Gujarat High Court
Labh Decor vs Gujarat University on 17 October, 2018
Author: Anant S. Dave
Bench: Anant S. Dave, Biren Vaishnav
C/SCA/10009/2017 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10009 of 2017
With
CIVIL APPLICATION NO. 1 of 2017
With
R/SPECIAL CIVIL APPLICATION NO. 10055 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE ANANT S. DAVE
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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LABH DECOR
Versus
GUJARAT UNIVERSITY
===============================================
Appearance:
MR.ASIM PANDYA for MR JAY S SHAH(7244) for the PETITIONER(s) No.
1,2,3,4,5,6
MR MIHIR THAKORE SR. ADV. with MR JP SHAH & MR DHAVAL D
VYAS(3225) for the RESPONDENT(s) No. 2
MR SN SHELAT SR. ADV. with MRS VD NANAVATI(1206) for the
RESPONDENT(s) No. 1 & MR PRAKASH JANI, SR. ADV. with MRS VD
NANAVATI in SCA No.10055 of 2017
===========================================
CORAM: HONOURABLE MR.JUSTICE ANANT S. DAVE
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
Page 1 of 78
C/SCA/10009/2017 JUDGMENT
Date : 17/10/2018
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE ANANT S. DAVE)
1. Both these writ petitions filed under Article 226 of the Constitution of India challenge initiation of the tender inquiry No. GU/ESTATE/CONV/2017-18/01 dated 2/3.5.2017 by respondent No.1 namely the Gujarat University and tender document is for leasing of the 'Convention Facility of Infrastructure of Gujarat University'. All writ petitioners have common grievances since they are carrying on the business of decoration and providing temporary infrastructure and materials for organizing events and functions, basically the procedure followed by respondent NO.1 in inviting bids for tender documents, for which, tender notice was published in the newspaper which reveal reputed agencies with capabilities with managing State- of-Art Convention Centre facility and allied infrastructure with open land area at Gujarat University in the centre of Ahmedabad City and interested agencies were requested to visit the web-site of the university so as to get terms and conditions for participating in the tendering process. That challenge to the above, is manifolds to which we may advert later on but before that for the sake of convenience we may refer to a prayer clause 10 (A), (B), (C) , (D), (E) including alternatively and amended clause (EE). The prayers of Special Civil Application No.10055 of 2017 is substantially same as under:
"(A) This Hon'ble Court may be pleased to quash and set aside the tender inquiry no:GU/ESTATE/CONV/2017-
18/01 (Annexure P1) and the corrigendum dated 12/5/2017 being arbitrary, malafide, contrary to law and violative of articles 14, 19 and 21 of the Constitution of India.
(B) This Hon'ble Court may be pleased to quash and set
Page 2 of 78
C/SCA/10009/2017 JUDGMENT
aside the basic eligibility criterion clause 4 fixing the cutoff dated 1/04/2008 being malafide, arbitrary, irrational and hence violative of Article 14 of the Constitution of India.
(C) This Hon'ble Court may be pleased to quash and set aside clause 19 providing the system of marking on the basis of certain pre-decided objective criteria by the respondents being mala-fide and suffering from the vice of favoritism.
(D) The Hon'ble Court may be pleased to quash and set aside clause 14 which gives a distinct advantage to the Q1 bidder to have the final say in the matter of the price bid being arbitrary and vi8lative of Article 14 of the Constitution of India.
(E) Pending admission and final disposal of the present petition this Hon'ble Court may be pleased to stay the further proceedings of the tender inquiry no:
GU/ESTATE/CONV/2017-18/01.
(EE) Pending admission and final disposal of the present petition this Hon'ble Court may be pleased to stay the further implementation and operation of the lease deed executed by respondent NO.1 in the favour of respondent NO.2 and the respondent NO.2 be directed not to create any third party rights and the respondents be directed to maintain the status quo with regard to the lease deed."
2. On 16.4.2018, this Court issued rule making it returnable on 22.6.2018 and refused to grant interim relief against which the petitioners preferred SLP being Special Leave to Appeal (C) Nos. 10515 Page 3 of 78 C/SCA/10009/2017 JUDGMENT of 2018 wherein following order was passed on 23.4.2018:
"We see no ground to entertain these petitions. Accordingly, the special leave petitions are dismissed.
However, we request the High Court to disposed of the matter(s) as early as possible.
Pending applications stand disposed of."
2.1. In view of the above request and order passed in SLP, we have taken up these matters for final hearing with consent of the parties.
3. It is the case of the petitioners that respondent No.1 University being the owner of the land admeasuring 3,19,675 sq.mts bearing Final Plot No.22 of Town Planning Scheme No.31 situated near Helmet Circle, Memnagar, Ahmedabad, established Exhibition Hall and Convention Centre since the University desired to lease the aforesaid land.
4. As per subject NIT pre-bid meeting was to be held on 8.5.2017. According to the petitioners many issues were raised in the above meeting but were not paid any heed. A corrigendum was issued by respondent NO.1 on 12.5.2017, whereby eligibility and financial criteria of the tender document were modified. As per the corrigendum, date of submission Technical Bid Part-I in physical form was extended upto 19.5.2017 upto 2.00 p.m. Lease deed draft was modified and changes were effected in "Evaluation of criteria of qualification" about basic eligibility criteria whereby Point No.3 is revised as "Average annual financial turnover of the bidding firm should not be less than Rs.20 crores of last three years (2016-2017, 2015-2017 and 2014-2015)". Point NO.4 was revised as "The year of establishment of the bidder shall be not after 1st April, 2008". So far as financial criteria at Point NO.1 is concerned it was revised as "Average annual financial turnover of the bidding firm should not be less than Rs.20 crores of last three years". Even objective criteria pertaining to turnover vis-a-vis marks to be awarded for such Page 4 of 78 C/SCA/10009/2017 JUDGMENT turnover was revised and replaced as under:
25 crores to 50 crores 10 marks 50 crores to 100 crores 20 marks About operation and management/leasing of similar property in Public Private Partnership firm or operation mode with any government undertaking for the turn over of Rs. 20 crores to 25 crores 10 marks more than 26 crores 15 marks.
Point No.5 with regard to net worth vis-a-vis turn over and marks to be awarded was also revised for 25 crores 10 marks 50 crores 20 marks Point No.6 with regard to profit before Tax was revised and replaced in the contention of turnover and marks to be awarded 5 crores to 10 crores 5 marks 11 crores to 20 crores 10 marks more than 21 crores 20 marks Point NO.7 pertaining to Bank Solvency Certificate was revised for the turn over 10 crores to 20 crores 5 marks
5. After corrigendum was issued by modifying the conditions as above, Special Civil Application NO. 9923 of 2017 was preferred on 12.5.2017 and two other writ petitions being Special Civil Applications No. 10009 of 2017 and 10055 of 2017 by other writ petitioners. Initially as per oral order dated 19.6.2017 while issuing notice making it returnable on 8.6.2017 and it was made clear that any further action Page 5 of 78 C/SCA/10009/2017 JUDGMENT taken pursuant to impugned notice inviting tenders shall be subject to further orders passed by the Court. On the very same day, the tenders were submitted and the technical bids were opened. On 26.5.2017 intimation to the qualified bidders for 'power point presentation' on the subjective criteria was sent and upon power point presentation held on 29.5.2017 to qualified bidders marks were awarded. On the very same day later on financial bids were opened, in which, respondent No.2 was declared as technically qualified as Q1 and highest financial bid as H1 was proposed to be awarded the tender and pursuant to which the bank security was also furnished by respondent No.2.
6. So far as Special Civil Application No. 9923 of 2017 is concerned, earlier Gandhi Corporation preferred writ petition being Special Civil Application No.13390 of 2017 which came to be dismissed by judgement and order dated 19.7.2017 passed by this Court against which Special Leave to Appeal (C) No. 18597 of 2017 was preferred before the Apex Court and as per order dated 21.7.2017 Special Leave Petition came to be disposed of. When the above order was passed, the Apex Court has taken note of successful bidder offering Rs. 1,10,00,000/- per month towards rent of the property and Gandhi Corporation was allowed to continue for a period commencing from 1.6.2017 till 30.4.2018 on the condition to pay Rs.1,10,00,000/- per month.
7. In the backdrop of above fatual scenario Mr. Asim Pandya, learned advocate appearing for the writ petitioners of Special Civil Application No. 10009 of 2017 would contend that notice inviting tenders was for leasing the property and therefore, challenge to subject NIT is to be considered keeping in mind above aspect. By carrying out amendment so granted by this Court as per order dated 10.4.2018 and it was averred on oath in the affidavit-in-reply filed by respondent No.1 on 5.2.2018 that the University had executed the Page 6 of 78 C/SCA/10009/2017 JUDGMENT registered lease deed in favour of the highest bidder M/s. Lallooji & Sons and since respondent NO.2 herein and initial order was passed while issuing the notice on 19.5.2017 by this Court whereby notice inviting tender was made subject to further orders passed by the Court, the execution of lease deed dated 16.10.2017 by respondent No. 1 in favour of respondent NO.2 is also illegal.
8. At the outset, it is submitted that non-participation of the petitioners in the tender process as such is no ground for not considering the challenge to notice inviting tenders inasmuch as participation by the petitioners in the tender process would have been an exercise in futility and also an empty formality for the petitioners. The conditions and clauses of subject NIT including those conditions which were revised, replaced and modified/amended of fixing basic eligibility and technical bid evaluation criteria wherein turnover of the bidder was to be considered for awarding marks for bid evaluation. Introduction of such criteria had no rational or any nexus with notice inviting tenders for leasing out the property in question. Further, no material exist of whatsoever in nature with respondent No.1- University to depart or deviation from settled practice or any experience with regard to tender procedure followed for the preceding years commencing from 2012 onwards and subjective criteria so revised amended, replaced and modified including that of eligibility criteria is with sole purpose to favour respondent No.2 and such criterias incorporated by way of corrigendum issued on 12.5.2017 are designed and tailor made to suit respondent NO.2 only and to oust other bidders from the bidding process.
9. Ordinarily, according to learned counsel for the petitioners rule for notice inviting tenders may be commercial or otherwise is that of 1% or 2% EMD/bid security amount of total contract value and in the facts of this case the above ordinary rule is not adhered to and the amount of EMD is exorbitant and bids security of Rs. 2 crores for the Page 7 of 78 C/SCA/10009/2017 JUDGMENT tender cost of Rs.11,50,00,000/- for which no explanation is provided and, therefore, 20% of EMD of the tender value is not only dis- proportionate but it is onerous condition and not capable of complying and, therefore, such harsh condition deprives and discourage other interested persons though having experience and capability in the field of subject tender.
10. Next, it is contended that fixing of cut off date namely 1.4.2007 is arbitrary and has no nexus with the objects sought to be achieved namely, to fetch highest price for the property in question. That the basic eligibility criteria so provided in the tender document require that the establishment of a bidder proposing to participate in the tender process should be prior to 1.4.2007 and such bidder should have turn over of more than Rs. 25 crores for last three financial years and that such cut off date prescribed initially solely with a view to oust the existing contractor M/s. Gandhi Corporation and such other establishments who might have started their business after 1.4.2007. No doubt as per corrigendum dated 12.5.2017, the cut off date is changed from 1.4.2007 to 1.4.2008 again in arbitrary manner and devoid of any logic or rational behind it, realizing gross blunder that it would result into discrimination and may oust other bidders and therefore, such a change apparently would reveal that M/s. Gandhi Corporation may also qualify who was holding the contract for earlier period just to make a show. That change of criteria with regard to experience of 5 years to 9 years is again revealed mala fide intention on the part of respondent No.1 since for the earlier period namely 2012 to 2017 the experience so required was only of 5 years.
11. Likewise, the criteria about turn over of Rs. 25 crore or more for tender contract value of Rs.11,50,00,000/- was also highly irrelevant and not germane to the purpose for which, the property in question was to be leased out. That fixation of criteria of turn over was also with a view to help respondent No.2 who alone was satisfying such Page 8 of 78 C/SCA/10009/2017 JUDGMENT criteria. Again in the corrigendum dated 12.5.2017 the criteria for turn over was reduced from Rs.25 crores to 20 crores.
12. In the tender process, it is submitted no subjective criteria could be incorporated and what is to be considered is qualification of a bidder qua technically and of fetching higher price of the subject property, such provisions of subjective criteria in tender document is vulnerable to manipulation and irregularities for selecting the bidder. It lacks bonafide much less any rational or even logic behind it. As submitted earlier, it was about leasing of the property of Respondent NO.1-University what is expected of lessee is to see that the property should be used for lawful purpose and usage thereof and do not result into any damage or value of the property. Ordinarily, only in a Joint Venture/Private Partnership Enterprise such subjective criterias are incorporated. Our attention is also invited to the lease agreement dated 16.10.2017 attached to the tender and Section 108 of the Transfer of Property Act which would reveal irrelevance and futility of introducing subjective criteria.
13. By taking us to the procedure if any followed by respondent NO.1-University for incorporating such onerous terms and conditions whether preceded by any minutes of the meeting or deliberations or any resolution passed by respondent NO.1-University insisting incorporation of such conditions based on any experience in the past which require any improvement. However, no such material is placed on record and based on the principle of doctrine of proportionality the burden of proof is upon respondent No.1 to justify the reasonableness and rationale behind the terms and conditions of the subject tender. By taking us to corrigendum dated 12.5.2017 it is submitted that by way of such corrigendum terms and conditions of NIT were substantially revised, replaced or modified. It was incumbent upon respondent NO.1-University to issue fresh public notice and by not doing so respondent NO.1-University has not acted in fair and Page 9 of 78 C/SCA/10009/2017 JUDGMENT transparent manner. Even clause-12 of notice inviting tenders allows respondent NO.1-University to issue clarifications and not for changing, amending, regularizing or revising basic eligibility criteria or other such terms and conditions. At the most, respondent NO.1 was entitled to correct manner, mistakes or seek clarifications about inadequacy or any discrepancies in the offer submitted by bidders qua minor lacunas.
14. Even changing the cut off line from 1.4.2007 to 1.4.2008 whereby M/s. Gandhi Corporation became eligible to bid was also a sham and amounts formation of a cartel by a qualified bidders, since M/s. Gandhi Corporation had offered only Rs. 2 lakhs above the upset price fixed in the tender and third bidder M/s. Deepali Designs and Exhibits was a person of respondent NO.2 and all three acted in collusion to see that respondent NO.2 fulfills all terms and conditions of NIT and become successful bidder. An open offer is made by the petitioner No.1 that he is ready and willing to offer Rs.13.51 crores and commensurate with that also ready and willing to furnish solvent security or any other conditions suitable so that bonafide of the petitioner can be considered in case if this Court is not inclined to order invitation of fresh tender.
15. Thus, collectively based on submissions as above, in the backdrop of factual aspects emerging on record of the case the whole exercise of floating notice inviting tenders by respondent NO.1 is nothing but unjust, unreasonable, discriminatory and colourable exercise consisting of legal malice and by all means against public interest which is not expected of respondent NO.1-University a 'State' withing meaning of Article 12 of the Constitution of India, and expected to act in a fair and transparent manner so as to rule out an iota of irregularities and illegality both when such an exercise is in public domain and, therefore, it was a bounden duty of respondent NO.1 to have followed the basic norms of transparency and fairness Page 10 of 78 C/SCA/10009/2017 JUDGMENT and by not doing so, respondent No.1 has exercised its power in violation of Article 14 and 19 of the Constitution of India and therefore requires to be quashed and set aside.
16. Learned advocate for the petitioners relied on following decisions in support of his various contentions namely Reliance Energy Limited and Ors. vs. Maharashtra State Road Development Corporation Ltd. and Ors. reported in (2007) 8 SCC 1 and particularly paragraphs 22 to 25 in support of the contentions there cannot be subjectivity in tender inquiry.
"22. 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 Constitution embodies the principle of "non- discrimination". However, it is not a free- standing 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". In includes "opportunity". In our view, as held in the latest judgment of the Constitution Bench of nine-Judges in the case of I.R. Coelho vs. 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 Page 11 of 78 C/SCA/10009/2017 JUDGMENT 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 equally-placed competitors are allowed to bid so as to subserve the larger public interest. "Globalization", in essence, is liberalization of trade. Today India has dismantled licence-raj. 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 afore- stated 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.
23. In the case of Union of India and another vs. International Trading Co. and another - (2003) 5 SCC 437, the Division Bench of this Court speaking through Pasayat, J. had held :
"14. It is trite law that Article 14 of the Constitution applies also to matters of governmental policy and if the policy or any action of the Government, even in contractual matters, fails to satisfy the test of Page 12 of 78 C/SCA/10009/2017 JUDGMENT reasonableness, it would be unconstitutional.
15. While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the state, and non-arbitrariness in essence and substance is the heart beat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness."
24. 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".
25. In the case of Reliance Airport Developers (P) Ltd. v.
Page 13 of 78C/SCA/10009/2017 JUDGMENT Airports Authority of India and others -(2006) 10 SCC 1, the Division Bench of this Court has held that in matters of judicial review the basic test is to see whether there is any infirmity in the decision-making process and not in the decision itself. This means that the decision-maker must understand correctly the law that regulates his decision- making power and he must give effect to it otherwise it may result in illegality. The principle of "judicial review" cannot be denied even in contractual matters or matters in which the Government exercises its contractual powers, but judicial review is intended to prevent arbitrariness and it must be exercised in larger public interest. Expression of different views and opinions in exercise of contractual powers may be there, however, such difference of opinion must be based on specified norms. Those norms may be legal norms or accounting norms. As long as the norms are clear and properly understood by the decision-maker and the bidders and other stakeholders, uncertainty and thereby breach of rule of law will not arise. The grounds upon which administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely, illegality, irrationality and procedural impropriety. In the said judgment it has been held that all errors of law are jurisdictional errors. One of the important principles laid down in the aforesaid judgment is that whenever a norm/benchmark is prescribed in the tender process in order to provide certainty that norm/standard should be clear. As stated above "certainty" is an important aspect of rule of law. In the case of Reliance Airport Developers (supra), the scoring system formed part of the evaluation process. The object of that system was to provide identification of factors, allocation of marks of each of the Page 14 of 78 C/SCA/10009/2017 JUDGMENT said factors and giving of marks had different stages. Objectivity was thus provided."
I. Global Energy Ltd and Ors. vs. Adani Exports Ltd. and Ors. reported in AIR 2005 (SC) 2653 (paragraph 9 to 10) "9. In Tata Cellular v. Union of India AIR 1996 SC 11, a Three Judge Bench has explained what is a tender and what are the requisites of a valid tender. It has been held that the tender must be unconditional and must conform to the terms of the obligation and further the person by whom the tender is made must be able and willing to perform his obligations. It has been further 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. In Air India Ltd. v. Cochin International Airport Ltd. 2000 (2) SCC 617 the same view was reiterated that the State can fix its own terms of invitation of tender and that it is not open to judicial scrutiny. Whether and in what conditions the terms of a notice inviting tenders can be a subject matter of judicial scrutiny, has been examined in considerable detail in Directorate of Education v. Educomp Datamatics Ltd. 2004(4) SCC 19. The Directorate of Education, Government of National Capital Territory of Delhi had taken a decision to establish computer laboratories in all Government schools in NCT area and tenders were invited to provide hardware for this purpose. For the final phase of 2002-03, tenders were called for 748 schools and the cost of project was approx. Rs.100 crores. In view of the difficulty faced in the earlier years where the lowest tenderers were not able to implement the entire project, a decision was taken to invite tenders from firms having a turnover of Rs.20 Page 15 of 78 C/SCA/10009/2017 JUDGMENT crores or more for the last three financial years ending with 31.3.2002, as it was felt that it would be easier for the department to deal with one company which is well managed and not with several companies. Some of the firms filed writ petitions in Delhi High Court challenging the clause of the NIT whereby a condition was put that only such firms which had a turnover of Rs.20 crores or more for the last three financial years would be eligible. It was contended before the High Court that the aforesaid condition had been incorporated solely with an intent to deprive a large number of companies imparting computer education from bidding and monopolize the same for big companies. The writ petition was allowed and the clause was struck down as being arbitrary and irrational. In appeal, this Court reversed the judgment of the High Court basically on the ground that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract and the Government must have a free hand in settling the terms of the tender. The courts would not interfere with the terms of the tender notice unless it was shown to be either arbitrary or discriminatory or actuated by malice. It was further held that while exercising the power of judicial review of the terms of the tender notice, the Court cannot order change in them.
10. The principle is, therefore, well settled that the terms of the invitation to tender are not open to judicial scrutiny and the Courts cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. This being the position of law, settled by a catena of decisions of this Court, it is rather surprising that the learned Single Judge passed an interim direction on the Page 16 of 78 C/SCA/10009/2017 JUDGMENT very first day of admission hearing of the writ petition and allowed the appellants to deposit the earnest money by furnishing a bank guarantee or a bankers' cheque till three days after the actual date of opening of the tender. The order of the learned Single Judge being wholly illegal, was, therefore, rightly set aside by the Division Bench.
II. Directorate of Education and Ors. vs. Educomp Datamatics Ltd. and Ors. reported in AIR 2004 SC 1962 (Paragraph 9 to 12)
9. It is well settled now that the courts can scrutinize the award of the contracts by the government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular vs. Union of India [1994 (6) SCC 651]. After examining the entire case law the following principles have been deduced.
"94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to Page 17 of 78 C/SCA/10009/2017 JUDGMENT judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-
administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
[Emphasis supplied]
10. In Air India Limited vs. Cochin International Airport Limited [2000 (2) SCC 617], this Court observed:
"The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not Page 18 of 78 C/SCA/10009/2017 JUDGMENT accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness."
[Emphasis supplied]
11. This principle was again re-stated by this Court in Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Others [2000 (5) SCC 287]. It was held that the terms and conditions in the tender are prescribed by the government bearing in mind the nature of contract and in such matters the authority calling for the tender is the best judge to prescribe the terms and conditions of the tender. It is not for the courts to say whether the conditions prescribed in the tender under consideration were better than the one prescribed in the earlier tender invitations.
12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down Page 19 of 78 C/SCA/10009/2017 JUDGMENT the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.
(emphasis supplied) That terms of tender are subject to judicial review if they are found to be arbitrary, mala fide and irrational.
17. In case of Global Energy Ltd and Ors. (supra) wherein contention was raised that exemption of EMD granted to Government/Semi Government/Public Sector unit was discriminatory and highest offer of the petitioner-Global Energy was not considered since it lacked requisite license. Though in the above case, contract valuing more than Rs.100 crores for which only Rs. 30 lakhs EMD was insisted and it was held that such condition was not arbitrary. Of course there was o contention raised about extensive EMD. In the Directorate of Education and Ors (surpa) based on past experience of the contractor eligibility criteria was fixed to Rs.2O crores in a contract value and put forward was more than Rs.100 crores and in the facts of this case, no such bad past experience is brought on record. In the case of Michigan Rubber (India) Ltd. vs. The State of Karnataka and Ors. reported in (2012) 8 SCC 216 wherein certain terms and conditions were incorporated in the tender document but the same was after detail deliberation and upon advise of the expert committee and, therefore, the court did not find such conditions to be arbitrary or irrational. No such material exist on record of the case. By relying on two other decisions namely Kalabharati Advertising vs. Hemant Vimalnath Narichania and Ors. reported in AIR 2010 SC 3745. In the context of submissions on legal malice particularly when in the above case order passed by the Corporation was vitiated in not recording reasons and violative of principle of nature justice and in Page 20 of 78 C/SCA/10009/2017 JUDGMENT the facts of this case there is conscious violation of the law to the prejudice of another, a depraved inclination on the part of the authority to disregard the rights of others and apparently lease deed is executed for an unauthorised purpose, since it is a deliberate act in discretionary to the rights of others. The decision in the case of Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Ors. reported in AIR 2000 SC 2272 it was held by the Apex Court that tender process should be fair and not arbitrary and when it is borne out from the record that such process was tainted with malafide, discrimination and having no nexus with policy or object the award of contract quash and set aside by the High Court and calling for fresh tender was justified by the Apex Court lastly about arbitrariness in fixing of cut off line and burden of proof cast upon an authority to rule out irrationality reliance was placed in the case of D.S.Nakara and Ors. vs. Union of India (UOI) reported in AIR 1983 SC 130 and it was emphasized that authority within meaning of Article 12 of the Constitution of India is to strictly adhere to twin tests of reasonable classification and the rational principle correlated to the object sought to be achieved. In the facts of these case the respondent NO.1 is given complete go by to fundamental principles so elucidated by the Apex Court in various such other decisions to which reference is made in D.S.Nakara and Ors. (supra) and even burden is also not discharged by respondent No.1 to justify such cut off line.
18. By relying on decision in the case of K. Beeran Kutty vs. Prl. Secretary (Medical and Health) and Ors. reported in 2017 (5) ALT 261, the decision of learned Judge of the High Court for the State of Telangana in the State of Andhra Pradesh particularly para 9 that it is not open for a person, who is participated in a bidding process to challenge the tender condition and to challenge the bidding process and, therefore, not joining the queue of bidders by the petitioners especially when onus conditions were imposed the stand of the Page 21 of 78 C/SCA/10009/2017 JUDGMENT petitioners were justified.
19. Therefore, the prayer contained in para 10 of the writ petition be granted by quashing and setting aside subject NIT dated 2/3 rd May 2017 and also the corrigendum dated 12.5.2017 and as per amended prayer clause (EE) of para 10 also to quash and set aside the lease deed dated 16.10.2017 executed by respondent NO.1 in favour of respondent NO.2 and alternatively accept the offer of the petitioners of Rs.13.51 crores for the contract value along with suitable security to be furnished by him for the rest of the contract period.
19.1. Learned advocate appearing for the petitioners in Special Civil Application No. 10055 of 2017 relied on submissions made by learned counsel for the petitioners of Special Civil Application No.10009 of 2017 and contended that conditions of NIT were tailor made so as to suit respondent No.2 and decision making process by respondent No.1 was arbitrary and discriminatory and grounds raised in the petition are almost identical to that of Special Civil Application No.10009 of 2017 and, therefore, detail reference is avoided at this stage.
20. Per contra, Mr. S.N.Shelat, learned senior counsel for respondent NO.1-University would contend that no averments are made with regard to expertise and turn over by the petitioners and the petitions deserve to be rejected at the threshold since notice inviting tender is not purchased by the petitioners. On the above ground the petitioners are not entitled to invoke extraordinary jurisdiction of this Court under Article 226 of the Constitution of India and further the petitioners have no locus to challenge the subject NIT. The petitioners are onlookers and sitting on the fence and lack bonafide. It is submitted that respondent NO.1 has already executed lease deed on 16.10.2017 in favour of respondent NO.2 during pendency of the writ petition and, therefore, any grievance in this regard by the petitioners though amendment is granted and permitted to be carried out the Page 22 of 78 C/SCA/10009/2017 JUDGMENT remedy lies elsewhere and not before the writ Court.
21. Along with the above submissions our attention was drawn to further affidavit filed on behalf of respondent No.1-University in which, reference is made to previous litigation instituted on behalf of M/s.Gandhi Corporation by filing Special Civil Application No. 13390 of 2017 wherein order of eviction was passed by respondent NO.1 under the provisions of the Gujarat Public Premises (Eviction of Unauthorised Occupants) Act, 1972 and the erstwhile occupier challenged the order of eviction which was partly modified and confirmed by the appellate court. By the judgement and order dated 19.7.2017 of this Court the above writ petition came to be rejected and upon a challenge by way of SLP No.1851 of 2017 the Apex Court passed an order on 21.7.2017 dismissed the same. A reference is already made to above order in earlier part of this judgement. So far as Special Civil Application No.9923 of 2007 filed by M/s. Gandhi Corporation along with present group of writ petitions liberty was sought for to withdraw the writ petition and an order was passed accordingly on 13.10.2017. It is not in dispute that the petitioner attended pre-bid meeting held on 8.5.2017 in which they had raised grievances with regard to terms and conditions of the tender document which were taken note of. In addition to above, on 9.5.2017 representatives of the Association were invited by the Vice Chancellor and on behalf of the Association namely, 'Ahmedabad Decorators Merchant Association', it's President expressed satisfaction over the meeting and also tendered an apology for the conduct of unruly members in the meeting so held earlier on 8.5.2017. No suggestion was made thereafter. According to learned senior counsel, petitioners are close associates of M/s. Gandhi Corporation and one of the petitioners is brother of Mr. Hasmukh Gandhi, a close relative of Gandhi family. At the cost of repetition, it is submitted that none of the petitioners averred as regards to eligibility or financial strength and experience and failed to purchase the tender document or any Page 23 of 78 C/SCA/10009/2017 JUDGMENT further request to participate in the bid processing, the belated offer of Rs.13.51 crores by one of the petitioners towards contract value is a hoax and not genuine and at the stage when lease deed is already executed by respondent No.1 in favour of respondent NO.2 as early as on 16.10.2017, no relief as prayed for can be granted.
22. That only consideration weighed with respondent NO.1- University is to see that property in question forming part of subject NIT to fetch maximum revenue/rent and, therefore, corrigendum was issued on 12.5.2017 and out of three qualified bidders respondent NO.2 ranked H1 and Q1 both having made offer of Rs.12.51 crores and being a successful bidder the lease deed is executed in his favour. At this stage, when entire tender process is completed upon handing over the possession of the property in question by M/s. Gandhi Corporation to respondent No.1 University and M/s. Lallooji and Sons, respondent No.2 now granted lease hold rights and in possession exercising extra ordinary jurisdiction under Article 226 of the Constitution of India is not warranted.
22.1. By taking us to the various particulars i.e. of publication of tender notice on 2.5.2017 and tender process was declared open on- line on 3.5.2017, it is submitted that evaluation of objective criteria has been done as per the strict compliance of the tender conditions and particularly clause 19 of the tender evaluation criteria and as per the instructions of the bidders including 12 and 16. It is empathetically submitted that even introduction of subjective criteria is based on norms prevailing to value of tender bid as a whole so as to rule out arbitrariness or any kind of favoritism, since, it introduces transparency and fairness in assessing criteria namely eligibility vis-a- vis required turn over, experience in the field so as to ascertain financial credibility and infrastructural viability of the bidder and to have comparative assessment with and amongst bidders. By referring to details about criterias qua eligible bidders under various heads Page 24 of 78 C/SCA/10009/2017 JUDGMENT namely, average turn over, similar work, single order, net worth, profit before tax and solvency value out of total marks respondent No.2 was awarded 70 out of 100 and the evaluation of subjective criteria was done by the committee constituted by various persons including Vice Chancellor of respondent No.1-University, other five members of Executive Chancellor of University, Registered Valuer (Special Invitee), a representative on behalf of Executive Engineer, R&B Department, State of Gujarat and Registrar In-charge of the University and lastly Tender Consultant. It is submitted that an explanation is given that various subjective criterias were taken into consideration for the evaluation which consisted of 30% weightage for determination of Q1 bidder and such eleven criterias based on scientific management of the property and on power point presentation with other documents the assessment was made accordingly in which respondent No.2 secured 22% out of total marks. The final outcome of the tender qualifying evaluation, in which total evaluation namely objective as well as subjective criteria wherein total marks secured by respondent NO.2 was 92 out of 100. Even the financial bids were opened in the presence of authorised representative of the University on 29.5.2017 whereby respondent No.2 was ranked H1 having highest offer of Rs.12.51 crores which was more than the upset price of contract value and price quoted by other bidders.
23. By emphasizing on a technical bid, it was divided into two parts objective and subjective criteria and weight-age given to each of 70% i.e. for objective criteria and 30% for subjective criteria. Average turn over was of three years to ascertain financial history and strength and experience of similar work of similar order so as to ascertain ability to take up the management and as per the formula of determining net worth so that successful bidder can pay the lease amount so offered. For the subjective evaluation various heads were taken into consideration including overall methodology/operations and maintenance plan of the venue, existing skill-set and abilities, detail Page 25 of 78 C/SCA/10009/2017 JUDGMENT vision for the upliftment of the venue along with sales and marketing plan, improvement and up-gradation of existing infrastructure.
24. Justification was also canvassed since objective of bid was to identify qualitatively best agency and award the tender at the best lease price, the method of Q1-H1 was followed. Q1 being the qualitatively best bidder while H1 being highest lease officer. The above methodology ensures respondent No.1 to rely the best value of the property to be managed and maintained by the best agency in the field.
25. While denying the tender conditions were tailor made and so designed in favour of respondent No.2, it is submitted that the criteria set forth were far lower than the actual numbers of respondent NO.2 in the field on the aspect of turn over policy and maintenance experience, single work order, net worth and profit before tax so fixed Rs.50 crores, 26 crores, 40 crores, 50 crores, 30 crores as against respondent NO.2 having turn over of 168 crores O&M single work order for more than 73 crores, net worth of 90 crores and profit before tax 37 crores. That potential bidders like Wizcraft International Entertainment Private Ltd. had turnover of Rs. 239 crores.
26. Even for determination of net worth of the partnership firm formula adopted was of fix assets + trade receivable + current assets together and offer was considered accordingly. That introducing various criteria's after publication of tender and issuance of corrigendum heavy reliance was placed on an additional affidavit dated 15.6.2017 whereby the entire tender process was explained including that of grievance redressed by the petitioners. That various stages from publication of tender, pre-bid meeting, issues of corrigendum, submissions of technical bid (on-line as well as off line both), qualification assessment, objective assessment, calling for presentation, objective as well as subjective assessment, calculation of Page 26 of 78 C/SCA/10009/2017 JUDGMENT marks, opening of financial bid, financial assessment, declaration of Q1 and H1 and requirement of interconnection for matching the price and relevance of Q1 and H1 was only for the purpose of fetching highest revenue.
27. It is submitted that no comparison is required of terms and conditions incorporated in the earlier contract for a period of 5 years commencing for the year 2012 onwards and it is clear from the conduct of the petitioners that they had participated in the tender procedure and realized chances of their success would be nil and they have lost the opportunity to compete with successful bidder and filing of these petitions is nothing but an abuse of process of the Court.
28. Our attention is also invited so far Special Civil Application No. 9923 of 2017 is concerned about pending arbitration proceedings. That on each count or ground of challenge for fixing the aspect of minimum turn over, it is submitted that it is a sole discretion of the respondent NO.1-University and upon grievances raised during pre- bid meeting which was also attended by the petitioners on the aspect of minimum turn over the eligibility criteria was reduced to Rs.20 crores. Even details about credibility of respondent No.2 for the criteria of financial and technical bid are examined in detail and a separate affidavit is filed by respondent No.2 which may reveal that decision taken by the respondent No.1-University for a long term of contract is justified.
29. Likewise, it is submitted that change in cut off line, determination of EMD, publication required in newspaper for corrigendum and undefined criteria in subjective marking so marked and under challenge, tenders were well published in the newspaper having nation vide circulation and that interested participants were informed to keep visiting the website for any further change, modification etc. or any other information with regard to tender Page 27 of 78 C/SCA/10009/2017 JUDGMENT document. Such corrigendum was also published on the website open for the visit by the petitioners for which, no grievance can be made. Therefore, the property in question having worth more than 1000 crores in real estate is to be managed and operated by a bidder having adequate financial credibility and infrastructural stability for the reasons as above, the petitions are devoid of merit and deserve to be dismissed.
30. Mr.Shelat Learned Senior Counsel for the Respondent No.1 University, relied on the following decisions in support of his submissions:
(1).Raunaq International Limited Vs.I.V.R.Construction Ltd.& Ors.AIR 1999 SC 393. Reliance was made on Paras 22 and Para 27 of the judgement to contend that it is a settled position of law since the judgement in the case of Tata Cellular v Union Of India reported in AIR 1996 SC 11 that, the modern trend is to exercise judicial restraint in administrative action. The terms of the tender cannot be open to judicial review as they are on the realm of contract. For the sake of convenience the six parameters laid down therein to which reference is made in later part of this judgment.
Para 27 of the judgement in the case of Raunaq International was pressed in to service to support his submission that judicial relief ought not to be granted at the instance of a party that does not fulfill the requisite criteria to participate in the Tender.
(2). Jagdish Mandal Vs. State Of Orissa and Ors.(2007) 14 SCC 517. Para 19 of the judgement was relied upon. It was submitted that if the decision relating to the award of the contract was bonafide and in public interest, courts will not, in exercise of power of judicial review, interfere even if there is a procedural aberration or error in assessment or prejudice to or prejudice to a tenderer. Attempts by Page 28 of 78 C/SCA/10009/2017 JUDGMENT unsuccessful bidders with wounded pride or imaginary grievances and having business rivalry should be resisted.
(3). Meerut Development Authority v.Association of Management Studies and Anr Pawan Kumar Agarwal vs Meerut Development Authority. AIR 2009 SC 2894. Paras 15 to 17 of his judgement were read before us to submit that invitation to tender was in the realm of contract and not open to judicial review.
(4).Municipal Corporation,Ujjain And Another Versus BVG Limited And Others. (2018) 5 SCC 462. This judgement, in Mr Shelat's submissions reiterates that entire trend on the subject of judicial review of the past cases including Tata Cellular(supra): Raunaq International(supra).Our Attention was drawn to Paras 15 to 17. of the judgement.
30.1. Mr.Shelat, learned senior counsel also distinguished the judgements referred to and relied upon Mr.Asim Pandya and submitted that the common thread in all these judgements is that he Court cannot interfere with the terms of the tender because it feels that some other terms in the tender could have been fair,wiser or logical.
31. Mr.J.P.Shah, Learned Senior Counsel assisted by Mr Dhaval.D.Vyas appeared for the Respondent No.2, the successful bidder. In addition to reiterating and adopting the submissions made on behalf of the University, Mr Shah submitted as under:
(a) He invited our attention to the Affidavit-In Reply filed by the Respondent No.2 and submitted that the petition was filed in collusion with the partner of M/s Gandhi Corporation, the Petitioner of SCA 9923/2017 which came to be withdrawn. He submitted that the Petitioner No.5 Deepak Navinchandra Gandhi, is the real brother of Page 29 of 78 C/SCA/10009/2017 JUDGMENT Mr.Hemendra Navinchandra Gandhi-the partner of Gandhi Corporation. Which is an unsuccessful bidder. The partner of the Petitioner No:1 Mr Manoj Gandhi is the first cousin of Hemendra Gandhi, partner of Gandhi Corporation and the Petitioner No.4 is the brother-in-law of the Petitioner No.4.Petitioners Nos 2,3 and 6 are closely associated with Petitioner Nos 1,4 and 5 and Mr Hemendra Gandhi partner of Gandhi Corporation. The above fact is also referred in the affidavit-in-reply filed by respondent No.1.
(b) Mr Shah submitted that the Petitioners did not meet the basic(revised) eligibility criteria of having average annual turnover of Rs.20 Crores for the last three years. The annual turnover of the Petitioner No.1 for the last three years for the year 2015-2016 was Rs.689 Lakhs. For the year 2014-15 it was Rs.1246 Lakhs and for the year 2013-14 it was Rs.889 Lakhs. For the Petitioner no.3 for the last three years was: for the year 2015-14 Rs.321 Lakhs: for the year 2013-14 Rs.377 lakhs and for the year 2012-13 was Rs.542 lakhs. For the Petitioner No.4 the turnover was Rs.244 lakhs for the year 2015-
16;Rs.247 lakhs for year 2014-2015 and Rs.232 lakhs for the year 2013-2014.
31.1. In support of his submissions Mr. Shah relied upon the following decisions of the Supreme Court:
(1). AIR India Ltd. vs Cochin International Airport Ltd and Others. (2000) 2 SC 617 (Para 7) (2).B.S.N.Joshi & Sons Ltd versus Nair Coal Services Ltd and Others. (2016) 11 SCC 548 (Para 61) (3). S.S.& Company Versus Orissa Mining Corporation Limited.
(2008)5SCC 772. (Paras 47 and 51)
This was cited in support of his submission that even the
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amended criteria did not make the petitioner eligible.
32. In a rejoinder Mr. Asim Pandya, learned counsel appearing for the petitioners once again highlighted substantial challenge about revising, replacing, amending and modifying basic conditions about eligibility criteria for evaluation of technical and financial bids and valuation on the part of respondent No.1-University to justify such changes by way of corrigendum inspite of inviting tenders afresh of scrapping subject tender and distinguishing the judgments on which reliance is placed by Mr. S.N.Shelat, learned senior counsel.
33. Having regard to facts and circumstances of the case, submissions made by learned counsels appearing for the parties and a careful perusal of the record of writ petitions in the context of prayer, we would like to first address the issue about Corrigendum dated 12.5.2017.
33.1. Initially eligibility and financial criteria along with method of evaluation on criteria for clarification along with Clauses 9, 12 and 16 are reproduced herein below vis-a-vis corrigendum dated 12.5.2017.
Tender Notice PROJECT: Leasing of the convention facility infrastructure The Registrar: Gujarat University invites bids with two bid system for leasing of the convention facility infrastructure-detailed in the table below from the bidders having experience for similar type of works and meeting the qualifying criteria specified.
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Sr. Name of Work Minimum Bid Security Tender Fee Period of
No. expected lease (RS.) lease
amount
1 2 3 4 5 6
1 Leasing of the 11,50,00,000/- 2,00,00,000/- 1,00,000/- 60 months
convention facility (Non-
infrastructure refundable)
Milestone Dates for Tendering
1 Tender Downloading Date From 3rd May 2017 to 15th May
2017
2 Tender Online submission On or before 06:00 PM, 16th
May, 2017
3 Submission of tender On or Before 2:00 PM, 16th May
(Technical bid part-1 2017
including pre-qualification
form and its documents) in
physical form at room no.38,
Gujarat University,
Ahmedabad
4 Last day of submitting On or Before 4:00 PM, 5th May
bidder's query 2017
5 Pre-Bid Meeting On 12:00 PM, 8th May 2017
6 Opening of Technical Bid On 3:00 PM, 16th May 2017
7 Opening of Financial Bid Will be intimated to the bidders
online
8 Bid Validity 180 Days from last date of
submission of the bid.
Nature of scope of corrigendum and
changes/additions/alterations made in the tender document, to which, bidders were requested to take note.
Corrigendum -12.5.2017 Bidders are requested to note the following changes/additions/alterations in the tender document:
Date of submission of Technical Bid Part 1, in physical Page 32 of 78 C/SCA/10009/2017 JUDGMENT form is extended up to 19th May 2017 up to 2.00 p.m.
1. Lease deed draft has been modified.
CHANGES IN "EVALUATION OF CRITERIA OF QUALIFICATION" are as under:
Basic Eligibility Criteria:
Point 3 to be revised as:
"Average annual financial turnover of the bidding firm should not be less than Rs.20 crores of last three years (i.e. 2017-17, 2015-16 and 2014-15)".
Point 4 to be revised as "The year of establishment of the bidder shall be not after 1st April, 2008".
FINANCIAL CRITERIA Point 1 to be revised as:
"Average annual financial turnover of the bidding firm should not be less than Rs.20 crores of last three years (.i.e. 2016-17, 2015-16 and 2014-15)".
Objective Criteria:
Point 1 Turn Over to be revised and replaced as:
25 crores to 50 crores 10 marks 50 crores to 100 crores 20 marks Point 3 to be revised and replaced as:
O&M/Leasing of similar property in PPP or Operation mode with any government undertaking.
20 crores to 25 crores 10 Marks
More than 26 crores 15 Marks
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Point 5 to be revised and replaced as:
Net worth
25 crores 10 Marks
50 crores 20 Marks
Point 6 to be revised and replaced as:
Profit before Tax
5 crores to 10 crores 5 marks
11 crores to 20 crores 10 marks
More than 21 crores 20 marks
Point 7 to be revised and replaced as:
Bank Solvency Certificate
10 crores to 20 crores 5 marks
Additional Condition to be added in "Instructions to the bidder".
34. So far as scrutiny of NIT and procedure adopted by respondent No.1 explaining the entire tender process including grievances raised by the petitioners and redressal thereto by respondent No.1 from the beginning namely, publication of tender, pre-bid meeting, issuance of corrigendum, then technical bid submissions (on-line and off-line), qualification assessment was done on the basis of document submitted by three qualified bidders for the technical bid and the date of registration of their firms prior to the date namely 1 st June, 2008 and, therefore, declared technically qualified. Thereafter objective assessment was done and by qualified bidders were called for power point presentation. Having completed all the above stages, subjective assessment was carried out on the basis of presentations and pre-
Page 34 of 78C/SCA/10009/2017 JUDGMENT defined criterias and application of mind by the committee comprising of the members of Finance and Building Committee of Gujarat University and specially invited members to which reference is made in earlier paragraphs recorded their marks and based on calculation of marks complete assessment was carried out having regard to tender condition of proportionate marking and the list was prepared for Q1, Q2 and Q3 and pursuant to that financial bid was opened in presence of designated officers on 29.5.2017 and even in final assessment also respondent No.2 was ranked H1 and since on both counts namely, Q1 and H1, respondent No.2 was ranking 1st, no other exercise was to be carried out and declared as successful bidder and thereafter on issuance of letter of indent deposit of Rs.2 crores was submitted by respondent No.2 and finally executing lease deed on 16.10.2017.
35. Respondent NO.1 has provided sufficient justification for awarding property on lease basis of executed lease deed preceded by invitation of offers in view of the fact that the property in question was constructed using University funds and it is to be released to the agency with best credentials in terms of financial abilities and management capabilities and therefore terms and conditions of the tender document must be such that the convention centre is managed by highly professional agency with sufficient experience and financial capabilities. The tender in process was divided in two parts namely, (i) technical evaluation to find qualitatively best agency through technical bid and (ii) use market forces to get the best lease price through a financial bid. Further even the technical bid was also divided into two parts namely, objective criteria and subjective criteria.
"Objective criteria being more dependable, they are assigned 70% weight-age while subjective criteria are assigned 30% weight-age.
A. The heads used for objective (Through financial
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documents) evaluation are:
1. Average turn-over of three years: To ascertain financial history and strength.
2. Experience of similar work in terms of single order size and similar work: To ascertain ability to take up the management.
3. Net-worth, profit before tax and solvency:
Considering the high value asset being leased, it is critical to ascertain financial soundness of the agency to pay the lease amount.
B. The heads used for subjective evaluation are:
1. Overall methodology/operations and maintenance plan of the venue.
2. Existing skill-set and abilities.
3. Presentation of necessary and proposed technical team/manpower details.
4. Detail vision for the upliftment of the venue.
5. Sales and marketing plan, improvement and up-
gradation of existing infrastructure.
The Q1-H1 concept:
As the objective of bid is to identify qualitatively best agency and award him the tender at the best lease price, the method of Q1-H1 is derived, where Q1 being the qualitatively best bidder while H1 being highest lease offer.
The tender objective of bid is to identify qualitatively best agency and award him the tender at the best lease Page 36 of 78 C/SCA/10009/2017 JUDGMENT price, the method of Q1-H1 is derived, where Q1 being the qualitatively best bidder while H1 being highest lease offer.
The tender proposed to identify Q1 using technical bid evaluation and H1 through financial bid of qualified parties.
Based on the objective of best man with best price, H1 value ascertained by competitive financial bid, same is offered to the Q1 bidder.
This methodology ensured that Gujarat University is able to realize the best value and yet appoint the best agency to operate the prestigious and price property."
36. Following events have taken place in the tender process which are as under:
19.05.2017 Technical Bid 4 Bidders submitted Submission tender on-line but only 3 bidders submitted the hard copy 19.05.2017 Technical Bid Opened Documents from only at 03:00 PM 3 bidders 19.05.2017 For determination of the pre-qualification criteria, the tenders came to be forwarded to the Consultant-
Auctors
26.05.2017 Communication from All the 3 bidders
the Tender Consultant stood qualified and
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regarding pre- further action for
qualification of the inviting the committee
bidders members for
assessment of
subjective criteria
initiated
26.05.2017 Intimation to the A panel of 9 members
members of the was constituted for
Building Committee the subjective
and Finance Committee assessment based on
for a joint meeting on different criteria
29.05.2017 at 11:00PM
26.05.2017 Hand Delivered
communication and
Emails were sent to all
the three bidders for
the presentation for
subjective criteria
assessment to be held
on 29.05.2017 at 11:00
AM onwards
29.05.2017 All the three bidders All the committee
from 11:15 remained present on members assessed the
onwards the allotted time slot presentation as per
and presented before their satisfaction in
the constituted the respective topics
committee. Out of the as prescribed by the
invited members one score-sheet
Shri Dhrumilbhai Patel
could not remain
present and hence the
Incharge Registrar and
Tender Consultant Shri
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Samir Shukla were
asked to be a part of
the assessment
committee
29.05.2017 The entire assessment
report and the
documents were
forwarded to the
Tender Consultant-
Auctors
29.05.2017 Evaluation report was
obtained from the
Consultant
29.05.2017 The objective criteria
evaluation obtained
and proportion
calculation was done
on 70% basis
29.05.2017 The subjective criteria
calculation was done as
per the score-sheets
and proportion
calculation was done
on 30% basis
The total of the Lallooji declared Q1
objective and Gandhi declared Q2
subjective criteria was Deepali declared Q3 done 29.05.2017 Financial bids which Lallooji offered a price at 19:05 hours were submitted on-line of Rs.12.51 crores per on www.nprocure.com year and was declared were opened in the H1 Deepali Designs Page 39 of 78 C/SCA/10009/2017 JUDGMENT presence of University offered a price of Engineer, Chief Rs.11.75 crores per Accounts Officer, year and was declared Librarian, Programmer H2 Gandhi Corporation offered a price of Rs.11.52 crores per year and was declared H3 The financial bids were forwarded to the Consultant for further process 30.05.2017 Declaration of The firm Lallooji and successful bidder and sons being the Q1 and so proposal for also offering the recommending the highest bid and successful bidder declared as H1 is declared as the successful bidder 31.05.2017 Communication to Lallooji and Sons with letter of intent and furnishing bank guarantee 05/06/17 The bank guarantee as mandated under the tender conditions came to be submitted by Lallooji and Sons
37. Evaluation of objective criteria was done by the University as per the compliance of the tender condition particularly Clause 19 of the Tender Evaluation Criteria in the instructions to the bidders and assessment made reads as under:
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Criteria Gandhi Lallooji and Sons Deepali
Corporation Respondent No.2 Corporation
Rs.in Cr Marks Rs. in Cr Marks Rs. in Cr Marks
Average 31.5 10 168 20 44 10
Turnover
Similar Work 53 15 73 15 1.46 0
Single Order 42 20 73 20 12 5
Net-worth 10.33 0 90.92 20 13.75 0
Profit Before 1.26 0 37.97 20 3.12 0
Tax
Solvency 11 5 50 5 13.5 5
Value
Total Marks 50 100 20
(Out of 100)
Proportionat 35 70 14
e (Out of 70)
38. The Evaluation Committee for consideration of subjective criteria consisting of following persons were as under:
a. Shri Himanshu Pandya-The Vice Chancellor b. Shri Maheshbhai Kaswala-Executive Council Member c. Shri Digvijaysinh Gohil-Executive Council Member d. Shri Pankajbhai Shukla-EExecutive Council Member e. Shri Vanrajsinh Chavda-Executive Council Member f. Dr.Dhavalbhai Patel-Executive Council Member g. Shri Bakul Desai-Registered Valuer (Special Invitee) h. Shri Maheshbhai Gor-On behalf of Executive Engineer, Road and Building Department, State of Gujarat i. Dr. P.M.Patel-Registrar Incharge (Gujarat University) j. Shri Samir Shukla-Tender Consultant.Page 41 of 78
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39. Criteria given for consideration for the evaluation of subjective criteria giving 30% weight-age for determination of Q1 tender are as under:
a. Overall Methodology b. Operation and Management Strategy c. Existing Skill-Set d. Man-power (proposed) e. Manpower (existing) f. Vision g. Sale and Marketing Plan h. Improvement of Venue Proposed i. Up-gradation of Venue Proposed j. New Ideas k. Special Offers
40. Thus, Tender Evaluation Criteria in the instructions to the bidders as per clause 19 and marks awarded are as under:
Total Marks Gandhi Lallooji and Deepali
Corporation Sons Corporation
Out of 1100 687 813 469
% Marks 62.45 73.91 42.64
Rounded off as 19 22 13
per 30% Criteria
and Final tender qualifying evaluation was as under:
Firm Technical Technical Total Rank
Objective Subjective
M/s. Gandhi 35 19 54 Q2
Corporation
M/s Deepali 14 13 27 Q3
M/s Lallooji and 70 22 92 Q1
Sons
Page 42 of 78
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As per above marks M/s. Lallooji and Sons, respondent No.2 rank Q1.
41. In the final bid which was opened on 29.5.2017on 19:05 hours reads as under:
Firm Offer Rank M/s. Gandhi Corporation Rs.11,52,00,000/- H3 M/s. Deepali Rs.11,75,00,000/- H2 M/s. Lallooji and Sons Rs.12,51,00,000/- H1
This reveals M/s. Lallooji and Sons, respondent No.2 herein has offered Rs. 12.51 crores and was ranked as H1.
42. With regard to grievances about modification in cut off date by issuance of corrigendum, qualification of minimum turn over, evaluation on the basis of bank solvency, profit before tax and operation and management of similar property it was done after due deliberation and even sole discretion so as to determine the actual conditions for awarding of tender. That the object which was kept in mind by respondent NO.1 University was quality cum cost principle and to ascertain financial credibility, stability with experience incorporation of such conditions do not appear to be arbitrary or unreasonable. Considering entire value of work to the tune of minimum Rs. Of 57.5 crores for the period of 5 years EMD of Rs. 2 crores is reasonable and there is no such normal rule or a precedent were EMD can be fixed only at the rate of !5 or 2% of total value of the contract.
43. That submissions made by learned counsel for the petitioners falls apart when important criteria set forth for bidders across India and that of tailor made conditions since such criteria were set far lower than the actual price of M/s. Lallooji and Sons.Page 43 of 78
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1. The tender was open to bidders across India where there are many players capable of qualifying and bidding.
2. The important criteria were set far lower than the actual numbers of M/s. Lallooji & Sons a. Turn over worth with than 50 crores were assigned highest marks, while M/s. Lallooji & Son's Turn over is more than 168 crore, i.e. more than three times the required.
b. O&M experience of more than 26 crores are assigned full marks, while M/s. Lallooji & son's O&M experience is more than 73 crore, i.e. more than double the required.
c. Single work order of more than 40 crores is assigned full marks, while M/s. Lallooji & Son's Single work is more than 73 crore, i.e. far more than the required.
d. Net worth of more than 50 crores were assigned highest marks, while M/s. Lallooji & Son's net worth 90 crore, i.e. far more than the required.
e. Profit-before-tax of more than 30 crores is assigned highest marks, while M/s. Lallooji & Son's Profit before tax is more than 37 crores, i.e. far more than the required."
44. What emerges on record which almost remained undisputed that none of the petitioners was a bidder and made any attempt to purchase tender document. That erstwhile occupier who was successful when the tender was floated for the very property in the year 2012 for a period of 5 years when asked to vacate premise as per provisions of Gujarat Pubic Premises (Eviction of Unauthorised Occupants) Act, 1972 and order passed by competent authority and Page 44 of 78 C/SCA/10009/2017 JUDGMENT with partial modification confirmed by the appellate forum in Appeal No.1 of 2017 Order Below Exh.5 by learned Judge City Civil Court No.10, Ahmedabad on 7.7.2017, the petitioners the erstwhile occupier M/s. Gandhi Corporation somehow wanted to remain in possession of the subject property and the above order was challenged by filing Special Civil Application No. 13390 of 2017 which came to be rejected by oral judgement dated 19.7.2017 and Leave to Appeal No.18597 of 2017 preferred before the Supreme Court of India also came to be disposed of but it is worth while to refer to the above order and we may reproduce the same as under:
"Heard Mr. Mukul Rohatgi and Mr. Harin P. Raval, learned senior counsel along with Mr.Shiv Mangal Sharma, learned counsel appearing for the petitioner and Mr.C.A. Sundaram and Mr. K.V.Vishwanathan, learned senior counsel along with Mr. Nikhil Goel, for the respondents.
Having heard learned counsel for the parties, it is directed that the petitioner shall hand over the vacant possession to the respondent-university by the end of April, 2018 failing which the partners or any person connected with the petitioner-firm shall be liable for contempt of this Court and sent to jail. We have been apprised that the property was put to auction and the successful bidder has offered Rs.1,10,00,000/- (Rupees one crore ten lac only) per month, towards rent. Regard being had to the same, we direct the petitioner- firm to pay Rs1,10,00,000/- (Rupees one crore ten lac only) per month commencing 1.6.2017 (till 30.4.2018)."
45. Therefore, thus, it appears that only when erstwhile occupier M/s. Gandhi Corporation was threatened with dire consequences Page 45 of 78 C/SCA/10009/2017 JUDGMENT including to face contempt proceedings of the Supreme Court and to send him in jail vacated the premise but considering facts and circumstances M/s. Gandhi Corporation was allowed to continue to occupy the property in question till 30.4.2018 on the condition to pay monthly rent so offered by the successful bidder namely Rs.1.10 crores p.m. As per counter affidavits filed by respondent No.1
-University and respondent No.2 successful bidder and lessee now in whose favour lease deed is executed on 16.1.2007 on oath averred about close blood relationship of the petitioners and/or partnership with M/s. Gandhi Corporation the petitioners together formed un- wholly alliance to see that under one or other pretext possession of the disputed property remained with erstwhile occupier. In the affidavit-in-reply filed by respondent NO.2 it is clearly averred that petitioner NO.5 is the real brother of Mr.Hemendra Navinchandra Gandhi, the partner of the Gandhi Corporation who was unsuccessful bidder. Partner of the petitioner NO.1 Mr. Manoj J.Gandhi is the first cousin of Mr. Hemendra Navinchandra Gandhi of M/s. Gandhi Corporation and petitioner No.1 is the brother-in-law of petitioner No.4, Petitioner Nos. 2, 3 and 6 are closely associated with the petitioner Nos. 1, 4 and 5 and also with Mr. Mr. Hemendra Navinchandra Gandhi, partner of the M/s. Gandhi Corporation. The above fact remained un-controverted and even supported by respondent No.1-University. None of the petitioners satisfied basic revised eligibility criteria having average annual turn over of Rs.20 crorers for the last three years and a categorically statement about their turn over made in affidavit-in-reply that turn over of all the petitioners was fair below Rs.20 crores for the last three years again remained un-controverted.
46. Therefore, the petitioners though not bidders were permitted to attend pre-bid meeting on 8.5.2017 and later on President of the Association of the Decorators expressed satisfaction over procedure adopted for processing the tender document and even tendering the Page 46 of 78 C/SCA/10009/2017 JUDGMENT an apology for their rude behaviour in the meeting, the grounds of challenge to tender document are not germane to rely intentions of the petitioners. Further, facts about display of corrigendum with all details on the website of respondent No.1 and on-line information to be obtained by all bidders as per ITB instruction 12 and 16 and respondent No.1 was entitled to issue corrigendum and hence contention about fresh advertisement in newspaper etc. is hereby rejected.
46.1. It was not even the conscious decision to remain out of tender process solely with a view to challenge conditions of the tender but only because the petitioners lacked even pre-qualification criteria and subsequently also participated in pre-bid meetings and thereafter it was decided to challenge subject NIT by forming unholy license to cartel the whole process and the above arguments namely that, had the petitioners participated in tender process would have made them ineligible to challenge such conditions subsequently his argument in desperation and is hereby rejected.
47. That next contention about provisions of Section 108 of Transfer of Property Act and conditions in lease deed would govern relationship between the parties and that requirement of separate conditions in tender document including corrigendum were irrelevant is again based on mis-concealed notion and it is trite that while executing the lease deed lessor and lessee would get distinguished rights qua the lease property under the Transfer of Property Act and will be governed by such conditions but for the lease property an amount of rent to be derived for which, serious efforts to be made by University can be done only by inviting tenders and offers of floating the tenders from bidders so that maximum rent is fixed and the bidder should be able to pay fix and determined rent regularly without any default and simultaneously maintenance and operation of the property without any damage or deterioration in its value can be done.
Page 47 of 78C/SCA/10009/2017 JUDGMENT Therefore, the above contention of the learned counsel for the petitioners has no substance. That willingness shown by petitioner No.1 to offer Rs.13.51 crores and deposit of reasonable amount with security belatedly and by a person who found EMD of Rs. 2 crores as incapable of complying with harsh and onerous without participating in the tender procedure do not deserve any consideration and such offer is not only an after thought to derail whole procedure undertaken by respondent No.1 and finality is reached in favour of successful bidder upon executing a lease deed on 16.10.2017 but to take the advantage without fulfilling terms and conditions of NIT.
48. We fail to understand contention raised on comparative analysis of EMD tender from 2012 to 2017 and the subject NIT and absence of any material to issue corrigendum for determining contract value and eligibility criteria of turn over of Rs. 20 crores in last three years and necessity to fix EMD at exorbitant rate to the extend of 20% of the amount of value of contract. In the facts of this case, Rs. 2 crores vis- a-vis total value of contract for more than Rs.57 crores, the authority by no stretch of imagination is prevented from assigning value of the property and rented charges to be levied in case of lease deed to be executed on the basis of market forces and current trend in real estate. The contention about normal rule of 1% EMD of the total tender cost is again an argument without any basis. The above contention is devoid of merit and is hereby rejected. That basic eligibility criteria so provided originally in the tender document about establishment of a person proposing to participate in the tender process should be prior to 1st April, 2007 and that such person should have turn over of more than Rs.25 crores for last three financial year which was reduced later on and cut off date was changed from 1.4.2007 to 1.4.2008. As per corrigendum of 12th May, 2017 on the contrary reveal that such relaxation was beneficial to all those persons who wanted to make their offer. Under no circumstances, it can be said that by issuance of corrigendum substantially change basic Page 48 of 78 C/SCA/10009/2017 JUDGMENT condition like eligibility criteria but to make the procedure more transparent and fair and remained opened for scrutiny even upon a challenge on judicial side.
48.1. Introduction of objective and subjective criteria, for which, different heads were prescribed and marks were fixed and to be awarded based on various sub categories/criteria and norms on the contrary rule out any arbitrariness, favoritism or colourable exercise in contract awarding procedure. It is always open for the institution, organization or an authority within the meaning of Article 12 of the Constitution of India to seek clarifications from bidders qua submissions of their documents and even change or revising, modifying the conditions to the extent keeping in mind public interest and fetching highest value of the property so as to justify commercial wisdom and in such kind of dealing in a given case scope of judicial review is limited though the Court may notice arbitrariness or even to some extent breach of principles of natural justice. We are fortified on the submissions based on the decision of the Apex Court in the case of Jagdish Mandal vs. State of Orissa reported in 2007 (14) SCC 517.
49. In Jagdish Mandal (supra), the Apex Court defined scope of judicial review of award of contracts by referring to some of the decisions of the Apex Court in paragraphs 21 and 22 which reads as under:
"21. We may refer to some of the decisions of this Court, which have dealt with the scope of judicial review of award of contracts.
21.1) In Sterling Computers Ltd vs. M & N Publications Ltd [1993 (1) SCC 445], this Court observed :
"While exercising the power of judicial review, in respect Page 49 of 78 C/SCA/10009/2017 JUDGMENT of contracts entered into on behalf of the State, the court is concerned primarily as to whether there has been any infirmity in the decision making process the courts can certainly examine whether 'decision making process' was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution."
21.2) In Tata Cellular v. Union of India [AIR 1996 SC 11], this Court referred to the limitations relating to the scope of judicial review of administrative decisions and exercise of powers in awarding contracts, thus :
(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 action. 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. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fairplay 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 Page 50 of 78 C/SCA/10009/2017 JUDGMENT 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.
This Court also noted that there are inherent limitations in the exercise of power of judicial review of contractual powers. This Court also observed that the duty to act fairly will vary in extent, depending upon the nature of cases, to which the said principle is sought to be applied. This Court held that the State has the right to refuse the lowest or any other tender, provided it tries to get the best person or the best quotation, and the power to choose is not exercised for any collateral purpose or in infringement of Article 14.
21.3) In Raunaq International Ltd., vs. I.V.R. Construction Ltd. [1999 (1) SCC 492], this Court dealt with the matter in some detail. This Court held : "The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount importance are commercial considerations. These would be : (1) The price at which the other side is willing to do the work; (2) Whether the goods or services offered are of the requisite specifications; (3) Whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfill the requirements of the job is also important; (4) the ability of the tenderer to deliver Page 51 of 78 C/SCA/10009/2017 JUDGMENT goods or services or to do the work of the requisite standard and quality; (5) past experience of the tenderer, and whether he has successfully completed similar work earlier; (6) time which will be taken to deliver the goods or services; and often (7) the ability of the tenderer to take follow up action, rectify defects or to give post contract services. Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction.
What are these elements of public interest? (1) Public money would be expended for the purposes of the contract; (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfillment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in re-doing the entire work - thus involving larger outlays or public money and delaying the availability of services, facilities or goods, e.g. A delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost Page 52 of 78 C/SCA/10009/2017 JUDGMENT escalation. 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. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. 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 under Article 226 in disputes between two rival tenderers."
21.4) In Air India Ltd. vs. Cochin International Airport Ltd [2000 (2) SCC 617], this Court summarized the scope of interference as enunciated in several earlier decisions thus :
"The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial Page 53 of 78 C/SCA/10009/2017 JUDGMENT scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene."
[Emphasis supplied] 21.5) In Association of Registration Plates vs. Union of India [2005 (1) SCC 679], this Court held:
"..Article 14 of the Constitution prohibits government from arbitrarily choosing a contractor at its will and pleasure.Page 54 of 78
C/SCA/10009/2017 JUDGMENT It has to act reasonably, fairly and in public interest in awarding contracts. At the same time, no person can claim a fundamental right to carry in business with the government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest. ..."
21.6) In B.S.N. Joshi v. Nair Coal Services Ltd. [2006 (11) SCALE 526], this Court observed :
"It may be true that a contract need not be given to the lowest tenderer but it is equally true that the employer is the best judge therefor; the same ordinarily being within its domain, court's interference in such matter should be minimal. The High Court's jurisdiction in such matters being limited in a case of this nature, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the face of the record."
22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. 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 Page 55 of 78 C/SCA/10009/2017 JUDGMENT prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions :
i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone.
OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say : 'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached.'
ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under Article 226. Cases involving black- listing or imposition of penal consequences on a tenderer/contractor or distribution of state largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."
Page 56 of 78 C/SCA/10009/2017 JUDGMENT
(emphasis supplied)
50. The decision of the Apex Court in the case of Municipal Corporation, Ujjain and Anr. vs. BVG India Limited and Ors. reported in (2018) 5 SCC 462 wherein the Apex Court revisited law on government contracts and tenders and scope and nature of judicial review particularly in commercial transactions vis-a-vis considerations thereof and that involvement of element of public law or public interest of such commercial transaction duty is cast upon the authority to be fair to all concerned and a procedural lacking should not matter if it is bonafide public interest and the Court should always make largest public interest in mind. We may safely refer to paragraph 10 of the above decision which reveal modern trend which point out to judicial restraint in administration action and such decision must not only be tested by the application of the Wednesbury principle of reasonableness but also be free from arbitrariness and not affected by bias or actuated by mala fides. The Court has placed reliance on judgement in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., reported in (2005) 6 SCC 138 again reference was made in Sterling Computers Ltd. v. M & N Publications Ltd., Raunaq International Ltd. v. I.V.R. Construction Ltd., U.P.Financial Corporation v. Naini Oxygen & Acetylene Gas Ltd., , Karnataka SIIDC Ltd. V. Cavalet India Ltd. wherein the Apex Court delineated 11 illustrative criteria and even considered B.S.N.Joshi and Sons Ltd. v. Nair Coal Services Ltd., and paragraph 65 and 66 whereby role of the superior courts/writ courts in judicial review is elaborated and reverting to Tata Cellular v. Union of India (1994) 6 SCC 651, para 94 and other such decision including Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. reported in (2016) 16 SCC 818, Jagdish Mandal (supra) the above paragraphs are reproduced herein below:
"11. In Sterling Computers Ltd. v. M & N Publications Ltd. (1993) 1 SCC 445, this Court held as under:Page 57 of 78
C/SCA/10009/2017 JUDGMENT "18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process". In this connection reference may be made to the case of Chief Constable of the North Wales Police v. Evans [(1982) 3 All ER 141] where it was said that: (p. 144a) "The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court." 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 [(1982) 3 All ER 141] 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 taking into account the interest of the State and the public, then Court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract. But, once the procedure adopted by an authority for purpose of entering into a contract is held to be against the mandate of Article 14 of the Constitution, the courts cannot ignore such action saying that the authorities concerned must have some Page 58 of 78 C/SCA/10009/2017 JUDGMENT latitude or liberty in contractual matters and any interference by court amounts to encroachment on the exclusive right of the executive to take such decision."
12. In Raunaq International Limited v. I.V.R. Construction Limited, (1999) 1 SCC 492, this Court dealt with the matter in some detail and held in (para 9) as under:
"9.....In arriving at a commercial decision considerations which are of paramount importance are commercial considerations. These would be :
(1) the price at which the other side is willing to do the work;
(2) whether the goods or services offered are of the requisite specifications;
(3) whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfill the requirements of the job is also important; (4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;
(5) past experience of the tenderer and whether he has successfully completed similar work earlier;
(6) time which will be taken to deliver the goods or services; and often (7) the ability of the tenderer to take follow up action, rectify defects or to give post contract services."
13. Whenever the State or public body or the Agency of Page 59 of 78 C/SCA/10009/2017 JUDGMENT the State enters into such contract, an element of public law or public interest may be involved even in such a commercial transaction. In that very judgment, i.e., Raunaq International Limited (supra), the elements of public interest are also noted. It is held thus:
"10. What are these elements of public interest? (1) Public money would be expended for the purposes of the contract; (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfillment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work - thus involving larger outlays or public money and delaying the availability of services, facilities or goods, e.g. a delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation.
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. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any Page 60 of 78 C/SCA/10009/2017 JUDGMENT public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. 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 under Article 226 in disputes between two rival tenderers."
14. The judicial review of administrative action is intended to prevent arbitrariness. The purpose of judicial review of administrative action is to check whether the choice or decision is made lawfully and not to check whether the choice or decision is sound. If the process adopted or decision made by the authority is not mala fide and not intended to favour someone; if the process adopted or decision made is neither so arbitrary nor irrational that under the facts of the case it can be concluded that no responsible authority acting reasonably and in accordance with relevant law could have reached such a decision; and if the public interest is not affected, there should be no interference under Article 226.
15. It is well settled that the award of contract, whether it is by a private party or by a public body or by the State, is essentially a commercial transaction. In arriving at a commercial decision, the considerations which are of paramount importance are commercial considerations. These would include, inter alia, the price at which the party is willing to work; whether the goods or services Page 61 of 78 C/SCA/10009/2017 JUDGMENT offered are of the requisite specifications; and whether the person tendering the bid has the ability to deliver the goods or services as per the specifications. It is also by now well settled that the authorities/State can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation.
16. The State, its corporations, instrumentalities and agencies have a public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the Court must exercise its discretionary power under Article 226 with great caution and should exercise them only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere. (See the judgment in the case of Air India Limited v. Cochin International Airport Limited (2000) 2 SCC 617).
17. In U.P. Financial Corporation. v. Naini Oxygen & Acetylene Gas Ltd. (1995) 2 SCC 754, this Court held that it was not a matter for the courts to decide as to whether the Financial Corporation should invest in the defaulting unit, to revive or to rehabilitate it and whether even after such investment the unit would be viable or whether the Financial Corporation should realise its loan from the sale of the assets of the Company. The Court observed that a Corporation being an independent autonomous statutory body having its own constitution and rules to abide by, and functions and obligations to discharge, it is free to act Page 62 of 78 C/SCA/10009/2017 JUDGMENT according to its own right in the discharge of its functions. The views it forms and the decisions it takes would be on the basis of the information in its possession and the advice it receives and according to its own perspective and calculations. In such a situation, more so in commercial matters, the Courts should not risk their judgment for the judgments of the bodies to which that task is assigned. The Court further held that:
"21......Unless its action is mala fide, even a wrong decision taken by it is not open to challenge. It is not for the courts or a third party to substitute its decision, however more prudent, commercial or businesslike it may be, for the decision of the Corporation. Hence, whatever the wisdom (or the lack of it) of the conduct of the Corporation, the same cannot be assailed for making the Corporation liable."
18. In U.P. Financial Corporation v. Gem Cap (India) Pvt. Ltd. & Ors. (1993) 2 SCC 299, it was observed that the High Court while exercising its jurisdiction under Article 226 of the Constitution cannot sit as an appellate authority over the acts and deeds of the corporation and seek to correct them, and that the doctrine of fairness, evolved in administrative law, was not supposed to convert the writ Courts into appellate authorities over administrative authorities. It is further observed by this Court that fairness is not a one way street, and fairness required of the corporation cannot be carried to the extent of disabling it from recovering what is due to it.
19. In Karnataka State Financial Corporation v. Micro Cast Rubber & Allied Products (P) Ltd. & Ors. (1996) 5 SCC Page 63 of 78 C/SCA/10009/2017 JUDGMENT 65 the issue was whether the financial corporation was wrong in rejecting the offer given by the borrower which, after proper evaluation, was considered lower than the offer made by the purchasers. This Court, while upholding the action of the financial corporation, held that the action of the said financial corporation should not be interfered with if it has acted broadly in consonance with the guidelines.
20. In Karnataka State Industrial Investment & Development Corporation Limited v. Cavalet India Ltd. & Ors. (2005) 4 SCC 456, this court after taking into consideration various questions on various subjects laid down the following legal principles, viz.-
"(i) The High Court while exercising its jurisdiction under Article 226 of the Constitution does not sit as an appellate authority over the acts and deeds of the Financial Corporation and seek to correct them. The doctrine of fairness does not convert the writ courts into appellate authorities over administrative authorities.
(ii) In a matter between the Corporation and its debtor, a writ court has no say except in two situations:
a There is a statutory violation on the part of the Corporation, or b Where the Corporation acts unfairly i.e. unreasonably.
(iii) In commercial matters, the courts should not risk their judgments for the judgments of the bodies to which that task is assigned.
(iv) Unless the action of the Financial Corporation is mala fide, even a wrong decision taken by it is not open to challenge. It is not for the courts or a third party to substitute its decision, however, more prudent, commercial Page 64 of 78 C/SCA/10009/2017 JUDGMENT or businesslike it may be, for the decision of the Financial Corporation. Hence, whatever the wisdom (or the lack of it) of the conduct of the Corporation, the same cannot be assailed for making the Corporation liable.
(v) In the matter of sale of public property, the dominant consideration is to secure the best price for the property to be sold and this could be achieved only when there is maximum public participation in the process of sale and everybody has an opportunity of making an offer.
(vi) Public auction is not the only mode to secure the best price by inviting maximum public participation, tender and negotiation could also be adopted.
(vii) The Financial Corporation is always expected to try and realise the maximum sale price by selling the assets by following a procedure which is transparent and acceptable, after due publicity, wherever possible and if any reason is indicated or cause shown for the default, the same has to be considered in its proper perspective and a conscious decision has to be taken as to whether action under Section 29 of the Act is called for. Thereafter, the modalities for disposal of the seized unit have to be worked out.
(viii) Fairness cannot be a one-way street.
The fairness required of the Financial Corporations cannot be carried to the extent of disabling them from recovering what is due to them. While not insisting upon the borrower to honour the commitments undertaken by him, the Financial Corporation alone cannot be shackled hand and foot in the name of fairness.
(ix) Reasonableness is to be tested against the dominant consideration to secure the best price.
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21. Likewise, in B.S.N. Joshi and Sons Ltd. v. Nair Coal Services Ltd. (2006) 11 SCC 548, this Court while summarising the scope of judicial review and the interference of superior courts in the matter of award of contracts, observed thus:
"65. We are not oblivious of the expansive role of the superior courts in judicial review.
66. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarised as under:
(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 with 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 Page 66 of 78 C/SCA/10009/2017 JUDGMENT 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."
22. In Tata Cellular (supra), this Court referred to the limitations relating to the scope of judicial review of administrative decisions and exercise of powers in awarding contracts, by observing in para 94 thus:
"(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 negotiation through several tiers. More often Page 67 of 78 C/SCA/10009/2017 JUDGMENT than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere.
However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
23. In that very judgment, this Court proceeded to observe that there are inherent limitations in the exercise of the power of judicial review of contractual powers. This Court observed that the duty to act fairly will vary in extent, depending upon the nature of the cases to which the said principle is sought to be applied. The State has the right to refuse the lowest or any other tender, provided that it tries to get the best person or the best quotation.
24. This Court in Delhi Science Forum v. Union of India (1996) 2 SCC 405 observed in para 13 as follows:
"13.....While exercising the power of judicial review even in respect of contracts entered on behalf of the Government or authority, which can be held to be State within meaning of Article 12 of the Constitution courts, have to address while examining the grievance of any petitioner as to whether the decision has been vitiated on one ground or the other. It is well-settled that the onus to Page 68 of 78 C/SCA/10009/2017 JUDGMENT demonstrate that such decision has been vitiated because of adopting a procedure not sanctioned by law, or because of bad faith or taking into consideration factors which are irrelevant, is on the person who questions the validity thereof. This onus is not discharged only by raising a doubt in the mind of the court, but by satisfying the court that the authority or the body which had been vested with the power to take decision has adopted a procedure which does not satisfy the test of Article 14 of the Constitution or which is against the provisions of the statute in question or has acted with oblique motive or has failed in its function to examine each claim on its own merit on relevant considerations. Under the changed scenarios and circumstances prevailing in the society, courts are not following the rule of judicial self-restraint. But at the same time all decisions which are to be taken by an authority vested with such power cannot be tested and examined by the court. The situation is all the more difficult so far as the commercial contracts are concerned. Parliament has adopted and resolved a national policy towards liberalisation and opening of the national gates for foreign investors......." (emphasis supplied)
25. In Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) (2016) 8 SCC 622, it was observed as follows:
"38. In G.J. Fernandez v. State of Karnataka [(1990) 2 SCC 488] both the principles laid down in Ramana Dayaram Shetty (1979) 3 SCC 489 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.Page 69 of 78
C/SCA/10009/2017 JUDGMENT 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 Ramana Dayaram Shetty sense.
47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision-making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision "that no responsible authority acting reasonably and in accordance with relevant law could have reached" as held in Jagdish Mandal followed in Michigan Rubber." (emphasis supplied)
26. This Court also made an observation on judicial interference in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. and Ors. (2016) 16 SCC 818, as hereunder:
"15. We may add that the owner or the employer of a Page 70 of 78 C/SCA/10009/2017 JUDGMENT 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." Similar observations were made in the cases of Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517, and Meerut Development Authority v. Assn. of Management Studies (2009) 6 SCC 171.
27. Thus, only when a decision making process is so arbitrary or irrational that no responsible authority proceeding reasonably or lawfully could have arrived at such decisions, power of judicial review can be exercised. However, if it is bona fide and in public interest, the Court will not interfere in the exercise of power of judicial review even if there is a procedural lacuna. The principles of equity and natural justice do not operate in the field of commercial transactions. Wherever a decision has been taken appropriately in public interest, the Court ordinarily should exercise judicial restraint. When a decision is taken by the concerned authority upon due consideration of the tender document submitted by all tenderers on their own merits and it is ultimately found that the successful bidder had in fact substantially complied with the purpose and object for which the essential conditions were laid down, the same may not ordinarily be interfered with."
(emphasis supplied)
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C/SCA/10009/2017 JUDGMENT
51. That based on the law as laid down the submissions made by learned advocate for the petitioners and the ground of challenge it cannot be said that respondent No.1 as acted contrary to above law laid down by the Apex Court. Further in the very judgement, the Apex Court also referred to decisions of the Apex Court in the case of Montecarlo Ltd. v. NTPC Ltd reported in (2016) 15 SCC 272, Central Coalfields Ltd. vs. SLL-SML (Joint Venture Consortium) reported in (2016) 8 SCC 622, Sterling Computers Ltd., v. M & N Publications Ltd., (1993) 1 SCC 445 and also Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. (2016) 16 SCC 818 and we may squarely refer to paragraphs 39, 40, 41, 42, 43, 44, 45 and 46 as under:
"39. In Montecarlo Ltd. v. NTPC Ltd. (2016) 15 SCC 272, this Court highlighted the freedom of the owner to decide in matters of tenders as follows:
"26. We respectfully concur with the aforesaid statement of law. We have reasons to do so. In the present scenario, tenders are floated and offers are invited for highly complex technical subjects. It requires understanding and appreciation of the nature of work and the purpose it is going to serve. It is common knowledge in the competitive commercial field that technical bids pursuant to the notice inviting tenders are scrutinised by the technical experts and sometimes third-party assistance from those unconnected with the owner's organisation is taken. This ensures objectivity. Bidder's expertise and technical capability and capacity must be assessed by the experts. In the matters of financial assessment, consultants are appointed. It is because to check and ascertain that technical ability and the financial feasibility have sanguinity and are workable and realistic. There is a multi-prong complex approach; highly technical in nature. The tenders where public largesse is put to Page 72 of 78 C/SCA/10009/2017 JUDGMENT auction stand on a different compartment. Tender with which we are concerned, is not comparable to any scheme for allotment. This arena which we have referred requires technical expertise. Parameters applied are different. Its aim is to achieve high degree of perfection in execution and adherence to the time schedule. But, that does not mean, these tenders will escape scrutiny of judicial review. Exercise of power of judicial review would be called for if the approach is arbitrary or mala fide or procedure adopted is meant to favour one. The decision-
-making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly, in consonance with the language of the tender document or sub serves the purpose for which the tender is floated, the court should follow the principle of restraint Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints." (emphasis supplied)
40. In Central Coalfields (supra), the Court held that the employer can decide to even deviate from the NIT: "48. Therefore, whether a term of 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 Page 73 of 78 C/SCA/10009/2017 JUDGMENT 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." (emphasis supplied)
41. The reason for allowing public authorities such wide leeway in matters of contracts and tenders was elucidated in Sterling Computers (supra). Therein, the Court observed as follows:
"12. At times it is said that public authorities must have the same liberty as they have in framing the policies, even while entering into contracts because many contracts amount to implementation or projection of policies of the Government. But it cannot be overlooked that unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the Constitution in many cases for years. That is why the courts have impressed that even in contractual matters the public authority should not have unfettered discretion. In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognised by courts while dealing with public property. It is not possible for courts to question and adjudicate every decision taken by an authority, because many of the Government Page 74 of 78 C/SCA/10009/2017 JUDGMENT Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi-judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of "play in the joints" to the executive."
42. That the authorities should be given latitude in making a decision on the offers was also observed in Sterling Computers (supra). Therein, the Court observed that any judicial interference amounts to encroachment on the exclusive right of the executive to take a decision.
43. In the matter on hand, admittedly, the successful bidder was more technically qualified and it got more marks. Normally, the contract could be awarded to the lowest bidder if it is in the public interest. Merely because the financial bid of BVG India Ltd. is the lowest, the requirement of compliance with the Rules and conditions cannot be ignored.
44. As rightly contended by respondent no. 3, a statutory Page 75 of 78 C/SCA/10009/2017 JUDGMENT authority granting licences should have the latitude to select the best offer on the terms and conditions prescribed. The technical expert in his report categorically stated that, "All the above aspects demand high level of Technicalities and Expertise rather than just depending on lowest financial price quote for a material transport." As clarified earlier, the power of judicial review can be exercised only if there is unreasonableness, irrationality or arbitrariness and in order to avoid bias and mala fides. This Court in Afcons Infrastructure (supra) held the same in the following manner:
"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."
45. 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 Page 76 of 78 C/SCA/10009/2017 JUDGMENT 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."
(emphasis supplied)
52. As the above judgements covers and refers to law laid down by the Apex Court on various facets of contracts especially commercial in nature to be given by Government or any authority within meaning of Article 12 of the Constitution of India as a 'State' and the petitioners were not purchasers of the tender, we avoid detail discussion of the authorities otherwise relied on by learned counsel by the respondent No.1 University and respondent No.2 as we are satisfied with the facts and circumstances of the case. Even decisions making process so elaborately referred to by us reveal that the respondent No.1 has acted within four corners of law leaving no room of doubt of any arbitrariness or the decision can be said to be contrary to public interest and, therefore, we find no merit in the submissions made by learned advocate for the petitioners.
53. Considering the above celebrated principles laid down by the Apex Court in the case of Municipal Corporation, Ujjain v. BVG India Ltd. wherein earlier decisions on the subject were considered, confirmed, referred and tested on such principles action of respondent No.1 under challenge by the petitioners do not suffer from any vice of irrationality or decision making process is vitiated by arbitrariness or a case of colorable exercise of power or from vice of irrationality in decision making process nor it was based on any irrelevant consideration viz. conditions were tailor made to suit Page 77 of 78 C/SCA/10009/2017 JUDGMENT requirement of respondent No.2 only and under no circumstances we find any public interest was jeopardied by issuing corrigendum dated 12.5.2017 for which on-line information was given, we find that lease deed is already executed by respondent No.1 in favour of respondent No.2 on 16.10.2017 and though initially while issuing notice by this Court process of NIT was kept subject to further order that may be passed by this Court in absence of any irregularity violation of either any terms/conditions of contract or the legal malice as per law laid down by the Apex Court in the judgement relied on earlier and refereed to in earlier paragraph, we find the petition being Special Civil Application No. 10009 of 2017 is merit less and is hereby rejected.
54. Accordingly, Civil Application also stands disposed of.
55. Based on the above reasonings i.e. Special Civil Application NO. 10055 of 2017 is also rejected.
56. Rule discharged in each of the writ petitions.
57. Before parting, we may note that efforts made by unholy alliance of the petitioners in filing the petitions arguing the case by taking substantial time of the Court for no justifiable reason amounts abuse of process of law, we are of the considered opinion that if we do not award cost we will be failing in our duty as other deserving cases were to be adjourned and petitioners of both these writ petitions are directed to pay Rs.1 lakh cost for each petition and to be deposited in the registry within 10 days from the date of the copy of the judgement received.
(ANANT S. DAVE, J) (BIREN VAISHNAV, J) NAIR SMITA V. Page 78 of 78