in accordance with the relevant law would have reached such a conclusion. In the said decision, the concept of public interest was reiterated.
47 In Siemens Public Communication Networks Pvt Ltd and another v. Union of India and others, 2009 (1) SCJ 634, it has been held as under:
"..... A contract is a commercial transaction and evaluating tenders and awarding contracts are essentially commercial functions. In such cases principles of equity and natural justice stay at a distance. If the decisions relating to award of contracts is bonafide WP(C) 4196/2010 Page 35 of 52 and is in public interest, Courts will not exercise the power of judicial review and interfere even it if is accepted for the sake of argument that there is a procedural lacuna."
48 In Sorath Builders v. Shreejikrupa Buildcon Limited and Anr. (2009) 11 SCC 9, it was laid down that it was obligatory on the part of the bidder to submit his prequalification documents within the time schedule.
49 In Meerut Development Authority vs. Association of Management Studies, (2009) 6 SCC 171, it has been held as follows:
"27. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice Page 51 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the above stated ground, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the Authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations."
50 In Triveni Engineering and Industries Ltd v. D.J.B. And Anr. 2009 (5) AD Delhi 265, the necessity to satisfy the essential pre condition of the minimum eligibility requirement to participate in the tender and the nature of the necessity was dealt with and the Bench expressed the view that the nature of the project needed work experience and the petitioner had not satisfied the mandatory minimum eligibility criteria in respect of the work experience and was, therefore, not entitled to be considered.
51 In Union of India v. The Central India Machinery Manufacturing Co. Ltd. and others, AIR 1977 SC 1537, their Lordships, while dealing with the construction of a contract, expressed thus:
"29...... A correct construction, in turn, depends on a reading of the Standard and Special conditions as a whole. It would not be proper to cull out a sentence here or a subclause there and read the same in isolation. What is required is not a fragmentary examination in parts but an overall view and understanding of the whole. Again, it is the substance WP(C) 4196/2010 Page 37 of 52 of the documents constituting the contract, and not merely the Form which has to be looked into.
30. The real intention of the contracting parties is primarily to be sought within the four corners of the documents containing Standard and Special Conditions of the Contract......" [emphasis supplied]
43. In M/s. Hindustan Shipyard v. State of Andhra Pradesh, AIR 2000 SC 2411, the Apex Court has also emphasized the need of looking into the substance and not merely the factum of the contract. Their lord ships also Page 52 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT stated that the terms and conditions of the contract should be read as a whole.
52 In Ramdev Food Products Pvt Ltd v. Arvindbhai Rambhai Patel and others, AIR 2006 SC 3304, their Lordships expressed thus "31. In Delta International v. Shyam Sundar Ganeriwalla [(1999) 4 SCC 545], this Court noticed: "17. For construction of contracts between the parties and for the interpretation of such document, learned Senior Counsel, Mr. Desai has rightly relied upon some paragraphs from The Interpretation of Contracts by Kim Lewison, Q.C. as under: "1.03 for the purpose of the construction of contracts, the intention of the parties is the meaning of the words they have used. There is no intention independent of that meaning.
6.09 Where the words of a contract are capable of two meanings, one of which is lawful and the other unlawful, the former construction should be preferred.
Sir Edward Coke [Co. Litt. 42a] expressed the proposition thus:
"It is a general rule, that whensoever the words of a deed, or of one of the parties without deed, may have a double intendment and the one standeth with law and right, and the other is wrongful and against law, the intendment that standeth with law shall be taken."
32. It is further stated:
"For that purpose, he referred to the following observations of Buckley, J. from the paragraphs which are sought to be relied upon from The Interpretation of Contracts by Kim Lewison, Q.C.: "My first duly is to construe the contract, and for the purpose of arriving at the true construction of the contract, I must disregard what would be the legal consequences of construing it one way or the other way"."
33. Moreover, the document is to be read as a whole. It is equally well settled that the deed has to be construed keeping in view the existing law.
34. It is now a wellsettled principle of law that a document must be Page 53 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT construed having regard to the terms and conditions as well as the nature thereof. [Union of India v. M/s. Millenium Mumbai Broadcast Pvt Ltd. 2006 (5) SCALE 44]"
53 In MAA Binda Express Carrier (supra), the Supreme Court discussed the scope of judicial review in the matters relating to award of contracts by the State and its instrumentalities. The Supreme Court, in the facts of the said case, observed in para 8 as follows:
"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 nondiscriminatory treatment in the matter of evaluation of their tenders. It is also fairly wellsettled 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."
54 Thus, the Supreme Court took the view that the terms, subject to which the 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. The Supreme Court further clarified that the authority inviting the Tender can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the Page 54 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT Tender process.
55 In Michigan Rubber (India) Ltd. v. State of Karnataka and Ors. (2012) 8 SCC 216 the legal position on the subject was summed up after a comprehensive review and principles of law applicable to the process for judicial review identified in the following words:
"23. From the above decisions, the following principles emerge:
(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 on business with the Government.
20. 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 Page 55 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT 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." (emphasis supplied) 56 In Municipal Corporation, Ujjain (supra), the Supreme Court made the following observations in para 45 as under:
"Evaluating tenders and awarding contracts are essentially commercial transactions/contracts. If the decision relating to award of contract is in public interest, the Courts will not, in exercise of the power of judicial review, interfere even if a procedural aberration or error in awarding the contract is made out. The power of judicial review will not be permitted to be invoked to protect private interest by ignoring public interest. Attempts by unsuccessful bidders with an artificial grievance and to get the purpose defeated by approaching the Court on some technical and procedural lapses, should be handled by Courts with firmness. The exercise of the power of judicial review should be avoided if there is no irrationality or arbitrariness. In the matter on hand, we do not find any illegality, arbitrariness, irrationality or unreasonableness on the part of the expert body while in action. So also, we do not find any bias or mala fides either on the part of the corporation or on the part of the technical expert while taking the decision. Moreover, the decision is taken keeping in mind the public interest and the work experience of the successful bidder."
57 In Afcons Infrastructure Ltd (supra), the Supreme Court made the following observations in paras 13, 14, 15 and 18, which reads as follows:
"13. In other words, a mere disagreement with the decision making process or the decision of the administrative authority is no reason for a constitutional Court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional Court interferes with the decision making process or the decision.Page 56 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT
14. We must reiterate the words of caution that this Court has stated right from the time when Ramana Dayaram Shetty v. International Airport Authority of India [(1979) 3 SCC 489] was decided almost 40 years ago, namely, that the words used in the tender documents cannot be ignored or treated as redundant or superfluous - they must be given meaning and their necessary significance. In this context, the use of the word 'metro' in Clause 4.2 (a) of Section III of the bid documents and its connotation in ordinary parlance cannot be overlooked.
15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given."
"18. Before we conclude, it is necessary to point out that the High Court was of opinion that the eligible bidders were not entitled to be either impleaded in the petition filed in the High Court by the ineligible bidder GYTTPL JV or were not entitled to be heard. With respect, this is not the appropriate view to take in matters such as the present. There are several reasons for this, one of them being that there could be occasions (as in the present appeals) where an eligible bidder could bring to the notice of the owner or employer of the project that the ineligible bidder was ineligible for additional reasons or reasons that were not within the contemplation of the owner or employer of the project. It was brought to our notice by Afcons Infrastructure in these appeals that GYTTPL JV did not have any experience in the construction of a viaduct by the segmental construction method and that the translations of documents in Mandarin language filed in the High Court were not true English translations. Submissions made by learned counsel for Afcons Infrastructure in this regard are important and would have had a bearing on the decision in the writ petition filed in the High Court but since Afcons Infrastructure was not a party in the High Court, it could not agitate these issues in the writ petition but did so in the review petition which was not entertained. It is to avoid such a situation that it would be more appropriate for the constitutional Courts to insist on all eligible bidders being made parties to the proceedings filed by an unsuccessful or ineligible bidder."
58 The sum and substance of the case law referred to above and Page 57 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT discussed is that the Courts are not concerned with the wisdom or desirability of the terms on which a party is willing to contract. The Courts will not reconstitute or renegotiate the terms of contract. At the stage of negotiation of the terms of the proposed contract, there is everything to be said for allowing the parties to formulate the terms and conditions as per their respective contractual intentions. The parties are free to determine for themselves what primary obligations they will accept. The preliminary negotiations leading upto the execution of a contract are to be distinguished from the contract itself. There is no meeting of minds of the parties while they are merely negotiating as to the terms of an agreement to be entered into. To be final, the agreement must extend to all the terms which the parties intend to introduce. If in the decision making process of entering into a contract by the State there is element of arbitrariness that results in violation of fundamental rights guaranteed by Article 14 of the Constitution, then the power of judicial review would extend to correcting it. It would however not extend to requiring the "State" to enter into a particular type of contract or to vary the subject of the contract. When offer is invited by the offeree, it is the offeree who sets the parameters of the offer and the offeror cannot dictate as to what the offeree should seek. The offeror has no choice in fixing the requirements of the offeree. A fortiori, the Court cannot exercise its jurisdiction to confer such choice on him and tune the requirements of the contract to suit the offeror's capacity and will. Those would be the elements that go into the constitution of a contractual relationship and will have no bearing on the aspect of arbitrariness in a decision making process by which the contract is entered into. The arbitrariness that can justify the Court's interference in award of contract by "State" is not the arbitrariness in determining the requirements for which the offer is invited but the one that results in discrimination against the offeror who fulfills the requirements with a valid offer, by Page 58 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT bypassing him for no valid reason whatsoever. It is such precontractual situation that would make the decision to award a contract prone to challenge. Such arbitrary award of contract is bad not because of its terms but because of the manner in which it has resulted in violation of the fundamental right of a person bidding for it or due to violation of the statutory, including procedural requirements laid down for the purpose.
59 A lot has been argued on the doctrine of "level playing field". The principal argument in this regard, as canvassed on behalf of the writ applicant, is that by prescribing a very onerous eligibility criteria, the doctrine of "level playing field" stood frustrated. Much emphasis is sought to be placed on the decision of the Supreme Court in the case of Reliance Energy Limited (supra), more particularly, on the observations that when Article 19(1)(g) of the Constitution confers the fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". The doctrine of "level playing field" would come into play among equal and among equals and not unequal. The writ applicant is not one among equals and as such, it cannot maintain a complaint against the conditions of the Tender merely because it does not suit him. In commerce, a level playing field is a concept about fairness, not that each player has an equal chance to succeed, but that they all play by the same set of rules. We are not impressed by the submission canvassed on behalf of the writ applicant that the eligibility criteria has led to frustrating the doctrine of "level playing field". Just because the writ applicant is not in a position to fulfill the eligibility criteria, by itself, will not amount to giving a gobye to the concept of "level playing field". The Supreme Court, in Reliance Energy Limited (supra), has said, in so many words, that the doctrine of "level playing field" is subject to public interest. The reputation of the State may get spoiled at the hands of unscrupulous entity, and therefore, Page 59 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT a formula of check and balance is of indispensable requirement and prescription of certain conditions is necessary to select the best by eliminating the rest. Just because the writ applicant also happens to be the manufacturer of cycles, the same, by itself, is not sufficient to invoke the doctrine of "level playing field". The writ applicant cannot argue that as he is into the business of manufacturing of cycles, he is at par with the other competitors. The doctrine provides space within which the equally placed competitors are allowed to bid so as to subserve the larger public interest. It is too feeble an argument to be canvassed that the State should only consider the capacity of the writ applicant to provide 2,60,000 bicycles rather than insisting to show that the writ applicant had manufactured 6,00,000 bicycles per annum in last three financial years.
60 There need not be any debate on the proposition of law laid down by the Supreme Court. But, we fail to see how the same applies to the factual matrix before us. We are clearly of the view that the impugned condition imposed in the Tender document do not create a situation where there is no level playing field. At the cost of repetition, we reiterate that just because the writ applicant finds the eligibility criteria quiet onerous, he cannot complain that the concept of level playing field has not been maintained.
61 It is a settled principle that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. The courts are always hesitant to interfere with the administrative policy decision and in rarest of rare occasions, if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts can interfere or otherwise 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 Page 60 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT have been fair, wiser or logical. In the decision in Tata Cellular case (supra), a Three Judge Bench of the Supreme Court has authoritatively held that the principle of judicial review in the matter of contract 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. The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State and the power to refuse the lowest or any other tender is always available to the Government. 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. In a commercial transaction, the State can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, provided the tender conditions permit such a relaxation. Even when some defect is found in the decisionmaking process, the Court has to necessarily exercise its discretionary powers under Article 226 of the Constitution 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 and is satisfied that the overwhelming public interest requires interference, the Court should interfere. Otherwise, the larger public interest will prevail upon the individual's interest.
62 Also, in matters of tenders, the duty of the Court is to confine itself to the question of legality. Its concern should be : Whether the Tender Inviting Authority (1) exceeded its powers, (2) committed an error of law, (3) committed a breach of the rules of natural justice, (4) reached a decision which no reasonable tribunal would have reached or, Page 61 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT (5) abused its powers ?
63 Therefore, it is not for the Court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review are : (i) Illegality; (ii)Irrationality; and (iii) Procedural impropriety. Further, the principles deducible relating to scope of judicial review of administrative decisions and exercise of contractual powers by government bodies 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 Page 62 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT 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.
64 We are not impressed by the submission canvassed on behalf of the writ applicant that the eligibility criteria came to be changed at the last minute, and therefore, the State could be said to have changed the rules of the game after it had begun. The learned Advocate General submitted that the principal decision was taken and having regard to the materials on record, the allegations levelled by the writ applicant are absolutely without any basis. It has been pointed out to us that the Corporation was awaiting the final approval from the authorities of the GeM as regards incorporating the impugned condition and no sooner the approval was granted, the impugned condition came to be added in the Tender document by way of corrigendum. There was nothing suspicious in the process which came to be adopted.
Page 63 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT65 It is not the case of the writ applicant that the impugned condition came to be added by way of corrigendum only to the favour a particular party or to oust the writ applicant. If that would have been the case, then we would have rejected this writ application only on the ground that the successful bidders have not been joined as the party respondents. This aspect was discussed in the course of the hearing of this matter, but, ultimately, it was fairly submitted that it is not the case of the writ applicant that the impugned condition came to be added only with the intention to see that the contract is assigned any one of the big companies. The argument of the writ applicant is confined only with regard to the reasonableness in imposing the impugned condition and the concept of "level playing field".
66 It is no doubt true that when tenders are invited, the terms and conditions must indicate with legal certainty, the norms and benchmarks. This "legal certainty" is an important aspect of the rule of law. If there is vagueness or subjectivity in the said norms, it may result in unequal and discriminatory treatment. Only, in such circumstances, it could be said that the doctrine of "level playing field" has been violated. Such is not the case so far as the matter on hand is concerned.
67 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 Court has no power to rewrite the Tender document on certain conditions and terms that may suit to the writ applicant. In Shimnit Utsch India Private Limited vs. West Bengal Transport Infrastructure Development Corporation Ltd. and Ors [2010 AIR SCW 3974], "while maintaining the State Government's right to get the right and most Page 64 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT competent person, it was held that in the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring the supply of HSRP, greater latitude is required to be conceded to the State authorities and unless the action of the tendering authority is found to be malicious and a misuse of statutory powers, the Tender conditions are unassailable."
68 In Monarch Infrastructure (P) Ltd (supra), the questions that arose for consideration before the Apex Court were:
(i) Whether the High Court is justified in setting aside the award of contract in favour of Monarch Infrastructure (P) Ltd.?
(ii) Whether the direction for a fresh process of tender instead of awarding the contract in favour of Konark Infrastructure (P) Ltd.
is justified in the facts and circumstances of the case? and
(iii) the effect of the steps taken now by the Municipal Corporation to call for fresh tenders.
While deciding the aforesaid questions, the Apex Court noted, inter alia, "there have been several decisions rendered by this Court on the question of tender process, the award of contract and have evolved several principles in regard to the same. Ultimately what prevails with the courts in these matters is that while public interest is paramount there should be no arbitrariness in the matter of award of contract and all participants in the tender process should be treated alike. We may sum up the legal position thus:
Page 65 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT(i) The Government is free to enter into any contract with citizens but the court may interfere where it acts arbitrarily or contrary to public interest.
(ii) The Government cannot arbitrarily choose any person it likes for entering into such a relationship or to discriminate between persons similarly situated.
(iii) It is open to the Government to reject even the highest bid at a tender where such rejection is not arbitrary or unreasonable or such rejecting is in public interest for valid and good reasons."
69 Not only that, the Apex Court while answering the question (iii) noted that, "new terms and conditions have been prescribed apparently bearing in mind the nature of contract, which is only collection of octroi as an agent and depositing the same with the Corporation. In addition, earnest money and the performance of bank guarantee are insisted upon; collection of octroi has to be made on daytoday basis and payment must be made on a weekly basis entailing, in case of default, cancellation of the contract. We cannot say whether these conditions are better than what were prescribed earlier for in such matters the authority calling for tenders is the best judge."
70 Therefore, from the aforementioned statements of the Apex Court this Court has no hesitation to hold that it is the authority calling for tenders the best judge to decide whether they would amend the bid documents either for their own interest or for the public interest and it appears from the record that in the instant case the authority calling for Page 66 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT tenders, i.e. the Corporation has amended the tender documents not for eliminating the writ applicant, but keeping in mind the over all public interest.
71 Mr. Trivedi, the learned Advocate General invited our attention to a Division Bench decision of this Court in the case of Aahna Air Services Pvt Ltd and another vs. State of Gujarat and other passed in the Special Civil Application No.5338 of 2016 dated 29th April 2016. In the said case, the petitioner was a company registered under the Companies Act. It was engaged in the business of providing passenger vehicles for hire since 2010. It was the case of the company that it had supplied vehicles on hire to various government departments such as Department of Income Tax, Passport Office, Torrent Power Ltd., Gujarat Tourism, Regional Transport Office, etc. The respondent - Gujarat Secondary and Higher Secondary Education Board floated a tender for supply of vehicles. The Board conducts examinations in the month of March every year. The Board also conducts various other examinations such as the Gujarat Common Entrance Test for post 12th standard technical courses. For such purpose, it was in need of reliable agency for delivery of the answer and question papers at the various centres. In such circumstances, to award such contract for a period of two years, the Board issued the public tender. However, certain conditions came to be modified and the last date was suitably extended. Various conditions for technical qualification of tenderers were provided in the tender notice. In the petition, certain conditions came to be challenged. Later, in view of certain clarifications, the petitioners confined their challenge to only one particular condition i.e. condition No.22, which reads as under:
"22. The tenderer would have to scan copies as well as hard copies of work order / contract/ necessary certificates duly notarized along with the technical bid of having performed call base / fixed work by providing more Page 67 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT than 1000 passenger vehicles continuously for a period of 7 days to the State's GTU or CBSE Board or State or Central Government or Semi Government Organizations, University, Board, Corporation, or private agency, in any one of the last three financial years i.e. year 201213, 201314 and 201415. In connection with the tender, the tender opening cum evaluation committee will take a final decision based on the bidders expertize, financial stability, the ability to perform the work without any hindrance, etc. which shall be binding to the bidders".
The challenge was on the ground that the same was wholly unreasonable and arbitrary. It was argued before this Court that there would be virtual monopoly in favour of one Rajan Travels who had been providing such service to the Board past couple of years. It was argued that in the earlier tender notices also, the similar condition slightly differently worded was included. It was also argued that it was not possible to have sufficient competition on account of such condition in the past. The Board itself had relaxed the requirement and that is how the said Rajan Travels was awarded the contract. It was argued that the condition was very onerous and no other agency would be able to fulfill the same since no agency other than the Board in the State requires supply of vehicles in huge bulk. It was argued that the impugned condition had been imposed solely with a view to ensure total monopoly for one agency and therefore, the same deserved to be struck down.
A Coordinate Bench of this Court, while rejecting the writ application, observed as under:
"8. From the above details supplied by the Board, it can be seen that the nature of task being performed by the Board is enormous requiring extreme care and efficiency. When simultaneously nearly 20 lacs students appear in Board examination and when sufficient number of question papers have to be provided not earlier than one hour before the start of the examination, the enormity and complexity of the task can well be imagined. The students have multiple optional subjects. The delivery of correct set of question papers at each examination building would be of Page 68 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT utmost importance. Slightest error, mixup or delay in delivering question papers may jeopardize the entire test in the State and may in a given case, force the Board to cancel the examination of a particular subject. This, in addition to causing delay in declaration of the final result, would cause undue hardships to the students, who for no fault on their part, may have to turn up to appear in the examination at a later date. Many of these students would be appearing for all India examinations and depend on timely declaration of their Board results.
9. Two things, therefore, can be immediately seen. First is the requirement of large number of vehicles in a short span of time during peak examination season. Apart from the yearly requirement of vehicles for different purposes which naturally would be of few vehicles at a time during the annual Board examination, this requirement would spike to more than 3500 vehicles daily. Any agency that the Board may, therefore, appoint for such purpose must have sufficient expertize, wherewithal and ability to perform the task where there is no margin for error. Second aspect is of reliability of the agency. When nearly 20 lacs students have to be supplied question papers at over 5000 school buildings a task which has to be performed twice a day, the reliability of agency becomes extremely important. A breakdown of a vehicle, an accident or independability of a driver can quite easily throw the examination scheduled out of gear.
10. The condition challenged by the petitioner has to be seen in the background of such facts. The Board is an expert body which conducts such examinations. It has advisors to enable it to perform such important tasks. Ordinarily the conditions of contract are not open to challenge unless shown to be arbitrary or malafide. When the condition is being challenged in the background of the facts noted above, the scope of judicial review further narrows down.
14. Thus, Courts have consistently held that the scope of judicial review in the context of conditions of tender is limited to examination on the basis of arbitrariness, discrimination or malice. Examined from such angle, if the Board, looking to the enormity and complexity of the tasks involved, required past experience of supplying minimum 1000 vehicles for continuous period of 7 days, we do not see it in any manner, arbitrary or discriminatory. It may be that a few contractors would be shaken out of contention. It may even be possible that this steep condition may leave very few contractors in the fray. However, when the peak requirement of the Board is more than 3500 vehicles per day for a span of about 8 to 10 days, the imposition of condition of the past experience of less than 1/3rd thereof certainly cannot be said to be arbitrary. If we accept the suggestion of the counsel for the petitioner, the question would arise, where we should one draw the line? Would the experience of supplying 500 vehicles be Page 69 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT sufficient or would lesser number be suitable? This certainly is not the task or even within the expertize of the Court to do. Unless seen to be wholly arbitrary, choice of prescription of a condition must lie with the Board. It is possible that because of lesser competition, the tender rates may go up. However, the financial consideration cannot be the sole or even the prime motive behind awarding the contract of this nature. When future of close to 20 lacs students of the State is at stake, some additional expenditure would certainly not prompt us to delete the condition and substitute the requirement of past experience from that which has been prescribed by the Board. What is of paramount importance is of the ability of the agency to successfully perform the task and reliability of the agency to do so.
15. Though malice is a ground pressed in service, we do not see any foundation of establishing such a contention. There is nothing on the record to suggest that the authorities of the Board were so close to Rajan Travels that in order to ensure monopoly for such agency, this condition was included. Firstly, none of the officers of the Board are joined in personal capacity. Secondly, no allegations against any of the officials of the Board in personal capacity have been made, and lastly, said Rajan Travels has also not been joined to answer the allegations of malafides."
72 The principal of law explained in the aforesaid judgement of this Court squarely applies to the facts of the present case and we would like to follow the same.
73 Our attention was also invited to yet one another decision of this Court in the case of Sachin Lakra and another vs. Gujarat Rural Industries Marketing Corporation Ltd and others [Special Civil Application No.3605 of 2015 decided by this Court on 9th March 2015]. In the said case, the respondent was the very same Corporation who is before us in the present litigation. The subject matter was also of floating of tender for the purpose of supply of bicycles. In the said case, the tender was issued on 6th January 2015 inviting the technical bid as well as the financial bid for procurement of approximately 2,00,000 ladies bicycles under the annual rate contract. The eligibility criteria stipulated therein was that the tenderer should have the minimum Page 70 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT production capacity of 10,00,000 bicycles per annum. Clause (c) of the eligibility criteria in the said case read as under:
"Clause (c) : Manufacturing firm should have produced and sold to any State or Central Government, Public Sector Undertaking or autonomous bodies a minimum of 10,00,000 bicycles per annum in the specific financial year of last 3 years. (201112, 201213, 201314). (documentary proof in terms of Purchase order copies and/or a certificate of satisfactory supplies of specified number of bicycles from those purchasers to be enclosed)."
Thus, it appears that in the said tender, the eligibility criteria stipulated was that 10,00,000 bicycles must have been supplied in each financial year i.e. 201112, 201213 and 201314 by each of the tenderer. A grievance was redressed with regard to such onerous condition. Later, the condition came to be modified. The modified condition provided that the manufacturer firm was required to submit all the necessary documents with regard to supply of ladies bicycles to the State or Central Government or Public Sector Undertaking or autonomous bodies in the last three financial years. The modified condition read as under:
"Condition 1.
Manufacturing firm should have produced and sold to any state or central Government, Public Sector Undertaking or autonomous bodies a minimum of 6,00,000 (Six lacs) Bicycle in last three year. (documentary proof in terms of Purchase order copies and/or a certificate of satisfactory supplies of specified number of bicycle from those purchasers to be attached.)"
The criteria of supply or selling 10,00,000 bicycles per annum was reduced to minimum of 6,00,000 bicycles in last three years. The petitioner, being aggrieved by such condition, came before this Court saying that they had sold more than 6,00,000 bicycles in three years, but Page 71 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT not to the Government bodies. It was submitted that imposition of condition of 6,00,000 bicycles in the three financial years only to the Government bodies or undertaking totally ousted them though they had sold 6,00,000 or more bicycles in three financial years, but not to the Government bodies or undertaking. It was specifically alleged that such onerous conditions were imposed to ensure that only multinational companies like Hero Cycles Limited, Avon Cycle Limited and Atlas Cycles would get qualified for participating in the technical as well as the financial bids. The Division Bench of this Court, ultimately, rejected the writ application holding as under:
"Therefore, learned counsel for the petitioners has urged that tailor is made by the respondent authority just to oust the petitioners who are successful tenderer in the last year and tender conditions have been made to suit other three bicycle manufactures i.e. Hero Cycles Limited, Avon Cycle Limited and Atlas Cycles who are known to have cartel in earlier contract and have been found to be cartel by Chhatisgarh High Court as well as Karnataka and Tamilnadu States. According to the petitioners, though the State Government will be benefitted if the petitioners participate in the tender as their tender is much lower than other tenderers but to give undue advantage to other bicycle manufactures, a magic word has been used by the respondent authority that they have realized that instead of relying on the production capacity, actual sale to the Government is also necessary. Apart from this, there is no other explanation given in the tender notice or its modification which only few or only the members of erstwhile cartel should fulfill. Be that as it may. The law has been settled by the Honourable Supreme Court that the High Court in its limited jurisdiction of judicial review may not go into conditions which have been laid down by the Government and cannot enter into the wisdom of the Government in putting up conditions in the tender or modify conditions of the tender unless the Court comes to the conclusion that conditions have been altered or modified or has been made which is tailor made for other tenderers or class of tenderers who will be benefitted by them.
10. Mr.Mehta has placed reliance on the decision of Hon'ble Apex Court in (2009) 6 SCC 171 (Merrut Development Authority Vs Assn. Of Management Studies) wherein in paragraph 26, it has been held that `the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, the Apex Court observed that only a limited judicial review is available in Page 72 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT cases where it is established that the terms of the invitation to tender were so tailormade to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process. Similar view has been taken by the Apex Court in (2014) 3 SCC 760 (Maa Binda Express Carrier and another Vs North East Frontier Railway and others) wherein after considering a catena of decisions, the Apex Court has held in paragraph 8 that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailormade to benefit any particular tenderer or class of tenderers. In this view of the matter, we are of the opinion that it is always open to the Government to put any such condition in the tender notice which according to them, is suitable and in larger public interest."
74 In the last, we may refer to yet one another Division Bench decision of this Court in the case of Tractors and Farm Equipment Limited vs. Union of India and others delivered in the Special Civil Application No.18153 of 2017 on 11th October 2017. In the said case, the Mission Director, Swachha Bharat Mission, Gandhinagar invited E Tender / bids for supply, delivery, testing and commissioning (SITC) of Tractors 35 HP (minimum) with PTO and standard accessories as per the technical specifications and conditions for the ULB's of the State of Gujarat, required for the Municipal Solid Wastes Management Project. Clause V of the Tender document provided the eligibility criteria. The same read as under:
"C. The tenderer should have following work experience. Manufacturer / principal supplier of Tractor Machine whose system are proposed in the tender shall have supplied at least minimum of following quantity during last 7 years ending 31.07.2017. All necessary documentary evidence shall be submitted along with the tender.
a. Three similar works of supply of similar machines should not be less than 40% (i.e. 147 nos. of Tractor machine) of the quantum of this tender.
or Page 73 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT b. Two similar works of supply of similar machines should not be less than 50% (i.e. 184 nos. of Tractor Machine) of the quantum of this tender or c. One similar works of supply of similar machines should not be less than 80% (i.e. 295 nos. of Tractor Machine) of the quantum of this tender.
Similar work means work related to manufacture / supply of tractor machines of any capacity for Municipal Solid Waste management work and supplied to any Municipal Corporation/ ULBs/ Govt. Authority for Municipal Solid Waste Management related work, Machine must be having ARA/CMVR Certification."
Later, the eligibility criteria came to be modified as under:
"Section V Eligibility Criteria Sub Section C Tenderer should have following work experience:
Manufacturer / Principal supplier of the Tractor machines whose system are proposed in the tender shall have manufactured and / or supplied either directly & / or through authorized dealer / distributor for Municipal Solid Waste Activity in any Central Government / State Government /ULB/ Municipal Corporation either directly & / or through MSW service provide for which necessary documents and certification, will have to be submitted along with work order issued by not less than Class I Office and the above should be at least minimum of following quantity during last 7 years ending 31.7.2017. All necessary documentary evidence shall be submitted along with the tender.
a. Three similar works of Supply of Similar Vehicles should not be less than 40% (i.e. 147 nos of Tractor machines) of the quantum of this tender or b. Two Similar works of Supply of Similar Vehicles should not be less than 50% (i.e. 184 nos of Tractor machines) of the quantum of this tender or c. One similar works of Supply of Similar Vehicles should not be less than 80% (i.e. 295 nos of Tractor machines) of the quantum of this tender."
The petitioners came before this Court redressing the grievance Page 74 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT that the eligibility criteria was quite onerous and unreasonable as the same asked for the past work experience. It was argued that the past work experience clause in the eligibility criteria deserved to be dropped or relaxed substantially for Tractor, it being relatively an unorganized industry. Thus, the argument before this Court was that the eligibility clause was quite arbitrary and not inconsonance with the doctrine of "level playing field". M.R. Shah, J. (as His Lordship then was), speaking for the Bench, while rejecting the writ application, observed as under:
"6.1. It is the case on behalf of the petitioner that instead of asking the experience in the similar nature of work / eligible, it should have been on the basis of the actual turnover. One another reason / ground challenging the condition of having experience in the similar nature is that according to the petitioner either there will be less number of bidders and therefore, the same may eliminate the competition.
7.2. 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 the looking to the nature of work and tractors needed namely for handling solid waste for ULBs of the State of Gujarat, it cannot be said that such a condition of having past experience in the similar nature of work to become eligible, can be said to be arbitrary and / or mala fide and with a view to favour some one. Merely because, some of the bidder might not become eligible and / or they feel that instead of A condition if B condition would have been applied it can be beneficial to it, cannot be a ground to interfere with the tender process, more particularly, conditions of eligibility criteria provided in the tender. Looking to the nature of work for which equipments / vehicles are needed namely for handling solid waste, we are of the opinion that the conditions contained in clause C of Section V cannot be said to be either arbitrary and / or same has no nexus at all if the invitation of bids for supply of vehicles for handling municipal solid waste. It cannot be said that such a condition is such that no prudent person would impose such a condition. It is required to be noted that as such the petitioner has been raising a singular grievance that eligibility criteria must be based on turnover since there is no trend of documentation or purchase order which would be a necessity if past work experience remained the criteria. It is required to be noted that thereafter authority considered suggestion of the petitioner and the criteria which earlier included direct manufactures and suppliers now included indirect manufactures and suppliers who have provided services through hirers or agents for Municipal Solid Waste Activity are included. Thus, even the authority has tried to address the suggestions of the petitioner for necessity Page 75 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT of documentation and / or purchase order.
8.0. Now, so far as submission on behalf of the petitioner that petitioner is the largest manufacturer of the tractors is concerned, what is required to be considered is supply of tractors for the similar use and / or used in the similar nature of work of solid waste management. There might be different requirement or different persons / purchasers / users. In the present case, requirement is for solid waste management to be used by the Municipal Corporations etc. Therefore, unless and until the petitioner fulfills the eligibility criteria of supply of tractors for the similar nature of work and of a particular quantity, merely because the petitioner might be largest manufacturer of tractors, and the petitioner considering the eligibility criteria may not be found to be eligible, cannot be a ground to set aside the condition to become eligible once it is found to be reasonable and having a direct nexus with the purchase of the tractors and use viz. solid waste management.
9. Now, so far as reliance placed upon the circular issued by the Government dated 07.12.2016 by the learned counsel for the petitioner is concerned, it is required to be noted that the same can be said to be providing general guideline. However, if it is found appropriate by the employer that looking to the nature of work and use, some further conditions are required to be imposed, it will always open to provide further eligibility criteria. However such condition may not be perverse and / or unreasonable that no prudent person would think of imposing such condition. At this stage, it is required to be noted that condition in question is absolutely in consonance with the guideline issued by the CVC.
9.0. In view of the above and for the reasons stated above and when it is found that the condition in question contained in clause C of Section V cannot be said to be perverse and / or arbitrary and / or unreasonable and it cannot be said to be with a view to favour any other bidder and having a very limited scope of judicial review as per the catena of decisions of the Hon'ble Supreme Court referred to herein above, we see no reason to interfere with the eligibility criteria contained in the tender document, more particularly, the condition in question, in exercise of powers under Article 226 of the Constitution of India."
75 In the overall view of the matter, we are convinced that there has been no illegality of any nature in the decision making process and it will be too much for this Court to say that the impugned condition is arbitrary, unreasonable and onerous. We see no good reason to interfere with the Tender process, which has already attained finality. We are Page 76 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019 C/SCA/6886/2019 CAV JUDGMENT informed by the learned Advocate General that L1 and L2 bidders have already started supplying the bicycles.
76 In view of the aforesaid, both the writ applications fail and are hereby rejected. The connected civil application also stands disposed of.
(J. B. PARDIWALA, J) (A. C. RAO, J) CHANDRESH Page 77 of 77 Downloaded on : Tue Jul 09 22:09:39 IST 2019