Uttarakhand High Court
Vaibhav Kumar vs State Of Uttarakhand & Another on 24 May, 2022
Author: Sharad Kumar Sharma
Bench: Sharad Kumar Sharma
IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL
Writ Petition (M/S) No.1127 of 2022
Vaibhav Kumar ........Petitioner
Vs.
State of Uttarakhand & another .....Respondent
Mr. Siddhartha Singh, Advocate, for the petitioner.
Mr. N.S. Pundir, Deputy Advocate General, for the State of Uttarakhand/1.
Mr. C.S. Rawat, Advocate, with Mr. Bhuwan Bhatt, Advocate, for the respondent No.2.
Hon'ble Sharad Kumar Sharma, J (Oral)
Mr. C.S. Rawat, Advocate, has filed his "Authority" on behalf of the respondent no.2, the same is accepted, and is taken on record.
2. The petitioner to the present writ petition is a prospective tenderer in pursuance to the invitation of bids, as it was floated by the respondents, for the purposes of fee, for the executing a contract for recovery of the Mussoorie Eco Tourism, the period from 01.06.2022 to 31.03.2023, and for the purposes of collecting the toll charges. The petitioner has raised his grievances, as against the tender condition of Technical Bid ([k) Nos.2 and 4 itself, which are extracted hereunder:-
"2. यह िक उ�राख� रा� के िकसी भी नगर पािलका प�रषद् अथवा नगर िनगम म� �ूनतम 50.00 लाख प्रितवष� का काय� करने का प्रमाण पत्र संल� करना होगा।
4. यह िक िजलािधकारी अथवा उप िजलािधकारी के ह�ा�रों से िनग�त च�रत्र प्रमाण पत्र, िजसकी अविध जारी होने की ितिथ से 06 माह हो प्र�ुत कराना होगा"
3. In fact by virtue of the tender condition no.2, it had been provided, that the prospective tenderer should have an experience of having performed a work of minimum value of Rupees Fifty Lakh, with any Nagar Palika Parishad or Nagar Nigam of the State of Uttarakhand. Secondly, he has agitated his grievances against the condition of clause no.4, of the tender document, which provided that 2 a character certificate of the prospective tenderer, has had to be valid, from the date of its issuance for the period of six months, which has been issued by any District Magistrate or Sub District Magistrate.
4. The petitioner submits that he is the resident of the State of Uttar Pradesh, and he has already been issued with the character certificate, which is valid for three years, and in that eventuality, the condition imposed by clause no.4, would result into an automatic exclusion of the petitioner, from participating in the bidding process. Coupled with the fact his argument is that clause no.2, also which stipulates, that there has had to be an experience of having worked with any Nagar Palika Parishad or Nagar Nigam of the State of Uttarakhand, would be discriminatory because the petitioner, who is the resident of the State of U.P., would be ousted, from participating in the bidding process as invited by the respondents by the tender bid floated by them.
5. The contention of the learned counsel for the petitioner with regards to the aspect of arbitrariness pertaining to the aforesaid two clauses, is not acceptable by this Court for the reason being, that since the local body being a distinct legal entity, having its creation under the special statute, has got its exclusive powers which falls with their decision making domain, to impose any conditions in the bidding document, which suits its purpose; for the purposes of invitation of bids. Ouster of a proposed applicant, who expects to participate will not have the liberty or choice to put a challenge to the said condition on the ground of arbitrariness, because the stipulations provided, therein, is not discriminatory, but rather an essential conditions to determine the credentials of the proposed tenderer, as to whether he would suited be for the proposed purpose, for which the tenders have been invited.
6. The stipulations of imposing the conditions in the tender document this Court is of view that it is exclusively the prerogative of the author of the tender, who is the best person to understand, and 3 appreciate the requirement of the tenders, it is not technically and practically possible for the courts to interpret, as to the conditions, which has been imposed in the tender, whether it suits the need of the employer or not, and even if it results into an ouster of the proposed tenderer, though he may not be having any indefeasible rights under law to participate, but the right of an author of the tender to impose any condition has been exclusively vested to be falling within its domain of the decision making process, as it has been laid down by the Hon'ble Apex Court in a judgment rendered in Civil Appeal No.4862-4863 of 2021, "UFLEX Limited Vs. Government of Tamil Nadu & others", has referred to in paragraph nos.6 and 7, which is extracted hereunder:-
"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 Corporation Limited and Ors. MANU/SC/0505/2019 : (2019) 14 SCC 81 Even if it amounts to repetition, we believe that it needs to be emphasized 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.
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. This could hardly have been the objective in mind. An unnecessary, close scrutiny of minute details, contrary to the view of the tendering authority, makes awarding of contracts by Government 4 and Public Sectors a cumbersome exercise, with long drawn out litigation at the threshold. The private sector is competing often in the same field. Promptness and efficiency levels in private contracts, thus, often tend to make the tenders of the public sector a non-competitive exercise. This works to a great disadvantage to the Government and the public sector.
38. In Afcons Infrastructure Limited v. Nagpur Metro Rail Corporation Limited and Anr. MANU/SC/1003/2016 : (2016) 16 SCC 818, this Court has expounded further on this aspect, while observing that the decision-making process in accepting or rejecting the bid should not be interfered with. Interference is permissible only if the decision-making process is arbitrary or irrational to an extent that no responsible authority, acting reasonably and in accordance with law, could have reached such a decision. It has been cautioned that Constitutional Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute their view for that of the administrative authority. Mere disagreement with the decision-making process would not suffice.
39. Another aspect emphasised is that the author of the document is the best person to understand and appreciate its requirements. In the facts of the present case, the view, on interpreting the tender documents, of Respondent No. 1 must prevail. Respondent No. 1 itself, appreciative of the wording of Clause 20 and the format, has taken a considered view. Respondent No. 3 cannot compel its own interpretation of the contract to be thrust on Respondent No. 1, or ask the Court to compel Respondent No. 1 to accept that interpretation. In fact, the Court went on to observe in the aforesaid judgment that it is possible that the author of the tender may give an interpretation that is not acceptable to the constitutional Court, but that itself would not be a reason for interfering with the interpretation given. We reproduce the observations in this behalf as under:
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 5 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.
40. We may also refer to the judgment of this Court in Nabha Power Limited (NPL) v.
Punjab State Power Corporation Limited (PSPCL) and Anr. MANU/SC/1291/2017 :
(2018) 11 SCC 508, authored by one of us (Sanjay Kishan Kaul, J.). The legal principles for interpretation of commercial contracts have been discussed. In the said judgment, a reference was made to the observations of the Privy Council in Attorney General of Belize v. Belize Telecom Ltd. MANU/UKPC/0001/2009 as under:
"45......"16. Before discussing in greater detail the reasoning of the Court of Appeal, the Board will make some general observations about the process of implication. The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means. However, that meaning is not necessarily or always what the authors or parties to the document would have intended....
19......In Trollope & Colls Ltd. v. North West Metropolitan Regional Hospital Board Lord Pearson, with whom Lord Guest and Lord Diplock agreed, said:
...the court does not make a contract for the parties. The court will not even improve the contract which the parties have made 6 for themselves, however desirable the improvement might be. The court's function is to interpret and apply the contract which the parties have made for themselves. If the express terms are perfectly clear and free from ambiguity, there is no choice to be made between different possible meanings: the clear terms must be applied even if the court thinks some other terms would have been more suitable. An unexpressed term can be implied if and only if the court finds that the parties must have intended that term to form part of their contract: it is not enough for the court to find that such a term would have been adopted by the parties as reasonable men if it had been suggested to them: it must have been a term that went without saying, a term necessary to give business efficacy to the contract, a term which, though tacit, formed part of the contract which the parties made for themselves.
41. Nabha Power Limited (NPL)4 also took note of the earlier judgment of this Court in Satya Jain v. Anis Ahmed Rushdie MANU/SC/1063/2012 : (2013) 8 SCC 131, which discussed the principle of business efficacy as proposed by Bowen, L.J. in the Moorcock (1889) LR 14 PD 64 (CA). It has been elucidated that this test requires that terms can be implied only if it is necessary to give business efficacy to the contract to avoid failure of the contract and only the bare minimum of implication is to be there to achieve this goal. Thus, if the contract makes business sense without the implication of terms, the courts will not imply the same.
42. The judgment in Nabha Power Limited4 concluded with the following observations in para 72:
72. We may, however, in the end, extend a word of caution. It should certainly not be an endeavour of commercial courts to look to implied terms of contract. In the current day and age, making of contracts is a matter of high technical expertise with legal brains from all sides involved in the process of drafting a contract. It is even preceded by opportunities of seeking clarifications and doubts so that the parties know what they 7 are getting into. Thus, normally a contract should be read as it reads, as per its express terms. The implied terms is a concept, which is necessitated only when the Penta-test referred to aforesaid comes into play. There has to be a strict necessity for it. In the present case, we have really only read the contract in the manner it reads.
We have not really read into it any 'implied term' but from the collection of clauses, come to a conclusion as to what the contract says. The formula for energy charges, to our mind, was quite clear. We have only expounded it in accordance to its natural grammatical contour, keeping in mind the nature of the contract.
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 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.
7. It may also be pertinent to note the principles elucidated in the case of Tata Cellular v. Union of India:
"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 8 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."
7. In view of the aforesaid conditions, this Court is of the view that imposition of the condition in the tender, while invitation of the bids cannot be said that it was at all an arbitrary exercise of powers, which could be scrutinized by the writ courts under Article 226 of the Constitution of India, because its exclusive prerogative of determining, the technical aspects with regards to the nature of work, for which the tenders have been invited, even it leads to ouster of proposed contractor, with that of other suitable contractors of the State who satisfies the conditions of contract.
8. Since it has been held by the Hon'ble Apex Court that imposing condition of contract to fall within the domain of the author of the tenderer i.e. employer, the writ remedy is not available, and hence this Court is of the view that the clause nos.2 and 4, of the instant tender document, are only the stipulations which still the petitioner could have satisfied for making him eligible to participate in the tendering process, but since he doesn't satisfy those conditions, it cannot be nomenclatured as to be arbitrary in any manner whatsoever particularly in the light of the judgment of the Hon'ble Apex Court as rendered in UFLEX Limited (Supra).
9. Further the Hon'ble Apex Court in the judgment rendered in Civil Appeal No.1846 of 2022, arising out of SLP (Civil) 9 No.2103 of 2022, "N.G. Projects Limited Vs. M/s Vinod Kumar Jain", while making a reference to yet another judgment rendered by the Hon'ble Apex Court in the matters of "Galaxy Transport Agencies Vs. New J.K. Roadways", as reported in 2020 SCC Online SC 1035, has dealt with almost the similar issue, that the authority vested with the author of the tender is the best person who could understand and appreciate its requirement. Its opinion cannot be seconded or suggested by the judicial review. The relevant paragraph nos.16 and 17, of the said judgment is extracted hereunder:-
"16. In Galaxy Transport Agencies v. New J.K. Roadways", 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:
"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 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 N.I.T. 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 N.I.T. prescribing work experience of at least 5 years of 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, (2007) 14 SCC 517. this Court noted:
10"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone.
or Whether the process adopted or decision made is so arbitrary and irrational that the court can say: the decision is such that no responsible authority acting reasonably and in 11 accordance with relevant law could have reached":
(iii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under Article 226, Cases involving blacklisting or Imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."
XX XX XX
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."
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 No. 1 that the for mat for bank guarantee was not followed strictly by the State and that the relaxation given was not uniform, in that respondent No. 1 was singled out. The said contention has found favour with the Courts below."
10. A similar view has yet again been reiterated by the Hon'ble Apex Court in Civil Appeal No.786 of 2022, "M/s Agmatel India Pvt. Ltd. Vs. M/s Resoursys Telecom & others", arising out of an SLP (C) No.16671 of 2021,, wherein, in paragraph no.16, the Hon'ble Apex Court while extracting the excerpts from the judgment of the "Galaxy Transport Agencies Vs. New J.K. Roadways", it had observed in its paragraph no.21, that its not within the purview of the Court to analysis, and to determine the conditions, which are to be given in the contract. The tender conditions are to only adopted by the author and it cannot be widened by the judicial interference. Paragraph no.21.1 and 21.2, is extracted hereunder:-
"21.1. Even if some organisations/institutions, with reference to their requirements or other relevant factors, had assumed these two products.12
Le.. "Tablets" and "Smart Phones" akin to each other, the facts do remain that these very products have been placed under different categories on the online portal GeM and have also been taken as classifiable differently by the customs authority. In the given set of facts and classifications, the decision, as taken by NVS and its TEC, cannot be said to be suffering from irrationality, absurdity or mala fide. In our view, the analysis of the writ Court needs to stop at that. Beyond this point, the writ Court would got be substituting its preferred interpretation of the tender condition with the one adopted by the author of the tender document and the person procuring the product, who has to be regarded as the best person to understand its requirements.
21.2. Putting it differently, neither the excessive analysis, as entered into by the High Court, was required in this case nor we would be evaluating all the specifications of these two products, namely, "Smart Phones" and "Tablets". Suffice it to notice for the present purpose that even if both are electronic devices and even if several of their utility features are the same or similar, their categorisation under different headings is also a fact not unknown to the parties, as would appear from the categorisation on the Government online portal itself. Beyond this aspect, in our view, no adjudicatory process is called for and the interpretation as put by the tender inviting authority-NVS does not deserve interference. Similarly, if in some of the notice inviting tenders, both smart phones and tablets were stated, or in some of the tenders specific product tablet alone was stated, that would also not be decisive because that would, obviously, depend on the purpose for which the procurement was being made; and the procuring party, i.e., the tender inviting authority, ought to be extended the latitude to decide on its requirements."
11. Accordingly, the writ petition is dismissed, since being beyond the ambit of exercise of its powers of Judicial Review, to a tender conditions, under Article 226 of the Constitution of India.
(Sharad Kumar Sharma, J.) 24.05.2022 NR/