Delhi High Court
M/S Alankit Assignments Ltd vs Union Of India And Anr on 12 October, 2023
Author: Satish Chandra Sharma
Bench: Chief Justice, Sanjeev Narula
$~32.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 12.10.2023
% W.P.(C) 10872/2023, CM APPL. 42116-42117/2023
M/S ALANKIT ASSIGNMENTS LTD ..... Petitioner
Through: Mr. Mohit Garg, Advocate.
versus
UNION OF INDIA AND ANR ..... Respondents
Through: Mr. Vikram Jetly, CGSC with Ms.
Shreya Jetly, Advocate for R-1.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SANJEEV NARULA
SATISH CHANDRA SHARMA, CJ. (ORAL)
1. The present writ petition relates to Request for Proposal dated
20.04.2023 (the „RFP‟), issued by the Embassy of India,
Riyadh/Respondent No.2 for „Outsourcing of Consular-Passport-Visa
(CPV)--Misc. Attestation Services At Embassy of India, Riyadh and
Consulate General of India, Jeddah‟ (the „Subject Tender‟). The Petitioner
herein is aggrieved by a letter issued by Respondent No.2 on 13.08.2023,
whereby the Petitioner was excluded from the Subject Tender process (the
„Impugned Letter‟).
2. The facts of the case reveal that the Petitioner, M/s. Alankit
Assignments Ltd., is a company incorporated under the Companies Act,
1956 which provides e-governance, financial, insurance and healthcare
services. After the RFP was issued, the Petitioner Company sent an email to
Respondent No. 2 on 29.04.2023 communicating its willingness to
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participate in the Subject Tender along with a copy of its organizational
profile. It is pertinent to note that the RFP required bidding companies to
immediately submit their organizational profiles so that the same could be
forwarded to Respondent No. 1/ Ministry of External Affairs (the „MEA‟)
for pre-verification purposes.
3. The Subject Tender involved a two-stage process for bidding: (i) the
technical bid and subject to success thereunder, (ii) the financial bid. The
last date of submission for the technical bid was 26.06.2023 and
accordingly, the Petitioner Company submitted its technical bid within the
prescribed time on 08.06.2023.
4. Thereafter, on 12.07.2023, the Petitioner Company was informed by
Respondent No. 2 via email that it had qualified in the technical evaluation
stage of the Subject Tender with a score of 72.30/100. The email also stated
that the financial bid for the Subject Tender would open on 27.07.2023.
However, on 24.07.2023, Respondent No. 2 issued a notice extending the
date of opening of financial bids without specifying the revised timeline
thereunder.
5. In the interregnum, before the opening of the financial bids, the MEA,
through its Consular-Passport-Visa („CPV‟) division, sent an email dated
24.07.2023 to Mr. Ankit Agarwal, the director of the Petitioner Company
seeking certain clarifications (the „Clarification 1‟). The relevant portion of
Clarification 1 reads as under:
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"M/s. Alankit Ltd., New Delhi has participated in the tenders
floated by Indian Missions/Posts abroad for outsourcing of
consular, passport and visa (CPV) services.
Under Mandatory Eligibility Criteria in the RFPs, the
participating companies are required to fulfil certain
conditions. In this regard, we have learnt that several cases
are pending against M/s. Alankit Ltd. and/or its promoter(s)
with law enforcement authorities. Therefore, please provide
the full details of these cases i.e. whether cases are still
ongoing, what are the charges, updated status, etc.
Please provide the requisite information and any other related
information by Friday, the 28thJuly, 2023."
(emphasis supplied)
6. In compliance with the aforenoted email, Mr. Ankit Agarwal, on
behalf of the Petitioner Company responded to the MEA on 26.07.2023 and
provided the following clarifications: (i) the Petitioner Company and M/s.
Alankit Ltd. are independent and separate legal entities, and; (ii) the
Petitioner Company and Mr. Ankit Agarwal are not named in any FIRs/
ECIRs and there are no pending prosecution proceedings against either
party.
7. Being unsatisfied with the information provided, the MEA sent
another email to Mr. Ankit Agarwal on 27.07.2023 seeking further
clarifications (the „Clarification 2‟). The relevant portion of Clarification 2
reads as follows:
"It is requested to provide details of other promoter(s) of
Alankit Group of which Alankit Assisgnment Ltd. is a part,
including Mr. Alok Kumar Agarwal, Chairman of the Group.
It is learnt that several cases are pending against them with
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law enforcement authorities. Please provide full details of all
these cases."
(emphasis supplied)
8. Mr. Ankit Agarwal replied to Clarification 2 vide e-mail dated
28.07.2023 reiterating his position and stating as follows:
"I would like to clarify that Alankit Assignments Limited and
Alankit Group are entirely separate legal entities and my
father, Mr. Alok Kumar Agarwal, is in no way associated with
Alankit Assignments Limited and Alankit Group. He is
neither a director, shareholder, nor does he have any
involvement in any way whatsoever, with Alankit Assignments
Limited and Alankit Group.
Furthermore, I would like to reiterate that Mr. Alok Kumar
Agarwal is my father, and his personal affairs are entirely
separate from the business operations of Alankit Assignments
Limited and Alankit Group. He has no connection or affiliation
with the Company/Group in any capacity."
(emphasis supplied)
9. Thereafter, on 31.07.2023, the MEA sent another email to Mr. Ankit
Agarwal seeking further clarification on the following questions (the
„Clarification 3‟):
"(i) when was Alankit Assignment Ltd. or the new entity
constituted?
(ii) whether Alankit Assignment Ltd. or the new entity was
carved out of Alankit Group or formed independently;
(iii) what is its shareholding pattern; and
(iv) what is its organisational structure?"
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10. Mr. Ankit responded to the aforenoted email on 01.08.2023. The
relevant portion of the response reads as follows:
"i.) Alankit Assignments Limited was duly incorporated on
01/01/1991 under the provisions of the Companies Act, 1956.
ii.) Alankit Assignments Limited was formed independently as a
separate legal entity and is separate from Alankit Group.
iii.) The Shareholding Pattern of the Company as on
31.07.2023 is as follows:
"
11. Subsequently, on 13.08.2023, the Petitioner Company received the
Impugned Letter which stated that the Competent Authority had decided to
exclude the Petitioner Company from the Subject Tender. Being aggrieved,
the Petitioner Company immediately sent an email to Respondent No. 2 on
14.08.2023 stating that the arbitrary exclusion of the Petitioner Company,
without any justifiable reason, violated the conditions of the RFP.
12. Aggrieved by the lack of response from Respondent No.1, the
Petitioner Company preferred the present writ petition seeking the quashing
of the Impugned Letter and seeking issuance of directions against
Respondent No.1 to include the Petitioner Company in the Subject Tender
process and consider the financial bid of the Petitioner Company.
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13. Learned Counsel for the Petitioner Company forcefully contends that
the Impugned Letter is ex-facie arbitrary as it is not grounded in any
reasoning. He submits that the Impugned Letter does not make any reference
to the terms and conditions of the RFP and therefore gives no indication to
the Petitioner Company regarding the reasons for its exclusion despite its
qualification at the technical evaluation stage.
14. Learned Counsel further argues that the actions of the Respondents,
culminating in the issuance of the Impugned Letter, violates the principle of
audi alteram partem as the Petitioner Company was not issued any show-
cause notice or granted an opportunity of hearing before being excluded
from consideration for the Subject Tender.
15. As the clarifications sought by the MEA related to M/s Alankit Ltd
and one Mr. Alok Kumar Agarwal, during the course of the hearing, this
Court put a question to the Learned Counsel for the Petitioner regarding the
relationship between the Petitioner Company and M/s. Alankit Ltd. and the
relationship between the Petitioner Company and Mr. Alok Kumar Agarwal.
16. Learned Counsel for the Petitioner clarified that the Petitioner
Company and M/s. Alankit Ltd. are separate legal entities that are both part
of the Alankit Group of Companies. Learned Counsel further stated that
while Mr. Ankit Agarwal is presently the director of the Petitioner Company
and the managing director of M/s Alankit Ltd., his father i.e., Mr. Alok
Kumar Agarwal, was previously a director of the Petitioner Company but is
no longer a director nor occupies any leadership position in the Petitioner
Company. Learned Counsel reiterated that there are no pending criminal
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proceedings against the Petitioner Company or its director, Mr. Ankit
Agarwal. In light of the aforesaid, Learned Counsel argues that the pendency
of any prosecution proceedings against either M/s Alankit Ltd. or Mr. Alok
Kumar Agarwal cannot therefore justify the exclusion of the Petitioner
Company from the Subject Tender.
17. Per Contra, Learned Counsel for the MEA submits that the Petitioner
Company was rightfully excluded from consideration for the Subject
Tender, in accordance with the terms stipulated in the RFP. In this regard,
Learned Counsel brings the attention of the Court to the relevant provisions
of the RFP which read as follows:
"Chapter III: Instructions to Bidders
(ii) The Organisation profile (Annex-I) in soft copy, as required
in Chapter IV (below), should be sent immediately to the
Mission at email ID: <[email protected]> or
<[email protected]>, for onward transmission to
the Ministry of External Affairs, New Delhi for pre-verification
purposes, without waiting for finalization/submission of
completed tender documents by the bidding companies to the
Mission. Bidding companies not cleared from security angle
as decided by the Ministry of External Affairs, New Delhi
(hereinafter referred to as 'MEA') will not be eligible to
participate in this tender or award of contract.
(iv) Bidding companies not fulfilling the Mandatory Eligibility
Criteria (Annex D) will be disqualified.
Chapter V: Mandatory Eligibility Criteria
(iv) The Bidding Company must certify that the company and
its subsidiaries/partners are not involved in any unlawful or
illegal activity including but not limited to human trafficking,
anti-Indian activities, hawala, tax evasion, financial fraud,
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corporate malpractices, etc. The bidder must certify that it has
no outstanding criminal or civil liabilities in Saudi Arabia or
elsewhere and provide information on any previous and
current law enforcement cases or any other legal cases
against them."
(emphasis supplied)
18. Learned Counsel submits that in accordance with the aforesaid terms
of the RFP, on receipt of organisational profiles of the bidding companies, a
comprehensive pre-verification exercise lasting 2-3 months was undertaken
by the MEA which continued simultaneously with the tender process. As a
result of the pre-verification exercise undertaken by the MEA, a report in
this regard was received by the MEA from the concerned authorities which
indicated that there were cases pending against M/s. Alankit Ltd., and/or its
directors with law enforcement authorities.
19. Learned Counsel explains that despite finding incriminating charges,
before initiating any action against the Petitioner Company, the MEA sought
clarifications from the Petitioner Company by way of Clarifications 1-3. He
submits that upon receiving responses from the Petitioner Company, the
CPV division of the MEA arrived at a conclusion that the Petitioner
Company was suppressing material information from the MEA. Thereafter,
this finding was communicated by the MEA to Respondent No. 2 and it was
decided that the Petitioner Company should be excluded from the Subject
Tender.
20. Learned Counsel for the MEA further submits that the MEA also
sought additional confirmation of the pending cases against the Petitioner
Company and/or its directors from the Directorate of Enforcement (the
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„ED‟). In this regard, Learned Counsel highlights letter dated 18.09.2023
received from the ED which reads as under:
"2. In this regard, it is informed that the Prosecution
Complaint dated 30.07.2021 against Alok Agarwal, Ex-
Director of Alankit limited and Alankit Assignments Limited
has been filed before the Hon'ble Special Court for PMLA
cases under the Prevention of Money Laundering Act
(PMLA), 2002 at New Delhi and Hon'ble Court has taken
cognizance of the same.
3. It is further informed that Alok Kumar Agarwal, Alankit
Limited and AlankitAssignments Limited DMCC among
others are accused in the said Prosecution Complaint.
4. Investigation vis-a-vis Ankit Agrawal, present director in
Alankit limited and Alankit Assignments Limited is
underway."
(emphasis supplied)
21. Given this context, Learned Counsel for the MEA vehemently argues
that the Respondents acted strictly in accordance with the terms laid out in
the RFP. He submits that due to the sensitive nature of the Subject Tender, a
security clearance from the MEA was mandatory as specified by the RFP
and in the absence of such clearance, the Petitioner Company was rightfully
excluded from the Subject Tender vide the Impugned Letter.
22. We have heard the learned counsels for both parties and have
carefully perused the record.
23. The issue for consideration herein is whether the issuance of the
Impugned Letter by Respondent No. 2 was arbitrary and unjustified thereby
warranting interference by this Court. At the outset, it is pertinent to reiterate
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that the scope of judicial review in contractual matters, particularly vis a vis
interference in tender processes is limited and characterised by the exercise
of judicial restraint. The settled position of law in this regard has been aptly
summarised by the Apex Court in Silppi Constructions Contractors vs.
Union of India, (2020) 16 SCC 489, as under:
"19. This Court being the guardian of fundamental rights is
duty-bound to interfere when there is arbitrariness,
irrationality, mala fides and bias. However, this Court in all
the aforesaid decisions has cautioned time and again that
courts should exercise a lot of restraint while exercising their
powers of judicial review in contractual or commercial
matters. This Court is normally loathe to interfere in
contractual matters unless a clear-cut case of arbitrariness or
mala fides or bias or irrationality is made out. One must
remember that today many public sector undertakings compete
with the private industry. The contracts entered into between
private parties are not subject to scrutiny under writ
jurisdiction. No doubt, the bodies which are State within the
meaning of Article 12 of the Constitution are bound to act fairly
and are amenable to the writ jurisdiction of superior courts but
this discretionary power must be exercised with a great deal of
restraint and caution. The courts must realise their limitations
and the havoc which needless interference in commercial
matters can cause. In contracts involving technical issues the
courts should be even more reluctant because most of us in
Judges' robes do not have the necessary expertise to adjudicate
upon technical issues beyond our domain. As laid down in the
judgments cited above the courts should not use a magnifying
glass while scanning the tenders and make every small
mistake appear like a big blunder. In fact, the courts must give
"fair play in the joints" to the government and public sector
undertakings in matters of contract. Courts must also not
interfere where such interference will cause unnecessary loss to
the public exchequer.
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20. The essence of the law laid down in the judgments
referred to above is the exercise of restraint and caution; the
need for overwhelming public interest to justify judicial
intervention in matters of contract involving the State
instrumentalities; the courts should give way to the opinion of
the experts unless the decision is totally arbitrary or
unreasonable; the court does not sit like a court of appeal
over the appropriate authority; the court must realise that the
authority floating the tender is the best judge of its
requirements and, therefore, the court's interference should
be minimal. The authority which floats the contract or tender,
and has authored the tender documents is the best judge as to
how the documents have to be interpreted. If two
interpretations are possible then the interpretation of the
author must be accepted. The courts will only interfere to
prevent arbitrariness, irrationality, bias, mala fides or
perversity. With this approach in mind we shall deal with the
present case."
(emphasis supplied)
24. In light of this position, it must be remembered that the Petitioner
Company herein has the burden of establishing a clear-cut case of
arbitrariness or irrationality in the issuance of the Impugned Letter to
persuade this Court to interfere in the Subject Tender. To that extent, the
case of the Petitioner Company is that the Impugned Letter is arbitrary as it
lacks reason and was issued in violation of principles of natural justice.
Relevant portions of the Impugned Letter reads as follows:
"Please refer to the bid documents submitted by Mis Alankit
Assignments Ltd. in response to the tender for outsourcing of
consular, passport, and visa (CPV) services published by the
Embassy.
2. The Competent Authority has decided to exclude Mis
Alankit Assignments Limited from the tender process in
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Embassy of India, Riyadh and consulate General of India,
Jeddah.
3. Therefore, it is requested to collect the financial bids and
other documents submitted by your company, in person or
through your authorised representative on any working day
between 09:30 to 12:30 hrs.
4. Kindly acknowledge receipt of the mail."
(emphasis supplied)
25. The first prong of the Petitioner‟s challenge is that the Impugned
Letter is unreasoned and therefore bad in law. While a prima facie perusal of
the Impugned Letter supports the contention of the Petitioner Company, a
complete examination of the terms of the RFP and the communications
between the Petitioner Company and the Respondents as extracted above
reveals otherwise. The terms of the RFP as highlighted by the MEA clearly
specify that bidding companies who are not granted a security clearance by
the MEA will be ineligible to participate in the tender process or for award
of contract. This must be read with Clause (iv) of the Mandatory Eligibility
Criteria in the RFP which directs participating bidders to not only certify
that they have no outstanding criminal and civil liabilities anywhere but to
also provide information to Respondent No. 2 about any previous or current
legal cases pending against them, their subsidiaries or their partners.
26. In accordance with these terms, a pre-verification exercise was
conducted by the MEA and the report in this regard indicated that there were
cases pending against M/s. Alankit Ltd. and/or its promoters with law
enforcement agencies. Subsequently, when these findings were put to the
Petitioner Company by way of Clarification 1 and 2 and responses were
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collected from the Petitioner Company, the MEA arrived at an opinion that
the Petitioner Company was supressing relevant information. It was on this
basis that the MEA denied security clearance to the Petitioner Company and
therefore, the Petitioner Company was excluded from the Subject Tender. It
is relevant to reiterate that the Apex Court in Silppi Constructions (supra)
has held that the tendering authority is the best judge of the requirements of
the tender and therefore courts must defer to their understanding in the
absence of irrationality or perversity. In the considered opinion of this Court,
this principle of deference to expert opinion must be heightened in cases like
the present where the Subject Tender is of a sensitive nature and the public
interest considerations are substantial. As the Respondents have established
that their decision to exclude the Petitioner Company is based on a justified
finding, this Court cannot sit in appeal over that decision. At any rate, such
an exercise would be futile as the MEA has also brought on record the letter
from the ED dated 18.09.2023 which confirms that criminal proceedings are
pending against the Petitioner Company under the Prevention of Corruption
Act, 2002 and investigation in this regard is underway against Mr. Ankit
Agarwal.
27. In this context, the mere absence of reasons in the text of the
Impugned Letter cannot lead to the conclusion that the same is unreasoned
and unjustified. The Apex Court in Silppi Constructions (supra) has held
that Courts, in their exercise of judicial review of tender matters, should not
use a magnifying glass to make every small mistake appear to be a big
blunder. The Respondents herein have been able to establish that their
decision to exclude the Petitioner Company is fully supported by the terms
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of the RFP and therefore, this Court finds no fault on the part of the
Respondents in issuing the Impugned Letter.
28. The Petitioner Company also contends that it cannot be excluded from
the Subject Tender as it was already declared technically qualified. In this
regard, it is pertinent to note that the RFP clearly stated that the exercise
conducted by the MEA constitutes pre-verification for the purpose of
participation in the tender process. The relevant clause of the RFP reads as
follows:
"Bidding companies not cleared from security angle as decided
by the Ministry of External Affairs, New Delhi (hereinafter
referred to as 'MEA') will not be eligible to participate in this
tender or award of contract."
29. The afore-extracted clause clearly states that a bidder not cleared by
the MEA will not be eligible to participate in the tender or for the award of
contract. Thus, it is evident from a reading of the clause that the stage of the
tender would not impact the ouster of a bidder that fails to obtain security
clearance. The MEA has stated that the process of verifying security
credentials of the bidders required a significant amount of time and was
therefore undertaken parallelly with the tender process. In this context, the
contention furthered by the Petitioner Company is not only contrary to a
plain reading of the RFP but would also entirely defeat the purpose of the
clearance exercise and hence, is not acceptable to this Court.
30. The second prong of the Petitioner‟s challenge is that the Impugned
Letter was issued in violation of the maxim of audi alteram partem. Firstly,
it must be noted that the Petitioner Company, being a bidder participating in
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the Subject Tender was well aware of the terms of the RFP including Clause
(iv) of the Mandatory Eligibility Criteria which inter alia mandated
disclosure of any pending criminal proceedings against the bidder. Despite
this mandate, the Petitioner Company failed to provide such disclosure
during submission of the technical bid.
31. Thereafter, by way of Clarification 1, the Petitioner Company was
given explicit notice of the fact that the Respondent No. 2 had learnt of
several cases pending M/s. Alankit Ltd. and/or its promoters i.e., a violation
of Clause (iv) of the Mandatory Eligibility Criteria of the RFP. It is an
admitted fact that Petitioner Company and M/s. Alankit Ltd are sister
concerns, part of the Alankit Group of companies and that Mr. Ankit
Agarwal serves as a Director for both the companies. However, in its
response to Clarification 1, the Petitioner Company supressed information
about the relationship between the two companies and furthermore, contrary
to the factual position, stated that there are no cases/criminal proceedings
pending against the Petitioner and Mr. Ankit Agarwal.
32. Subsequently, by way of Clarification 2, the Petitioner Company was
asked to provide information about any cases pending against the promoters
of the Alankit Group. In response, the Petitioner Company continued to
suppress relevant information and failed to provide the clarifications sought
by the Respondents. Therefore, on an examination of the totality of
circumstances, it is evident that the Petitioner Company was given notice of
their violation of the RFP and was subsequently given two opportunities to
defend/explain itself on that charge. However, the Petitioner Company
deliberately suppressed relevant information regarding the cases/criminal
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proceedings pending against it and Mr. Ankit Agarwal and by way of the
present petition, the Petitioner Company now seeks assistance of the Court
to benefit from its own wrong.
33. In light of the above, the Petitioner Company has failed to establish
any arbitrariness or irrationality in the issuance of the Impugned Letter. At
this stage, it is also important to emphasize the sensitive nature of the
Subject Tender due to its considerable security implications. It must be
remembered that judicial restraint while interfering with contract/tender
matters involving State instrumentalities is premised on the paramount need
to preserve the larger public interest. In this case, while an examination of
the contentions raised by the Petitioner Company has shown that the
Respondents have acted strictly in accordance with the terms of the RFP, the
actions of the Respondents is also justified on grounds of overwhelming
public interest. The Respondents have established that there are criminal
proceedings pending against the Petitioner Company and in these
circumstances, the Respondents cannot be faulted for excluding the
Petitioner Company from the Subject Tender. Therefore, in considered
opinion of this Court, no case of interference with the Impugned Letter is
made out.
34. Accordingly, the writ petition is dismissed.
SATISH CHANDRA SHARMA, CJ
SANJEEV NARULA, J.
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