M/S Macawber Beekay Pvt Ltd vs Ms/ Bharat Heavy Electricals Ltd on 2 November, 2022

[Cites 23, Cited by 0]

Karnataka High Court

M/S Macawber Beekay Pvt Ltd vs Ms/ Bharat Heavy Electricals Ltd on 2 November, 2022

Bench: M. Nagaprasanna

                            1



        IN THE HIGH COURT OF KARNATAKA AT BENGALURU        R
          DATED THIS THE 02ND DAY OF NOVEMBER, 2022

                           BEFORE

          THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

          WRIT PETITION No.20333 OF 2022 (GM - TEN)


BETWEEN:

M/S MACAWBER BEEKAY PVT. LTD.,
A COMPANY REGISTERED UNDER
THE PROVISIONS OF COMAPNIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
BEEKAY HOUSE, C450-451
SECTOR-10, NOIDA
GAUTAM BUDDHA NAGAR
UTTAR PRADESH - 201 301
REPRESENTED BY ITS
EXECUTIVE DIRECTOR (CONTRACTS)
                                              ... PETITIONER

(BY SRI S.SRIRANGA, SR.ADVOCATE FOR
    SMT.SUMANA NAGANAND, ADVOCATE)

AND:

1.     M/S BHARAT HEAVY ELECTRICALS LTD.,
       A COMPANY REGISTERED UNDER
       THE PROVISIONS OF THE COMPANIES ACT, 1956
       HAVING ITS OFFICE AT
       BHEL HOUSE, SIRI FORT
       NEW DELHI - 110 049
       REPRESENTED BY ITS
       CHAIRMAN AND MANAGING DIRECTOR.
                           2



2.   M/S BHARAT HEAVY ELECTRICALS LTD.,
     INDUSTRIAL SYSTEMS GROUP
     HAVING ITS OFFICE AT
     OPPOSITE INDIAN INSTITUTE OF SCIENCE
     PROF. CNR RAO CIRCLE
     MALLESHWARAM
     BENGAULRU - 560 012
     REPRESENTED BY MS.L.BINDU
     ADDITIONAL GENERAL MANAGER (MM).

3.   M/S BTL EPC LTD.,
     A COMPANY INCORPORATED UNDER
     THE PROVISIONS OF THE COMPANIES ACT, 1956
     HAVING ITS OFFICE AT
     2, JESSORE ROAD
     KOLKATA - 700 028
     REPRESENTED BY ITS DIRCTOR.

4.   M/S FUJIAN LONGKING CO. LTD.,
     A COMPANY INCORPORATED UNDER
     THE PROVISIONS OF THE COMPANIES ACT, 1956
     HAVING ITS OFFICE AT
     NO 81, LINGYAUAN ROAD
     XINLUO DISTRICT, LONGYAN CITY,
     FUJIAN PROVINCE, PR CHINA
     REPRESENTED BY ITS DIRCTOR.

5.   M/S TELANGANA STATE POWER
     GENERATION COMPANY LTD.,
     A COMPANY INCOROPORATED
     UNDER THE PROVISIONS OF
     THE COMPANIES ACT, 1956
     HAVING ITS CORPORATE OFFICE AT
     VIDYUT SOUDHA, TSGENCO
     KHAIRATABAD, HYDERABAD
     TELANGANA - 500 082
     REPRESENTED BY ITS MANAGING DIRCTOR.
                           3



6.   M/S TATA CONSULTING ENGINEERS LIMITED
     A COMPANY INCORPORATED UNDER
     THE PROVISIONS OF THE COMPANIES ACT, 1956
     HAVING ITS REGISTERED OFFICE AT:
     ELPHINSTONE BUILDING, 10
     VEER NARIMAN ROAD
     MUMBAI - 400 001
     ALSO HAVING A BRANCH OFFICE AT
     NO.71, CUNNINGHAM ROAD
     VASANTH NAGAR
     BENGALURU - 560 052
     REPRESENTED BY ITS DIRCTOR.
                                          ... RESPONDENTS

(BY SRI JAYAKUMAR S.PATIL, SR.ADVOCATE FOR
    SRI P.CHINNAPPA, ADVOCATE FOR R1 AND R2;
    SRI DHYAN CHINNAPPA, SR.ADVOCATE A/W
    SRI THAKUR RISHABHA RAJ,
    SRI SUBHANKA CHAKRABORTY AND
    SRI SAPTARSHI BHATTACHARJEE, ADVOCATES FOR R3;
    SRI D.L.N.RAO, SR.ADVOCATE FOR R5)

     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR
RECORDS    PERTAINING   TO    NOTICE   INVITING   TENDER
DTD.24.6.2022   BEARING     ENQUIRY     NO.77/22/6055/LSY
(ANNEXURE-C) ISSUED BY THE R-2; DECLARE THAT THE BID
SUBMITTED BY THE CONSORTIUM OF R-2 AND 3 AS NON
COMPLAINT AND AN INVALID BID AND ETC.,



     THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 18.10.2022, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
                               4



                             ORDER

The petitioner-M/s.Macawber Beekay Private Limited ('Company' for short) is before this Court calling in question the notice inviting tender ('NIT' for short) and consequent issuance of letter of intent to the 3rd respondent and has sought a direction to the 2nd respondent by issuance of a writ in the nature of mandamus to award the contract to the petitioner.

2. Shorn of unnecessary details, the facts in brief that are germane for consideration of the lis, are as follows:

The petitioner/Company claims to be specialized in providing turnkey solutions with regard to Ash Handling Plant to various industries such as power, cement, aluminum, steel including thermal power station, which face severe problems in handling bulk materials within the plant. The Company also claims to provide solutions to reduce environmental pollution with conservation of energy. The 5th respondent-

M/s.Telangana State Power Generation Company Limited sought to setup a 4000 MW capacity thermal power station at Yadadri, Nalgunda District, Telangana and sought to award contract for design, engineering, supply, erection and commissioning to the 1st respondent/Bharat Heavy Electricals Limited ('BHEL' for short) a portion of which was ash handling plant and the other coal handling plant. This was to be executed by the 2nd respondent-M/s Bharat Heavy Electricals Limited Industrial Systems Group. It is claimed that the entire plant was to be completed and commissioned by October, 2021. In furtherance of the said decision to set up a thermal power station, a NIT was issued on 22-08-2018. The petitioner was one amongst other three, who participated in the tender.

The tender however, was cancelled.

3. The 2nd respondent issued tender notification on 05.03.2020, wherein the petitioner and one M/s.Indure Private Limited had participated. The contract was awarded to M/s.Indure Private Limited. The said company is said to have 6 failed in performing with the contract and accordingly, the contract was terminated. In order to complete incomplete works of M/s.Indure Private Limited of ash handling at the risk and cost of M/s.Indure Private Limited, the 2nd respondent invited tenders on 06.01.2022. In the tender proceedings, the petitioner along with one M/s.DC Industrial Plant Services Private Limited had participated. The technical bid of M/s.DC Industrial Plant Service Private Limited came to be rejected and both the technical and financial bids of the petitioner came to be accepted. The petitioner claims to have been technically capable and suitable to carry out the project.

Notwithstanding that, the contract was not awarded to the petitioner and the tender proceedings itself was recalled and cancelled.

4. After all these attempts to call for tender and get the work executed failed, a tender notification comes to be issued on 24-06-2022, which is the subject notification. The subject tender notification is slightly modified with the re-packaging of 7 scope of work in comparison to the earlier tender notification.

The petitioner, the 3rd and 4th respondents participated in the tender process as notified on 24-06-2022. The petitioner/Company and respondent Nos.3 and 4 submitted both their technical and financial bids - one as independent company and the other respondent Nos.3 and 4 as consortium. The technical bid submitted by the petitioner and respondent Nos.3 and 4 were opened and both were held to be technically qualified on 27-07-2022 and thereafter, the financial bids were sought to be evaluated. While evaluating financial bids, it was found that respondent Nos.3 and 4 as consortium was the lowest L1 and the contract was sought to be awarded in favour of respondent Nos.3 and 4. In terms of the decision to award contract by the Tender Scrutiny Committee, a letter of intent was communicated to respondent Nos.3 and 4 on 29-09-2022. On coming to know that the letter of intent so communicated to respondent Nos.3 and 4, 8 the petitioner has knocked the doors of this Court in the subject petition.

5. Heard Sri S.Sriranga, learned senior counsel appearing for the petitioner, Sri Jayakumar S.Patil, learned senior counsel appearing for respondent Nos.1 and 2, Sri Dhyan Chinnppa, learned senior counsel appearing for respondent No.3 and Sri D.L.N.Rao, learned senior counsel appearing for respondent No.5.

6. The learned senior counsel Sri S.Sriranga, appearing for the petitioner would vehemently contend that the entire process of respondent Nos.1 and 2 in communicating the letter of intent to award the contract in favour of respondent Nos.3 and 4 is arbitrary and illegal as the petitioner is fully qualified and eligible to be awarded the said contract. Notwithstanding this and the fact that the 3rd respondent does not have the capacity to independently perform the contract and has, therefore, entered into an agreement with a Chinese company 9 and therefore, the 3rd respondent could not have been awarded the contract on the face of an Office Memorandum issued by the Union of India which clearly bars entering into any agreement with any Chinese Company for the purpose of any contract. He would contend that in every tender notification issued for this purpose, third of them in the path, the petitioner has been the successful bidder. Those tenders have been cancelled or aborted. He would, therefore, contend that in the teeth of eligibility of the petitioner, the ineligibility of performance of contract is given credence and, therefore, the entire process is arbitrary, highhanded and is violative of Article 14 of the Constitution of India. He would seek to place reliance upon the judgment rendered by the High Court of Delhi interpreting the very Office Memorandum which is against respondent Nos.3 and 4 in a judgment reported in DSPC ENGINEERING PRIVATE LIMITED v. MECON LIMITED1.

2021 SCC OnLine Del 1320 10

7. On the other hand, the learned senior counsel Sri Dhyan Chinnappa, representing respondent No.3 takes this Court through the statement of objections and documents appended to the said objections to demonstrate that the letter of intent issued to the said respondent does not suffer from any arbitrariness or illegality as the very office memorandum, which the petitioner relies upon, permits such action to be taken and the tender notification itself permitted participation in the tender process by a consortium and the agreement so filed is in tune with the format that was prescribed in the tender. He would submit that the bid between the petitioner and respondent Nos.3 and 4 had a difference of Rs.58/-

crores. Therefore, respondent Nos.3 and 4 were chosen.

8. The learned senior counsel Sri Jayakumar S. Patil, representing respondent Nos.1 and 2 would vehemently refute the submissions made by the learned counsel appearing for the petitioner to contend that BHEL being a company of Union 11 of India, it has taken a conscious call after scrutinizing entire documents submitted. He would contend that the tender documents submitted by respondent Nos.3 and 4 were strictly in consonance with the clauses of tender and, therefore, they did merit consideration apart from the fact that there was huge difference of amount between the rates quoted the petitioner and respondents 3 and 4 in their financial bids and it is for the tender inviting authority and the Tender Scrutiny Committee to evaluate the tender and come to a conclusion.

9. The learned senior counsel, Sri D.L.N.Rao, representing the 5th respondent to whom the work is sought to be executed would submit that the 5th respondent has been waiting for this project for the last four years as there is serious power crisis and if it is not immediately implemented it would run the risk of losing the very project itself. He would therefore submit that the petitioner cannot contend that his tender alone should be accepted and would seek dismissal of the petition.

10. On one issue, all the aforesaid learned senior counsel representing the respondents would in unison contend that the scope of judicial review in the matter of contract or tender is extremely limited and cannot undertake microscopic exercise of the conditions of tender unless there is arbitrariness or illegality is writ large in the process of tender. They would all seek to place reliance upon the judgments of the Apex Court in the cases of (i) TATA CELLULAR v. UNION OF INDIA2 -;

(ii) MICHIGAN RUBBER (INDIA) LIMITED v. STATE OF KARNATAKA AND OTHERS3; (iii) AFCONS INFRASTRUCTURE LIMITED v. NAGPUR METRO RAIL COROPORATION LIMITED AND ANOTHER4; (iv) SILPPI CONSTRUCTIOINS CONTRACTORS v. UNION OF INDIA AND ANOTHER5 and (v) N.G. PROJECTS LIMITED v.

VINOD KUMAR JAIN AND OTHERS6.

(1994) 6 SCC 651 3 (2012) 8 SCC 216 4 (2016) 16 SCC 818 5 (2020) 16 SCC 489 6 (2022) 6 SCC 127 13

11. To counter these submissions, the learned senior counsel appearing for the petitioner would contend that it is not the law that the Court exercising jurisdiction under Article 226 of the Constitution of India cannot consider any tender process. The facts brought out would clearly indicate that it is an arbitrary and the petitioner is deliberately kept out and, therefore, the writ petition would be maintainable. He would contend that the very look at the agreement would mean that two people coming together have participated in the tender, which is impermissible as the agreement itself notices it to be a consortium agreement. To this submission, the learned senior counsel Sri Jayakumar S.Patil, would submit that it is not the title of the document that is to be seen. It is the contents in the document or the recitals in the document that are required to be noticed. He would place reliance upon the judgment of the Apex Court in the case of C.C.,C.E. & S.T., 14 BANGALORE (ADJUDICATION) AND OTHERS v.

NORTHRN OPERATING SYSTEMS PRIVATE LIMITED7.

12. I have given my anxious consideration to the submissions made by the respective learned senior counsel and perused the material on record. In furtherance whereof, the issue that falls for consideration is, whether the impugned tender process is shrouded with such illegality that it would become violative of Article 14 of the Constitution of India and would thus be amenable to scrutiny under Article 226 of the Constitution of India.

13. Before embarking upon consideration of the case on hand qua merits of the matter, I deem it appropriate to notice the law as laid down by the Apex Court insofar as it concerns judicial review of contractual or tender matters in exercise of its jurisdiction under Article 226 of the Constitution of India.

The Apex Court right from the judgment in the case of TATA 7 AIR 2022 SC 2450 15 CELLULAR (supra), has considered the issue of judicial review in contractual matters. The Apex Court in the case of TATA CELLULAR (supra), has deduced the principles of interference, they read as follows:

"94. The principles deducible from the above are:

(1) The modern trend points to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative decision.

If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in 16 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.

Based on these principles we will examine the facts of this case since they commend to us as the correct principles."

(Emphasis supplied) A three Judge Bench of the Apex Court in the case of TATA CELLULAR (supra), deviated from the hitherto prevailing principle and observed that the modern trend points to judicial restraint in administrative action. The Court would not sit as a Court of appeal, but merely reviews the manner in which the decision was made, is what is emphasised. Therefore, the examination would be the decision making process. The Apex 17 Court later in the case of MICHIGAN RUBBER (INDIA) LIMITED (supra) has held as follows:

"23. From the above decisions, the following principles emerge:

(a) The basic requirement of Article 14 is fairness in action by the State, and non-

arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;

(b) Fixation of a value of the tender is entirely within the purview of the executive and the courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by courts is very limited;

(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by courts is not warranted;

(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and

(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by court is very restrictive since no person can claim a fundamental right to carry on business with the Government.

24. 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"? and

(ii) Whether the public interest is affected?

If the answers to the above questions are in the negative, then there should be no interference under Article 226."

... .... ...

35. As observed earlier, the Court would not normally interfere with the policy decision and in matters challenging the award of contract by the State 19 or public authorities. In view of the above, the appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable. We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd respondent thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligibility criteria should be permitted to participate in the tender. As noted in various decisions, the Government and their undertakings must have a free hand in setting terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the courts would interfere. The courts cannot interfere with 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. In the case on hand, we have already noted that taking into account various aspects including the safety of the passengers and public interest, CMG consisting of experienced persons, revised the tender conditions. We are satisfied that the said Committee had discussed the subject in detail and for specifying these two conditions regarding pre- qualification criteria and the evaluation criteria. On perusal of all the materials, we are satisfied that the impugned conditions do not, in any way, could be classified as arbitrary, discriminatory or mala fide."

(Emphasis supplied) The Apex Court clearly holds that the basic requirement of Article 14 of the Constitution of India is fairness in action by 20 the State and non-arbitrariness in essence and substance to be the heartbeat of fair play. It is these that would entitle judicial review in a contractual matter. The afore-quoted clauses are the parameters that are laid down by the Apex Court, which are essential ingredients with regard to judicial review in contractual matters.

14. Later, the Apex Court in the case of SILPPI CONSTRUCTIONS (supra) has held as follows:

"7. In Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651] , it was held that judicial review of government contracts was permissible in order to prevent arbitrariness or favouritism. The principles enunciated in this case are:

(SCC pp. 687-88, para 94) "94. ...

(1) The modern trend points to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its 21 own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.

Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed 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 in original)

8. In Raunaq International Ltd. v. I.V.R. Construction Ltd. [Raunaq International Ltd. v. I.V.R. Construction Ltd., (1999) 1 SCC 492] , this Court held that the superior courts should not interfere in matters of tenders unless substantial public interest was involved or the transaction was mala fide.

9. In Air India Ltd. v. Cochin International Airport Ltd. [Air India Ltd. v. Cochin International Airport Ltd., (2000) 2 SCC 617] , this Court once again stressed the need for overwhelming public interest to justify judicial intervention in contracts involving the State and its instrumentalities. It was held that the courts must proceed with great caution while exercising their discretionary powers and should exercise these powers only in furtherance of public interest and not merely on making out a legal point.

10. In Karnataka SIIDC Ltd. v. Cavalet (India) Ltd. [Karnataka SIIDC Ltd. v. Cavalet (India) Ltd., (2005) 4 SCC 456] it was held that while effective steps must be taken to realise the maximum amount, the High Court exercising its power under Article 226 of the Constitution is not competent to decide the correctness of the sale effected by the Corporation.

11. In Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. [Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138] it was held that while exercising power of judicial review in respect of contracts, the court should concern itself primarily with the question, whether there has been any infirmity in the decision-making process. By way of judicial review, the court cannot examine details of terms of contract which have been entered into by public bodies or the State.

12. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. [B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd., (2006) 11 SCC 548] it was held that it is not always necessary that a contract be awarded to the lowest tenderer and it must be kept in mind that the employer is the best judge therefor; the same ordinarily being within its domain. Therefore, the court's 23 interference in such matters should be minimal. The High Court's jurisdiction in such matters being limited, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the face of the record.

13. In Jagdish Mandal v. State of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] it was held: (SCC p. 531, para 22) "22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim 24 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."

14. In Michigan Rubber (India) Ltd. v. State of Karnataka [Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216] it was held that if the State or its instrumentalities acted reasonably, fairly and in public interest in awarding contract, interference by court would be very restrictive since no person could claim fundamental right to carry on business with the Government. Therefore, the courts would not normally interfere in policy decisions and in matters challenging award of contract by the State or public authorities.

15. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. [Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818] it was held that 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. The owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. 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.

16. In Montecarlo Ltd. v. NTPC [Montecarlo Ltd. v. NTPC, (2016) 15 SCC 272 : AIR 2016 SC 4946] it was held that where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the 25 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.

17. In Municipal Corpn., Ujjain v. BVG (India) Ltd. [Municipal Corpn., Ujjain v. BVG (India) Ltd., (2018) 5 SCC 462 : (2018) 3 SCC (Civ) 291] it was held that the authority concerned is in the best position to find out the best person or the best quotation depending on the work to be entrusted under the contract. The court cannot compel the authority to choose such undeserving person/company to carry out the work. 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.

18. Most recently this Court in Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd. [Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd., (2019) 14 SCC 81] observed that a writ petition under Article 226 of the Constitution was maintainable only in view of government and public sector enterprises venturing into economic activities. This Court observed that there are various checks and balances to ensure fairness in procedure. It was observed that the window has been opened too wide as every small or big tender is challenged as a matter of routine which results in government and public sectors suffering when unnecessary, close scrutiny of minute details is done.

19. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer.

20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the State instrumentalities; the courts should give way to the 27 opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case."

(Emphasis supplied) In the afore-quoted judgment of the Apex Court in the case of SILPPI CONSTRUCTIONS, the Apex Court has considered the entire spectrum of law with regard to judicial review on contractual matters right from the judgment in the case of TATA CELLULAR (supra) and holds that the Court is normally be loathe to interfere in contractual matters, unless a clear case of arbitrariness or mala fide or bias or irrationality is made out. Again, the Apex Court in the case of N.G.PROJECTS LIMITED (supra) has held as follows:

"10. We find that the interference in contract awarded to the appellant is wholly unwarranted and has caused loss to public interest. Construction of roads is an essential part of development of infrastructure in any State. The learned Single Bench and the Division Bench of the High Court were exercising power of judicial review to find out whether the decision of the State was manifestly arbitrary or unjust as laid down by this Court in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651] and to act as appellate authority over the decision of the State. This Court in Tata Cellular [Tata Cellular v. Union of India, (1994) 6 SCC 651] held as under: (SCC pp. 675, 677-78 & 687-88, paras 70, 77 & 94) "70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.

***

77. The duty of the court is to confine itself to the question of legality. Its concern should be:

1. Whether a decision-making authority exceeded its powers?

2. committed an error of law,

3. committed a breach of the rules of natural justice,

4. reached a decision which no reasonable tribunal would have reached or,

5. abused its powers.

Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:

(i) Illegality : This means the decision-

maker must understand correctly the law that regulates his decision-making power and must give effect to it.

(ii) Irrationality, namely, Wednesbury [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] unreasonableness.

(iii) Procedural impropriety.

The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secy. of State for the Home Deptt., ex p Brind [R. v. Secy. of State for the Home Deptt., ex p Brind, (1991) 1 AC 696 : (1991) 2 WLR 588 (HL)] , Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of 30 proportionality. In all these cases the test to be adopted is that the court should, 'consider whether something has gone wrong of a nature and degree which requires its intervention'.

***

94. The principles deducible from the above are:

(1) The modern trend points to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-

administrative sphere. However, the decision must not only be tested by the application of Wednesbury [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 31 (CA)] 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.

Based on these principles we will examine the facts of this case since they commend to us as the correct principles."

                                    (emphasis supplied)
     ...           ...                 ...           ...

12. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. [Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818] , this Court held that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. It was held as under : (SCC p. 825, paras 13 & 15) "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.

***

15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or 32 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."

13. This Court sounded a word of caution in another judgment reported as Silppi Constructions Contractors v. Union of India [Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489] , wherein it was held that the courts must realise their limitations and the havoc which needless interference in commercial matters could cause. In contracts involving technical issues, the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above, the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. The courts must also not interfere where such interference would cause unnecessary loss to the public exchequer. It was held as under: (SCC p. 501, paras 19-20) "19. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is 33 normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts, but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer.

20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the State instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not 34 sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind, we shall deal with the present case."

(emphasis supplied)

14. In National High Speed Rail Corpn.

Ltd. v. Montecarlo Ltd. [National High Speed Rail Corpn. Ltd. v. Montecarlo Ltd., (2022) 6 SCC 401] , this Court sounded a word of caution while entertaining the writ petition and/or granting stay which ultimately may delay the execution of the mega projects. It was held as under : (SCC para 48) "48. Even while entertaining the writ petition and/or granting the stay which ultimately may delay the execution of the Mega projects, it must be remembered that it may seriously impede the execution of the projects of public importance and disables the State and/or its agencies/instrumentalities from discharging the constitutional and legal obligation towards the citizens. Therefore, the High Courts should be extremely careful and circumspect in exercise of its discretion while entertaining such petitions and/or while granting stay in such matters. Even 35 in a case where the High Court is of the prima facie opinion that the decision is as such perverse and/or arbitrary and/or suffers from mala fides and/or favouritism, while entertaining such writ petition and/or pass any appropriate interim order, High Court may put to the writ petitioner's notice that in case the petitioner loses and there is a delay in execution of the project due to such proceedings initiated by him/it, he/they may be saddled with the damages caused for delay in execution of such projects, which may be due to such frivolous litigations initiated by him/it. With these words of caution and advise, we rest the matter there and leave it to the wisdom of the Court(s) concerned, which ultimately may look to the larger public interest and the national interest involved."

15. In Uflex Ltd. v. State of T.N. [Uflex Ltd. v. State of T.N., (2022) 1 SCC 165] , this Court stated that the enlarged role of the Government in economic activity and its corresponding ability to give economic "largesse" was the bedrock of creating what is commonly called the "tender jurisdiction". The objective was to have greater transparency and the consequent right of an aggrieved party to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India beyond the issue of strict enforcement of contractual rights under the civil jurisdiction. However, the ground reality today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court under Article 226 of the Constitution. The Court held as under: (SCC pp. 173-74 & 189-90, paras 2-3 & 42) 36 "2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at a distance. [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517]

3. We cannot lose sight of the fact that a tenderer or contractor with a grievance can always seek damages in a civil court and thus, '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'. [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] ***

42. We must begin by noticing that we are examining the case, as already stated above, on the parameters discussed at the inception. In commercial tender matters there is obviously an aspect of commercial competitiveness. For every succeeding party who gets a tender there may be a couple or more parties who are not awarded the tender as there can be only one L-1. The question is should the judicial process be resorted to for downplaying the freedom which a tendering party has, merely because it is a State or a public authority, making the said process even more cumbersome. We have already noted that 37 element of transparency is always required in such tenders because of the nature of economic activity carried on by the State, but the contours under which they are to be examined are restricted as set out in Tata Cellular [Tata Cellular v. Union of India, (1994) 6 SCC 651] and other cases. The objective is not to make the Court an appellate authority for scrutinising as to whom the tender should be awarded. Economics must be permitted to play its role for which the tendering authority knows best as to what is suited in terms of technology and price for them."

(emphasis supplied)

16. In Galaxy Transport Agencies v. New J.K. Roadways [Galaxy Transport Agencies v. New J.K. Roadways, (2021) 16 SCC 808 : 2020 SCC OnLine SC 1035] , a three-Judge Bench again reiterated that the authority that authors the tender document is the best person to understand and appreciate its requirements, and thus, its interpretation should not be second- guessed by a court in judicial review proceedings. It was observed as thus : (SCC paras 17-18 & 20) "17. In accordance with these judgments and noting that the interpretation of the tendering authority in this case cannot be said to be a perverse one, the Division Bench [New JK Roadways v. UT of J&K, 2020 SCC OnLine J&K 733] ought not to have interfered with it by giving its own interpretation and not giving proper credence to the word "both" appearing in Condition No. 31 of the NIT. For this reason, the Division Bench's conclusion that JK Roadways was wrongly declared to be ineligible, is set aside.

18. Insofar as Condition No. 27 of the NIT prescribing work experience of at least 5 years of 38 not less than the value of Rs 2 crores is concerned, suffice it to say that the expert body, being the Tender Opening Committee, consisting of four members, clearly found that this eligibility condition had been satisfied by the Appellant before us. Without therefore going into the assessment of the documents that have been supplied to this Court, it is well settled that unless arbitrariness or mala fide on the part of the tendering authority is alleged, the expert evaluation of a particular tender, particularly when it comes to technical evaluation, is not to be second-guessed by a writ court. Thus, in Jagdish Mandal v. State of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] , this Court noted :

(SCC pp. 531-32, para 22) '22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private 39 interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;

or Whether the process adopted or decision made is so arbitrary and irrational that the court can say:'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached';

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State 40 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.' ***

20. This being the case, we are unable to fathom how the Division Bench, on its own appraisal, arrived at the conclusion that the Appellant held work experience of only 1 year, substituting the appraisal of the expert four- member Tender Opening Committee with its own."

(emphasis supplied)

17. Therefore, the position of law with regard to the interpretation of terms of the contract is that the question as to whether a term of the contract is essential or not is to be viewed from the perspective of the employer and by the employer. Applying the aforesaid position of law to the present case, it has been the contention of Respondent 1 that the format for bank guarantee was not followed strictly by the State and that the relaxation given was not uniform, in that Respondent 1 was singled out. The said contention has found favour with the courts below.

... ... ... ...

21. Since the construction of road is an infrastructure project and keeping in view the intent of the legislature that infrastructure projects should not be stayed, the High Court would have been well advised to hold its hand to stay the construction of the infrastructure project. Such provision should be kept in view even by the writ court while exercising its jurisdiction under Article 226 of the Constitution of India.

22. The satisfaction whether a bidder satisfies the tender condition is primarily upon the authority inviting the bids. Such authority is aware of expectations from the tenderers while evaluating the consequences of non-performance. In the tender in question, there were 15 bidders. Bids of 13 tenderers were found to be unresponsive i.e. not satisfying the tender conditions. The writ petitioner was one of them. It is not the case of the writ petitioner that action of the Technical Evaluation Committee was actuated by extraneous considerations or was mala fide. Therefore, on the same set of facts, different conclusions can be arrived at in a bona fide manner by the Technical Evaluation Committee. Since the view of the Technical Evaluation Committee was not to the liking of the writ petitioner, such decision does not warrant for interference in a grant of contract to a successful bidder.

23. In view of the above judgments of this Court, the writ court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present day economic activities of the State and this limitation should be kept in view. Courts should be even more reluctant in interfering with contracts involving technical issues as there is a requirement of the necessary expertise to adjudicate upon such issues. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the procedure contemplated by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a mala fide manner, still the Court should refrain from interfering in the grant of tender but instead 42 relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present day Governments are expected to work.

... ... ... ...

26. A word of caution ought to be mentioned herein that any contract of public service should not be interfered with lightly and in any case, there should not be any interim order derailing the entire process of the services meant for larger public good. The grant of interim injunction by the learned Single Bench of the High Court has helped no one except a contractor who lost a contract bid and has only caused loss to the State with no corresponding gain to anyone."

(Emphasis supplied) The Apex Court at paragraph 26 (supra), directs a word of caution that any contract of public service should not be interfered with lightly and in any case, there should not be any interim order derailing the entire process.

15. On a coalesce of the law as laid down by the Apex Court in the aforesaid cases, what would unmistakably emerge 43 is, judicial review in contractual matters is restricted to decision making process and not the decision itself and in the decision making process, the presence of bias, malafides, arbitrariness and irrationality should be necessarily present. It is these what is to be looked into while considering a challenge to the tender process. Therefore, consideration of the issue in the case at hand would be within the parameters laid down by the Apex Court in the afore-quoted judgments and on the touchstone of the principles, so laid down therein.

16. To consider the issue it is germane to notice, the NIT. The notice inviting tender was issued on 24.06.2022. The subject of tender is as follows:

"Subject: Tender Enquiry for "Ash Handling Plant Main Package-2" as per Technical Specifications and terms and conditions of the tender for 5X800 MW Yadadri TPS, Nalgonda District, Telangana State."

The mode of submission of tender is dealt with under Clause 8 of the tender notification and reads as follows:

"8. Mode of Submission of Tender:

The tender shall be submitted in two parts in our E-Procurement Platform https://eprocurebhel.co.in/nicgep/ app on or before the due date and time, as follows:

PART-1: Pre-qualfication, Technical and Commercial Terms & Conditions Bid:

(i) Compliance to addendum/corrigendum, to the tender (if any).

(ii) Documents in support of Pre-Qualification Requirements-Technical & Financial (Mandatory).

(iii) Annexure-I to GCC (Mandatory)

(iv) General conditions of contract, GCC (Mandatory)

(v) Special Conditions of contract, SCC (Mandatory)

(vi) Technical offer, comprising of technical specification and other documents as asked in technical specifications e.g. drawings, test report etc. (Mandatory.

(vii) Annexure-III to GCC (Declaration about completeness of price) - (Mandatory)

(viii) Annexure-XII to GCC (Mandatory)

(ix) Un-priced copy of Annexure-II, cost of withdrawal of deviation (Mandatory) "Quoted" to be indicated under the column "Cost of Withdrawal of Deviation" for each deviation mentioned in this format. In case "Quoted" is not indicated against any deviation, cost of withdrawal for that deviation shall be considered as NIL.

(x) Un-Priced bid (Quoted to be mentioned for each line item against all applicable columns).

(xi) Duly filled in signed and stamped Integrity Pact as per the "Integrity Pact" format enclosed pre- signed by BHEL.

(xii) Un-Priced copy of list of items considered for CIF Content as per SCC (if applicable).

PART-2: Price Bid

(i) Price bid as per price bid format.

(ii) Cost of withdrawal of deviation as per Annexure-

(iii) List of items with breakup of CIF Content as per SCC (if applicable)."

It was a two cover tender on the E-Procurement platform of BHEL. The technical qualification and the financial bid are the two separate bids/offers involved in the tender. The tender also stipulated certain pre-qualification to participate in the tender. The entire issue in the lis revolves around pre-

qualification of the tender. Certain clauses of pre-qualification requirement of the bidders, are germane are to be noticed, and are extracted for the purpose of quick reference, they are as follows:

"01.00.00 TECHNICAL CRITERIA:

The bid is open for participation to those bidders who satisfy the following technical requirements:-

01.01.01 The bidder should have executed at least one (1) number Ash Handling Plant (AHP) in India/abroad for a thermal power station using sea water/plain water involving 46 design, engineering, manufacture/procure-

ment, supply, erection & commissioning (or supervision of erection & commissioning) comprising the following systems which should be in successful operation for at least (1) years as on date of submission of the bid:

(a) Bottom ash handling system comprising jet pump system in conjunction with water impounded bottom ash hopper designed for minimum 50 TPH (on dry ash basis) capacity or more for pulverized coal fired boilers.

AND

(b) First stage fly ash handling system for conveying fly ash from ESP hoppers to Intermediate Surge Hopper (ISH) by vacuum conveying system designed for minimum 30 TPH capacity (dry ash basis) per stream.

AND

(c) Second stage fly ash handling system for conveying fly ash from Intermediate surge Hopper (ISH) to Fly ash silos by pressure conveying system designed for minimum 20 TPH capacity (dry ash basis per line for a distance not less than 500 mts.

AND

(d) High Concentration Ash Slurry Disposal (HCSD) System for minimum 40 TPH capacity (dry ash basis) per line The above clauses 10.01.01 (a), (b), (c) and (d) can be in one single plant or in a combination of parts.

01-01-02 Bidder who is a supplier of bulk material handling system but does not meet the requirements under clause 01.01.01 above in part or in full can also participate provided he has executed at least the following systems design, engineering, manufacture, supply, erection & commissioning(or 47 supervision of erection and commissioning);

(a) Fly Ash Handling System for conveying Fly Ash from ESPs in dry form (vacuum conveying or pressure conveying system) or in wet slurry mode.

(b) Bulk material handling system, comprising of belt conveyors having a minimum design capacity of 800 TPH The systems mentioned at 01.01.02 (a) or (b) above should be in successful operation in at least two (2) plants for at least two (2) years as on date of submission of bid and should have been installed for pulverized coal fired boiler units in India/abroad generating not less than 40 TPH of Ash per boiler.

AND Collaborate(s)/Associate(s) with party(ies) who meet(s) either the total requirement under 01.01.01 (a), (b) and (c) above or any of the above requirements under 01.01.01 (a), (b) and

(c), which the bidder himself is not able to meet.

In such a case, the Bidder shall be required to furnish consortium agreement jointly executed by the Bidder and the collaborator(s)/Associate(s) and each executants, shall be jointly and severally liable to employer for successful performance of the relevant system, as per the format (Annexure- A) enclosed along with bid. The collaboration agreement should be submitted along with the bid. In such a case Collaborator/Associate shall be required to furnish a bank guarantee at the time of placement of order as follows:

i. INR 10 Lakh (Rupees Ten Lakh) for Collaborator/Associate for Jet Pumping system. ii. INR 25 Lakh (Rupees Twenty Five Lakh) for Collaborator/Associate for Vacuum conveying system.

iii. INR 25 Lakh (Rupees Twenty Five Lakh) for Collaborator/Associate for Pressure Transportation system.

AND Collaborate(s)/Associate(s) with party who meets the requirement under 01.01.01(d) above which the bidder himself is not able to meet.

In such a case, the Bidder shall be required to furnish Agreement of Support jointly executed by the Bidder and the collaborator/Associate for successful performance of the HCSD system as per the format (Annexure-B) enclosed along with bid. The Agreement of Support should be submitted along with the bid.

In case bidder collaborates/associates for more than one system with a party, then the Collaborators/ Associate shall be required to furnish a bank guarantee for an amount arrived at by adding up the amounts for the relevant systems as above.

01.01.03 The activity of design and engineering under 01.01.01 (a), (b) and (c) should have been carried out by the bidder and not through any external design agency/agencies. The activity of design and engineering under 01.01.01 (d) should have been carried out by the bidder or through any external design agency having experience for HCSD system.

For design and engineering activity referred under paras 0.01.02 the activity should have been 49 carried out by either the bidder or through design agency/agencies having experience for reference systems. In case of collaborator(s)/associate(s) meeting the balance part of total requirement under clause 01.01.01(a), (b), (c) and (d) the activity of design and engineering for the reference systems should have been carried out by them.

Bidders qualifying under Sl.No.01.01.02 and collaborating/associating with party(s) meeting total/ balance part of 01.01.01 (a), (b), (c) and (d) shall follow the following for supply and manufacturing of equipment. Bidder shall manufacture from their manufacturing setup based on collaborator(s)/ associate(s) drawing for the clause which bidder himself is not meeting the requirement but the collaborator(s)/associate(s) is meeting the requirement, then the collaborator(s)/associate(s) shall approve bidder's manufacturing facilities and manufacturing quality standards. Also after the manufacture of the items, the product shall be inspected by the respective collaborator(s)/ associate(s) and furnish certificate of conformance (COC) for the product.

Also, BHEL/Customer shall approve manufacturing facilities of the equipment of the vendor's self- manufacturing items in case the items are being manufactured by bidder as per collaborator(s)/ associate(s) design and manufacturing drawing.

... ... ... ...

B. Pre-Qualification Requirement: (Financial) ... ... ... ...

7. Bidder may collaborate/tie up in any legal form with other parties. Minimum eligibility criteria for financial capability has to be complied with either by a bidding Company 50 or by a lead consortium Member or any one of the member of a bidding Consortium.

7.1 Officers of the JV companies/Joint Bidders/ bidders having collaboration agreement/MOUs shall be evaluated as follows:

7.1a. If bidder happens to be the Joint Venture Company, then the credentials of any/both of JV partners can be also considered for meeting PQR.

7.1b If bidder happens to bid jointly with their partner, then credentials of the partners will be considered for meeting Financial PQR, proportionate to the scope of work/stake in the Partnership.

7.1c If bidder happens to be having valid collaboration agreement/MOU with some other Company, then the credentials of collaborator/ MOU partner can also be considered for meeting PQR proportionate to the scope of work/stake in the consortium.

In all such cases, lead bidder as specified in bid documents shall be responsible for overall execution of the contract and all guarantee/ warranty.

7.1d If bidder happens to be an Indian subsidiaries of foreign OEM, then the credentials of the foreign OCM can also be considered for meeting PQR.

7.2 The members of bidding Consortium should have entered into a Memorandum of Association ("MOA") 51 between themselves. One of the members of Consortium, holding at least 51% of the equity/ownership stake shall be authorized and nominated as the 'Lead Member' ("Lead Member") to act and represent all the members of the Consortium for bidding and implementation of the, Project.

7.3. Consortium Member whose financial capacity will be evaluated for the purposes of award of the Project shall hold at least 26% (twenty six per cent) stake in consortium.

7.4 A Bidder or a member of a Consortium can be a member in only one Consortium. If a Bidder/ member participates in more than one Bid for the same site/space, all Bids of which it is a part shall be summarily rejected.

7.5 All members of the Consortium shall be jointly and severally liable for the execution of the Project as per NIT terms.

7.6 Replacement of the Lead Member shall not be allowed at any time during the execution of the contract.

7.7 Bidder to note that the arrangement of bidding (joint bid partners/collaborator/MOU partner) once offered to BHEL as a part of bidding documents cannot be changed till the execution of the project.

8. Consideration of offer shall be subject to customer's approval of bidders."

(Emphasis added) In terms of the afore-quoted clauses of the pre-qualification requirement, what would emerge is, a bidder who is a supplier of bulk material handling system, if would not meet the requirements under clause 01.01.01 in part or in full can also participate, provided, he has executed at least the systems design, engineering, manufacture, supply and erection. The conditions are that, the bidder should have executed fly ash handling system or bulk material handling system. The systems mentioned in clause 01.01.02 above should be in successful operation at least two plants for two years. The bidder is also permitted to collaborate getting into the association with the party who meets the requirement of clause 01.01.01 (d). In such a case, the bidder is required to furnish consortium agreement jointly executed by the bidder and the collaborator and in case, external support is sought an agreement to that effect. The format of the agreement is also appended to the pre-qualification requirement.

17. Clause-7 supra permits the bidder to collaborate with any legal form with other party. Minimum eligibility criteria for financial capability have to be complied with either by a bidder company or a lead consortium member or any one of the member of a bidding consortium. Clause 7.2 supra observes that the members of a bidding consortium should have entered into Memorandum of Association between themselves and one of the members of the consortium would be a lead member holding at least 51% equity. These are the broad contours of pre-qualification requirement of bidders.

18. Contending to be eligible in terms of the aforesaid tender, both the petitioner and respondent Nos.3 and 4 submitted their respective bids. Technical qualification was assessed and both of them were found to be technically qualified. When it came to financial bid, the Tender Scrutiny Committee chose respondent No.3. The allegation now is that, the choice runs counter to the office memorandum issued by 54 Government of India, in the wake of the fact that one of the members of the consortium is a Chinese company. Therefore, it is necessary to consider whether it violates the office memorandum so issued by Government of India. The office memorandum reads as follows:

"No.F.18/37/2020-PPD Government of India Ministry of Finance Department of Expenditure Procurement Police Division 512, Lok Nayak Bhawan, New Delhi, Dated the 8th February, 2021. OFFICE MEMORANDUM Subject: Restrictions under Rule 144 (xi) of the General Financial Rules (GFRs), 2017.

Attention is invited to this Department's order (Public Procurement No.1) issued vide OM F.No.6/18/2019-PPD dated 23-07-2020. As per para 11 of the Order, in case of Works contracts, including turnkey contracts, contractors shall not be allowed to sub-contract works to any contractor from a country which shares a land border with India unless such contractor is registered with the Competent Authority. However, no such restriction is stipulated in the Order regarding other procurements i.e., procurement of goods, services etc.

2. This office is in receipt of representations seeking clarification whether it is permitted for the bidders to procure raw material or components/sub-

assemblies or the finished goods etc. from the vendors from the countries sharing land borders with India.

3. In this context following is hereby clarified:

1. A bidder is permitted to procure raw material, components, sub-assemblies etc. from the vendors from countries which shares a land border with India. Such vendors will not be required to be registered with the Competent Authority, as it is not regarded as "sub-contracting".

2. However, in case a bidder has proposed to supply finished goods procured directly/ indirectly from the vendors from the countries sharing land border with India, such vendor will be required to be registered with the Competent Authority.

4. This is issued with the approval of Secretary (Expenditure)."

(Emphasis supplied) The office memorandum dated 08.02.2021, is in clarification to paragraph-11 of the subsisting office memorandum dated 23.07.2020. The office memorandum dated 23.07.2020, mandated that contractor of turnkey contracts shall not be allowed to sub-contract works to any contractor from a country, which shares a land border with India unless such 56 contractor is registered with the competent authority.

However, no such restriction is stipulated in the order regarding procurement of goods and services.

Representations were made to the Union of India seeking clarification whether it is permitted for the bidders to procure raw materials or components from vendors of the country sharing land border. It is clarified that a bidder is permitted to procure raw material components and sub-assemblies from vendors, which share a land border with India and such vendors will not be required to register with the competent authority, as it is not regarded as sub-contract. In case, where the bidder proposes to supply finished goods procured directly or indirectly from vendors from the country sharing the land border of India, such vendor will be required to be registered with the competent authority. Therefore, it is to be seen whether respondent Nos.3 and 4 have entered into a consortium agreement of delivery of finished goods or raw material with the company with which respondent Nos.3 and 4 57 have entered into a consortium, which is registered with the competent authority or not.

19. The consortium agreement is entered into on 12.07.2022, between respondent No.3 and 4 - M/s Fujian Longking Co. Ltd., a company registered under the relevant laws of the People Republic of China, the jobs and responsibilities of the parties to the consortium is found in the annexure and the annexure to the consortium agreement reads as follows:

"1. The first party (M/s BTL EPC Ltd., Kolkata) shall undertake complete works as detailed in NIT which includes detailed design & engineering, manufacturing, supply erection, testing, commissioning, trial run, demonstration of PG test and handing over for complete ash handling plant.

2. The second party (M/s Fujian Longking, China) shall undertake basic design, vetting of the detail engineering, support in manufacturing, support/ supervision of erection, commissioning & PG test for complete AHP (excluding HCSD system)."

(Emphasis added) 58 Respondent Nos.3 and 4 have to undertake to complete the work as detailed in the tender, which includes detailed design, engineering, manufacturing, supply, erection, testing, commissioning, trial run, demonstration of PG test and handing over the project in complete - Ash Handling Plant.

Therefore, the entire work is done by respondent Nos.3 and 4.

The Chinese Company would undertake basic design, support in manufacturing, supervision of erection and commissioning and PG test for complete AHP (excluding HCSD system). The other agreement that the 3rd respondent entered into, is with a company housed in Netherlands. This is termed as an agreement as is required in the tender document. This is the support they seek for the design, erection and commissioning.

These are all permissible under the tender document.

20. If the afore-quoted clauses of the tender are considered with the documents submitted by respondent Nos.3 and 4, be it a consortium agreement or an agreement, were all necessary concomitants for participation in the 59 tender. While uploading the bid document, respondent Nos.3 and 4 have clearly uploaded all the material afore-indicated on consortium agreement and agreement with Chinese Company and a Company housed in Netherlands. If this is in terms of the contract, the element of arbitrariness as alleged is required to be noticed.

21. As observed hereinabove, the entire process of submission of the bid is in consonance with the tender notification. What remains is, decision making process. The decision making process in the opinion of the Court is in tune with clauses of the tender and necessities of tender. Financial viability of the tender is also one of the factors, if not the sole one for the Tender Inviting Authority to consider. Admittedly, the bid of the petitioner is Rs.58/- crores higher than the bid that is offered by respondent Nos.3 and 4. The difference of Rs.58/- crores is a huge margin for respondent Nos.1 and 2 to give up respondent Nos.3 and 4, who admittedly qualify for 60 award of tender and issue letter of intent in favour of the petitioner.

22. The award of contract is not even contrary to the office memorandum. The clarification issued in the office memorandum makes it unmistakably clear that, even raw materials can be procured from the bordering countries. What is barred is finished products from any vendor cannot be procured unless those vendors are registered with the competent authority. It is not in dispute that respondent Nos.3 and 4 are not procuring any raw material from a country that borders the nation. The communication dated 06-08-2022, made to respondent Nos.1 and 2 by respondent No.3 reads as follows:

"Subject: Tender enquiry for "Ash Handling Plant-2"

for 5x800 MW Yadadri TPS, Nalgonda Dist., Telangana State.

Ref: Enquiry No.77/22/7055/LSY dated 24-06- 2022.

Dear Sir, 61 This is to inform you that in the event we are successful for the above mentioned Pkg., we hereby declare that "No raw material or supplies shall be sourced from China. All supplies for complete AHP shall be sourced from India or abroad (except China). Majority of the items shall be sourced from manufacturing facilities and establishment available in India.

Hope, this will serve your purpose."

(Emphasis added) Respondent Nos.3 and 4 clearly undertook that in the event they would become successful, they declare that no raw material or supplies shall be sourced from China and all supplies shall be sourced from India or abroad except China.

Therefore, the scrutiny of this Court in such cases is being restricted to decision making process. Finding no error or illegality in the decision making process, this Court would hold its hands to interfere in the tender or the decision making process, in the light of the Court finding no arbitrariness. The mere fact that the petitioner was the successful bidder in earlier times would not mean that any other tenderer cannot 62 be chosen at the available discretion of the Tender Scrutiny Committee.

23. The Apex Court has further in the case of UFLEX LIMITED v. GOVERNMENT TAMILNADU AND OTHERS8, at paragraph Nos.1 to 8 deals with the scope of judicial review.

In fact, the judgment commences with the scope of judicial review. The said paragraphs read as follows:

"SANJAY KISHAN KAUL, J.-- The enlarged role of the Government in economic activity and its corresponding ability to give economic "largesse" was the bedrock of creating what is commonly called the "tender jurisdiction". The objective was to have greater transparency and the consequent right of an aggrieved party to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India (hereinafter referred to as "the Constitution"), beyond the issue of strict enforcement of contractual rights under the civil jurisdiction. However, the ground reality today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court under Article 226 of the Constitution. The public interest litigation ("PIL") jurisdiction is also invoked towards the same objective, an aspect normally deterred by the Court because this causes proxy litigation in purely contractual matters.

(2022) 1 SCC 165 63

2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence.

To that extent, principles of equity and natural justice have to stay at a distance. [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] ....... ...... .....

5. One other aspect examined by this Court is whether the terms and conditions of the tender have been tailor-made to suit a person/entity. In fact, this is what is sought to be contended in the facts of the present case by the respondents who were the original petitioners before the Court. In order to award a contract to a particular party, a reverse engineering process is evolved to achieve that objective by making the tender conditions such that only one party may fit the bill. Such an endeavour has been categorised as "Decision Oriented Systematic Analysis" (for short "DOSA"). [Misrilall Mines (P) Ltd. v. MMTC Ltd., 2013 SCC OnLine Del 563]

6. The burgeoning litigation in this field and the same being carried to this Court in most matters was the cause we set forth an epilogue in Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd. [Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd., (2019) 14 SCC 81] Even if it amounts to repetition, we believe that it needs 64 to be emphasised in view of the controversy arising in the present case to appreciate the contours within which the factual matrix of the present case has to be analysed and tested : (SCC pp. 92-95, paras 37-43) "37. We consider it appropriate to make certain observations in the context of the nature of dispute which is before us. Normally parties would be governed by their contracts and the tender terms, and really no writ would be maintainable under Article 226 of the Constitution of India. In view of Government and public sector enterprises venturing into economic activities, this Court found it appropriate to build in certain checks and balances of fairness in procedure. It is this approach which has given rise to scrutiny of tenders in writ proceedings under Article 226 of the Constitution of India. It, however, appears that the window has been opened too wide as almost every small or big tender is now sought to be challenged in writ proceedings almost as a matter of routine. This in turn, affects the efficacy of commercial activities of the public sectors, which may be in competition with the private sector.

43. We have considered it appropriate to, once again, emphasise the aforesaid aspects, especially in the context of endeavours of courts to give their own interpretation to contracts, more specifically tender terms, at the behest of a third party competing for the tender, rather than what is propounded by the party framing the tender. The object cannot be that in every 65 contract, where some parties would lose out, they should get the opportunity to somehow pick holes, to disqualify the successful parties, on grounds on which even the party floating the tender finds no merit."

(Emphasis supplied) In a later judgment, in the case of STATE OF PUNJAB V. MEHAR DIN9, the Apex Court holds as follows:

"20. The scope of judicial review in the matters of tenders/public auction has been explored in depth by this Court in a catena of cases. Plausible decisions need not be overturned and, at the same time, latitude ought to be granted to the State in exercise of its executive power. However, allegations of illegality, irrationality and procedural impropriety would be enough grounds for courts to assume jurisdiction and remedy such ills.

21. xxxxx

22. The exposition of law on the subject has been consistently followed by this Court even in the later decisions holding that superior courts should not interfere in the matters of tenders, unless substantial public interest was involved or the transaction was mala fide. It was consistently stressed by this Court that the need for overwhelming public interest should always be kept in mind to justify judicial intervention in contracts 9 (2022) 5 SCC 648 66 involving the State and its instrumentalities and while exercising power of judicial review in relation to contracts, the courts should consider primarily the question whether there has been any infirmity in the decision-making process.

24. xxxxx

25. The law on the subject is settled that the courts being the custodian of fundamental rights are under an obligation to interfere where there is arbitrariness, irrationality, unreasonableness, mala fides and bias, if any, but at the same time, the courts should exercise the power of judicial review with a lot of restraint, particularly in contractual and commercial matters.

26. Undisputedly, the provisional bid, in the instant case, was not confirmed by the competent authority (Sales Commissioner) and not being accepted after recording its due satisfaction by an order dated 2-7-1993 and the decision of the authority in passing the order of cancellation of the auction bid was scrutinised/examined by the appellate/revisional authority and the discretion exercised by the competent authority in taking decision of cancellation was upheld at later stages.

27. This being a settled law that the highest bidder has no vested right to have the auction concluded in his favour and in the given circumstances under the limited scope of judicial review under Article 226 of the Constitution, the High Court was not supposed to interfere in the opinion of the executive 67 who were dealing on the subject, unless the decision is totally arbitrary or unreasonable, and it was not open for the High Court to sit like a court of appeal over the decision of the competent authority and particularly in the matters where the authority competent of floating the tender is the best judge of its requirements, therefore, the interference otherwise has to be very minimal.

28. To the contrary, the limited scope of judicial review for which interference could have been permissible to prevent arbitrariness, irrationality, bias, mala fides or perversity, if any, in the approach of the authority while dealing with the auction proceedings, was never the case of the respondent at any stage. The High Court has recorded a finding to the contrary that the appellants have failed to show any irregularity or illegality in the auction proceedings and in the absence whereof, the auction proceedings could not be held to be vitiated. The premise on which the High Court has proceeded in recording a finding, particularly, in the matters of auction of public properties is unsustainable in law and that apart, it is also not in conformity with the scheme of auction of public properties as defined under Chapter III of the 1976 Rules."

(Emphasis supplied) Therefore, there is no scope of interference in the decision making process of respondent Nos.1 and 2.

24. It is now germane in the journey of the judgment to consider the sheet anchor of the contention of the learned senior counsel appearing for the petitioner i.e., the judgment rendered by the Division Bench of the High Court of Delhi in DSPC ENGINEERING PRIVATE LIMITED (supra). The facts obtaining in the case before the High Court of Delhi are distinguishable qua the facts obtaining in the case at hand without much ado. Though the High Court of Delhi considers the very office memorandum upon which reliance is placed, the reasons for setting aside the tender therein were entirely different. The NIT therein was not in pari materia with what is issued in the case at hand. Consortium bidding therein was prohibited, but a tenderer could take assistance from a supporting company. The supporting company therein was a 100% subsidiary of the Indian company registered in China and housed in China. Therefore, it was declared to be an agency of the Indian company which had submitted the bid and such action fell foul of the office memorandum (supra).

25. Therefore, the said judgment would not become applicable to the facts of the case. In the case at hand, the tender pre-qualification conditions itself permitted entering into a consortium agreement. Above all, the very office memorandum which fell for consideration before the High Court of Delhi had undergone a clarification. The clarification further enures to the benefit of respondent No.3 herein, as if a particular kind of assistance is sought from the company bordering the country, it need not be registered with the competent authority. The judgment in the case of DSPC ENGINEERING PRIVATE LIMITED before the Delhi High Court was reserved on 05-01-2021 and delivered on 23-03- 2021. In the interregnum the Union of India had clarified the said office memorandum on 08-02-2021. Therefore, the High Court of Delhi was considering an office memorandum which had not yet been clarified by the Union of India. Baring this clarification, no other submission would entail any interference at the hands of this Court as this Court would not sit in the 70 arm chair of experts or the Tender Scrutiny Committee, which has scrutinized and found the 3rd respondent to be responsive and had to be awarded the contract in its favour.

26. For the aforesaid reasons, finding no merit in the petition, the petition stands dismissed.

Sd/-

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