Bombay High Court
Alankit Assignments Limited vs Union Of India on 9 November, 2023
2023:BHC-OS:13537-DB
1 9-WPL-30013-2023-J.doc
THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 30013 OF 2023
Alankit Assignments Limited
A Company having the registered
office at 205-208 Anarkali Complex
Jhandewalan Extension, New Delhi 110 055 ... Petitioner
V/s.
Union of India
through Department of Financial Services
Ministry of Finance
3rd Floor, Jeevan Deep Building
Sansad Marg, New Delhi-110001
Life Insurance Corporation Limited
Body corporate constituted under the
Life Insurance Corporation Act, 1956
having its corporate office at Yogakshema,
JB Marg, Nariman Point Mumbai 400 021 ... Respondents
Mr. Gauraj Shah a/w Biswadeep Chakravarthy i/by Abhineet N.
Pange for Petitioner.
Mr. Ashutosh Misra for Respondent No.1.
Ms. Gathi Prakash a/w Nidhi Asher and Arushi Poddar i/by Cyril
Amarchand Mangaldas for Respondent No.2.
CORAM :DEVENDRA KUMAR UPADHYAYA, CJ. &
ARIF S. DOCTOR, J.
RESERVED ON : 07th NOVEMBER, 2023.
PRONOUNCED ON : 09th NOVEMBER, 2023.
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JUDGMENT (PER : CHIEF JUSTICE)
1. Heard Mr. Gauraj Shah, learned counsel for the Petitioner-Alankit Assignments Limited and Ms. Gathi Prakash, learned counsel representing Respondent No.2.
2. By filing this Petition under Article 226 of the Constitution of India, the Petitioner assails the Request for Proposal Document bearing reference No.LIC/BDS/RTA/2023- 24/001 dated 30th August, 2023 which has been published inviting proposals for appointment of Registrar and Share Transfer Agent (RTA) for a period of five years from 1 st December, 2023 or a later date which may be decided by Respondent No.2. The prayers made in the Writ Petition are extracted hereinbelow;
"a) That this Hon'ble Court be pleased to issue a Writ of Mandamus against the Respondents or any other Writ in the nature of the Mandamus under Article 226 of the Constitution of India or any other appropriate Writ, order or direction directing the Respondent No. 2 to withdraw the Impugned Request for Proposal (RFP) for selection of RTA bearing ref LIC/BDS/RTA/2023-24/001 dated August 30, 2023.
b) That this Hon'ble Court be pleased to issue a Writ of Certiorari against the Respondents or any other Writ in the nature of the Certiorari of the Constitution of India or any appropriate Writ, order or direction quashing and setting aside the Impugned Request for Proposal bearing ref/LIC/BDS/RTA/2023-24/001 dated August 30, 2023 and the same be declared as illegal, arbitrary and completely Shubham 2 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 :::
3 9-WPL-30013-2023-J.doc arbitrary, capricious, devoid of reasons and be quashed and set aside.
c) That pending the hearing and final disposal of the present Petition Hon'ble Court be pleased to direct the Respondent No.2, to stay the opening of bids and / or any process which may amount to acting in furtherance of the Impugned Request for Proposal bearing ref/LIC/BDS/RTA/2023-24/001 dated August 30, 2023.
d) For interim and ad-interim reliefs in the terms of prayer clause (c) above;
e) For costs
f) For such any other order as this Hon'ble Court may deem fit."
3. Learned counsel for the Petitioner has submitted that evaluation criteria as per the RFP document is such that it restricts participation of adequate number of bidders in the bid process and that it has been tailor made to suit a particular participant. It has thus been argued that the RFP document cannot be acted upon and hence the same may be quashed and a direction may be issued to Respondent No.2 to withdraw the same.
4. An RFP document bearing reference No.LIC/BDS/RTA/2023/001 dated 27th March, 2023 was published by Respondent No.2 inviting proposal for appointment of Registrar and Share Transfer Agent (RTA) for a period of five years from 17th May, 2023 or from any later date Shubham 3 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 4 9-WPL-30013-2023-J.doc as decided by Respondent No.2. It is stated by the Petitioner that the Petitioner by means of a representation dated 1 st April, 2023 objected to certain clauses of the said RFP document dated 27th March, 2023. The objection raised by the Petitioner vide its representation dated 1 st April, 2023 was in relation to the requirement of turnover of the bidder in past three years and the procedure given therein for award of marks for the purposes of evaluation of the bid. It was stated by the Petitioner in its representation that fixing such criteria for evaluation will result in participation of limited number of service providers (bidders) for the reason that service providers having average turnover of Rs.300 crore in past three years are not available and that this criteria has been fixed for favouring a particular service provider.
5. Certain other objections were also raised in the representation made by the Petitioner dated 1st April, 2023, most of which related to evaluation criteria. Objection was also raised regarding performance guarantee which as per the said tender document was 5% of the financial bid value and according to the Petitioner, performance security should not be more than 3%. Objections relating to process of tender Shubham 4 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 5 9-WPL-30013-2023-J.doc evaluation on QCBS evaluation system was also raised by stating that there is no relevance of QCBS evaluation system and that the evaluation should be based on L1 basis. The Request for Proposal dated 27th March, 2023 was however cancelled, which information was given to the Petitioner by email communication dated 10th April, 2023. After cancellation of the RFP document dated 27th March, 2023, Request for Proposal for providing the services as Share Transfer Agent was published afresh on 30th August, 2023. The Petitioner again raised certain objections, by means of a representation, to the tender conditions which was made by him on 11 th September, 2023. In the said representation as well, objections raised by the Petitioner mainly pertained to technical evaluation criteria, performance guarantee, technical and functional specifications and eligibility criteria.
6. By making the representation dated 11 th September, 2023, the Petitioner opposed the requirement of minimum 7 years experience of handling the functions of Registrar and Share Transfer Agent. In this regard it was submitted by the Petitioner that putting such a tender condition will restrict the competition as there are very limited number of service Shubham 5 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 6 9-WPL-30013-2023-J.doc providers who have the requisite experience of handling minimum two new issues of Equity Shares which has more than 2 lakhs of allottees of each issue. It was also stated that in the technical evaluation, the criteria for evaluation based on the average turnover of the bidder exclusively in the area of Share Transfer Agent in last three years should also be replaced by making a provision of slabs of turnover and also by providing that the bids be evaluated on the basis of bidder's over all turnover which shall ensure participation of potential bidders.
7. The Petitioner even went on to suggest the slabs for the purposes of awarding marks in relation to turnover in its representation dated 11th September, 2023. The Petitioner in its representation dated 11th September, 2023 also stated that technical evaluation based on number of private sector clients from top 50 listed entities will also limit the number of participants. The Petitioner also objected to evaluation based on standards such as ISO 27001, ISO 27002 and COBIT 5. The objection was also raised by the Petitioner to the criteria of number of clients having more than 25 lakhs folios for the purpose of evaluation of the bid. It was suggested by the Petitioner that bidder should have rendered services to at least Shubham 6 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 7 9-WPL-30013-2023-J.doc one Indian Public Sector bank/client with a minimum of 2 lakhs folios. The Petitioner also objected to performance bank guarantee of 10% of the total amount and instead, suggested that performance security should be 3%.
8. Thus, when we examine the representation dated 11th September, 2023 made by the Petitioner objecting to certain clauses of the RFP document, what we find is that the Petitioner by the said representation/application primarily challenged various criteria fixed by Respondent No.2 for the purpose of evaluation of the bid and has also challenged certain other conditions. In its representation dated 11 th September, 2023, the Petitioner has challenged as many as 7 conditions or criteria for the evaluation of the bid and also made certain suggestions.
9. The submission, broadly, advanced by learned counsel for the Petitioner challenging the RFP document in question is that by providing such criteria for evaluation of bids and putting such conditions in the RFP document, the Respondents have attempted to create a situation where participation of the bidders shall be limited and that the criteria Shubham 7 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 8 9-WPL-30013-2023-J.doc laid down in the document are such that it favours a particular service provider.
10. In paragraph No.4(b) of the Writ Petition, it has been stated by the Petitioner that the RFP document has been structured in a manner which overwhelmingly favours the present Share Transfer Agent, employed by the Respondent No.2 viz. Respondent No.3-Company, however, in the array of Respondents in the Writ Petition, only two Respondents have been arrayed, namely, (1) Union of India and (2) Life Insurance Corporation Limited. Thus, no company as Respondent No.3 has been arrayed in the array of Respondents.
11. It has strenuously been argued by learned counsel for the Petitioner that in case the evaluation criteria as fixed by Respondent No.2 in the RFP document is adhered to, the same will result in non-competitiveness of the bid process which cannot be said to be in public interest. It has also been urged on behalf of the Petitioner that the evaluation criteria set out by Respondent No.2 are completely arbitrary and unreasonable and further that the same do not have any rationale. Further submission of the learned counsel for the Petitioner is that the Shubham 8 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 9 9-WPL-30013-2023-J.doc evaluation criteria as set out in the RFP document does not have any nexus with the object sought to be achieved for the reason that object sought to be achieved is to select and appoint a Registrar and Share Transfer Agent, however, the functions of the Registrar and Share Transfer Agent, which on appointment the service provider concerned shall be required to discharge, has no co-relation with the evaluation criteria. It is the submission of the learned counsel for the Petitioner that the evaluation criteria as fixed in the RFP document do not contain any reasonable basis for the purpose of selection and appointment of Registrar and Share Transfer Agent. Thus, it has been prayed that the impugned RFP document be quashed.
12. Per contra, learned counsel representing Respondent No.2 has raised a preliminary objection regarding maintainability of the Writ Petition on the ground that Petitioner having participated in the bid process cannot be permitted to challenge the tender conditions or evaluation criteria available in the RFP document. She has further argued that the RFP document in question only contains terms of invitation to tender which is in the realm of contract and as such is not open to judicial scrutiny by this Court in exercise of its jurisdiction Shubham 9 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 10 9-WPL-30013-2023-J.doc under Article 226 of the Constitution of India. Arguing further it has been stated on behalf of Respondent No.2 that Petitioner is guilty of suppression of material fact inasmuch as that though the Petitioner has participated in the tender process by submitting its bid, however, this disclosure has not been made in the Writ Petition.
13. We have given our thoughtful consideration to the rival submissions made by learned counsel representing the respective parties and have also considered the documents available before us on this Writ Petition.
14. It is settled law that judicial review of contractual or tender matters under Article 226 of the Constitution of India is permissible provided there is a public law element involved. Interference in such matters is also permissible where some ulterior motive or mala fide is attributable to the authority floating the tender. In absence of any mala fide or ulterior motive or in absence of arbitrariness or unreasonableness, interference in such matters by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India has to be circumspect. The tender terms are contractual and it is the Shubham 10 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 11 9-WPL-30013-2023-J.doc privilege of the tender inviting authority and Courts do not have jurisdiction to judge as to how the tender terms would have to be framed.
15. Hon'ble Supreme Court in the case of Michigan Rubber (India) Limited Vs. State of Karnataka & Ors. 1 has clearly held that greater latitude is to be conceded to State authorities in the matters of formulating conditions of tenders and awarding contracts and that unless action of tendering authority is mala fide and is a misuse of its statutory powers, the Court would not interfere only because it feels that some other terms of the tender would have been wiser or more logical or fair. In paragraph No.23 of Michigan Rubber (India) Limited (supra), Hon'ble Supreme Court has deduced the following principles;
"(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 1 (2012) 8 SCC 216 Shubham 11 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 12 9-WPL-30013-2023-J.doc 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."
16. In view of what has been held by the Hon'ble Supreme Court in Michigan Rubber (India) Limited (supra), it is thus clear that in the matter of formulating conditions in a tender document, greater latitude is required to be given to the tendering authority. In Tata Cellular Vs. Union of India 2 it has been held by Hon'ble Supreme Court that the terms of invitation to tender cannot be open to judicial scrutiny as invitation to tender is in the realm of contract. Hon'ble Supreme Court in Directorate of Education & Ors. Vs. Educomp Datamatics Ltd. & Ors.3 has held that the Courts would not interfere with the terms of tender notices unless the condition complained of is shown to be either arbitrary or 2 (1994) 6 SCC 651 3 (2004) 4 SCC 19 Shubham 12 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 13 9-WPL-30013-2023-J.doc discriminatory or actuated by malice. The Hon'ble Supreme Court has further held in this judgment that while exercising the power of judicial review while examining the terms of the tender notice, it is not permissible for the Curt to observe or say that terms of any particular tender notice would serve the purpose which is sought to be achieved, better than the terms of the tender notice under consideration. Thus, unless and until the terms and conditions of the RFP document which are under challenge in this case are found to be arbitrary or unreasonable or discriminating, interference by this Court in this Petition would not be permissible.
17. Reference may also be made to a recent judgment of Hon'ble Supreme Court in the case of M/s. Agmatel India Pvt. Ltd. Vs. M/s. Resoursys Telecom & Ors. 4, in paragraph No.25 which is extracted hereinbelow;
"16. Further, in the recent judgment in Silppi Constructions Contractors v. Union of India (2020) 16 SCC 489], this Court held as follows: (SCC pp. 501-02, para 20) '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 4 (2022) 5 SCC 362 Shubham 13 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 14 9-WPL-30013-2023-J.doc 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.'"
18. It is to be further noticed that the Petitioner has participated in the bid and hence after participation, it is not open to the Petitioner to challenge the criteria of evaluation or any other condition of the RFP document. This view is fully supported by the judgment of a co-ordinate Bench of this Court in the case of Sai Agencies, Jalna Vs. The State of Maharashtra & Ors.5. Paragraph No.41.(2) of this judgment is relevant, which is extracted hereinbelow;
"41. (2) Validity Petitioner has challenged the validity of condition No. 3 of said Tender. Petitioner states that this condition restricts the successful bidder from getting more than one work with respect to work Nos. 1 to 9 of said tender. After examining the material on record, we find that condition No. 3 was applicable to tender Nos. 1 to 9 and those tenders were cancelled by Respondent No. 2 in its meeting dated 20th August, 2019. Thereafter, petitioner submitted tender for tender work Nos. 10 to 14. It indicates that petitioner was aware about cancellation of tender Nos. 1 to 9. The petitioner has suppressed this fact. Even otherwise, it is well settled law that a bidder who has participated in a tender cannot turn around and challenge the terms and conditions of the tender and Tender conditions are immune from judicial review."
5 2021 SCC OnLine Bom 13960 Shubham 14 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 15 9-WPL-30013-2023-J.doc
19. Having regard to the submissions made by the learned counsel for the Petitioner and also having gone through the averments made in the Writ Petition, what we find is that the Petitioner is challenging the criteria of evaluation of bid. It is not only challenging the criteria for evaluation of bid, but it has also made certain suggestions even to replace the criteria by the criteria suggested by it. In other words, the Petitioner intends to formulate the tender conditions itself. The representations made by the Petitioner, both, dated 1 st April, 2023 to the RFP document dated 27 th March, 2023 and also the one dated 11th September, 2023 objecting to RFP document dated 30th August, 2023 clearly reveal that apart from stating that putting particular criteria for evaluation of bid would result in narrowing the competition, nothing has been pointed out as to how such criteria of evaluation is arbitrary or discriminatory.
20. As already observed above, it is the tender floating authority, which has to be given latitude in formulating the tender conditions for the reason that it is the best judge of the work which it requires to be performed by the selected bidder. To evaluate the capacity and capability of the bidders to perform certain job for which the Request for Proposal has Shubham 15 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 16 9-WPL-30013-2023-J.doc been issued by Respondent No.2, in our considered opinion, has to be left to Respondent No.2 for determination.
21. As a matter of fact by filing this Writ Petition, in essence, the Petitioner has attempted to have a particular criteria for the evaluation of the bid and intends to require Respondent No.2 to set out the criteria of his liking or choice, which in our opinion, in such matters is legally not permissible. Request for Proposal is only an invitation to participate in the process on fulfillment of certain conditions and criteria, determination of which exclusively lies in the realm of contract and unless such criteria or condition is found to be manifestly arbitrary or unreasonable, this Court would not interfere in the same.
22. The contention of the Petitioner in the entire Writ Petition is that RFP document has been structured in such a manner which restricts competition and sets out arbitrary and manifestly prejudicial conditions. In this regard, we only observe that while inviting tenders for executing a particular work, the tender inviting authority is bound by the principles of fairness, non arbitrariness and reasonableness as enshrined in Shubham 16 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 17 9-WPL-30013-2023-J.doc the Article 14 of the Constitution of India, however, for setting out terms of invitation, as already discussed above, the tender issuing authority has to be given greater play. In none of the conditions or criteria for evaluation of bid as per the RFP document, there appears to be any element of unreasonableness or arbitrariness. The Petitioner has utterly failed to point out as to how putting a particular criteria for evaluation of the bid is unreasonable, except for submitting that it is causing prejudice to the Petitioner because the Petitioner is unable to fulfill the requisite criteria for evaluation or it apprehends that if its bid is evaluated on the criteria as set out in the RFP document, it may not succeed in the tender. In our considered opinion, such apprehensions cannot be a basis for terming a particular criteria of evaluation of bid or condition set out in the RFP document to be arbitrary or unreasonable.
23. As to whether bidder should have minimum 7 years of experience or less, cannot be the option of the bidder. Similarly, as to whether average turnover of the bidder in last three years should be the criteria for evaluation of bid or for such evaluation benchmarks based on evaluation of certain slabs has to be followed, can also not be the choice of the Shubham 17 of 18 ::: Uploaded on - 09/11/2023 ::: Downloaded on - 10/11/2023 10:20:03 ::: 18 9-WPL-30013-2023-J.doc bidder. Likewise, the criteria as to whether number of private sector clients should be from top 50 listed entities or there should be some other criteria, can again not be the choice of the bidder. The requirement of ISO standards can also not be the choice of the bidder. As regards the performance guarantee, whether it should be 10% of the total amount or 3% of the total amount is the prerogative and choice of the tender floating authority and not that of the bidder. Thus, from the aforesaid discussion, we find that the Petitioner has miserably failed to establish that any of the criteria for evaluation of tender or conditions of the RFP document are in any manner unreasonable or arbitray or suffer from any other irregularity or illegality so as to call of any interference by this Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India.
24. Resultantly, the Writ Petition fails which is hereby dismissed.
25. However, there be no order as to costs.
(ARIF S. DOCTOR, J.) (CHIEF JUSTICE)
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