Andhra Pradesh High Court - Amravati
M/S. Agile Security Force Private ... vs South Central Railway on 22 November, 2021
THE HON'BLE SRI JUSTICE A.V.SESHA SAI
WRIT PETITION No.10864 OF 2021
ORDER:
This Writ Petition is filed under Article 226 of the Constitution of India, with a prayer to set aside the disqualification of petitioner No.1, vide e-mail dated 10.04.2021 and for a consequential direction to the respondents to consider the technical and financial bids of the petitioners in accordance with the terms provided in Bid No.GEM/2021/B/1029182 dated 11.02.2021 issued by the Senior Divisional Material Manager (Sr. DMM), Office of the Divisional Railway Manager, South Central Railway, Vijayawada Division, Vijayawada, respondent No.2 herein.
2. The factual matrix which is relevant and germane for the purpose of the resolution of the issues in the present Writ Petition is as infra:
Petitioner No.1 is a company registered under the provisions of the Companies Act, 1956, and is engaged in the business of providing industrial security and also providing men on outsourcing basis for housekeeping and sanitation services to various governmental agencies and private entities. Petitioner No.2 is a shareholder and also the Managing Director of petitioner No.1-company and petitioner No.1-company had been providing services of comprehensive 2 mechanized cleaning of coaches at Vijayawada Coach Depot for South Central Railway since 27.03.2017 and the period of contract came to an end on 03.07.2021. Respondent No.2 herein floated fresh tender, vide Bid No.GEM/2021/B/ 1029182, dated 11.02.2021, at Government e-Market Place (GeM) portal. Petitioner No.1 participated in the tenders, vide its e-mail dated 26.02.2021 for providing services of mechanized cleaning of coaches, cleaning of depot premises, garbage collection and disposal at Coaching Depot. Vide e-
mail dated 10.04.2021 from GeM portal, it was informed that the technical evaluation of tender was complete and the result of the evaluation was uploaded on the portal and the petitioners came to know that their bid came to be disqualified on the ground that they failed to submit notarized copy of the Power of Attorney (PoA) and respondent No.3 emerged as the successful bidder and all other bids including the bid of the petitioners were disqualified.
3. In the above background, alleging infraction of fundamental rights guaranteed under Articles 14, 19(1)(g) and 21 of the Constitution of India, this Writ Petition came to be instituted.
4. After receipt of notices, counter affidavits have been filed by the respondent-railway authorities and respondent No.3 and an additional affidavit has also been filed by the writ petitioners.
35. Heard Sri Durga Bose Gandham, learned counsel for the petitioners, Smt. K.Aruna, learned Standing Counsel for the South Central Railway for respondent Nos.1 and 2 and Sri J.Ugranarasimha, learned counsel for respondent No.3, apart from perusing the entire material available on record.
6. Learned counsel for the petitioners contends that the action impugned is highly illegal, arbitrary, unreasonable, iniquitous and a patent infraction of the fundamental rights guaranteed under Articles 14, 19(1)(g) and 21 of the Constitution of India; that the petitioners already submitted a certified copy of the Board Resolution, authorizing the authorized signatory of petitioner No.1 to sign and submit the bid on their behalf; that the mere non-
submission of notarized Power of Attorney does not make the bid of petitioner No.1 technically unsound to provide required services nor the terms of the tender indicate that non-
submission of the notarized Power of Attorney would lead to disqualification of the tender of petitioner No.1; that the petitioners have been providing similar services to the respondents under the ambit of the existing contract between the parties since 2017; that the non-submission of the notarized Power of Attorney is not so critical that the technical qualification of petitioner No.1 can be overlooked;
that the non-submission of the notarized Power of Attorney 4 was only due to inadvertent oversight and unintentional and no specific format was given; that the Power of Attorney is only ancillary to the Board Resolution and the submission of the same needs to be treated as optional.
To bolster his submissions and contentions, learned counsel for the petitioners places reliance on the following judgments:
(1) MSK Projects India Limited Vs. National Highway Authority of India and others1.
(2) Poddar Steel Corporation Vs. Ganesh Engineering Works and Others2.
(3) AZZ Maintenance & Engineering Services Limited Vs. Maharashtra State Electricity Distribution Company Limited, Prakashgad, Mumbai3.
(4) Tata Cellular Vs. Union of India4.
7. Per contra, Smt. K.Aruna, learned Standing Counsel for Railways, appearing for respondent Nos.1 and 2 and Sri J.Ugranarasimha, learned counsel for respondent No.3, submit that the submission of notarized Power of Attorney is mandatory and is neither optional nor ancillary in view of Clause 13(d) of Chapter-II of the tender documents;
that though two days' time was given to the petitioners on 1 W.P. (C) 4945/2010 CM Appl. 9779/2019 and 19899/2010 dated 28.01.2019 of the Delhi High Court 2 (1991) 3 SCC 273 3 W.P. No.3859 of 2010 dated 28.07.2010 of the Bombay High Court 4 (1994) 6 SCC 651 5 10.04.2021 for submission, the petitioners failed to submit necessary documents as per the procedure; that as on the date of uploading tender documents, the Power of Attorney was not in existence and it was prepared on 12.04.2021 and the same was given to respondent Nos.1 and 2 on 13.04.2021 not through online. Eventually, it is submitted that in the absence of attribution of any mala fides, the Writ Petition cannot be entertained.
Learned counsel for respondent No.3, in order to substantiate his contentions, takes the support of the following judgments:
(1) Central Coalfields Limited & Another Vs. SLL - SML (Joint Venture Consortium) & Others5.
(2) Ramana Dayaram Shetty Vs. International Airport Authority of India and others6.
(3) C.S.R.Infratech India Private Limited Vs. The Government of Andhra Pradesh7.
(4) Directorate of Education and others Vs. Educomp Datamatics Ltd., and others8.
(5) AIR India Ltd., Vs. Cochin Int., Airport Ltd., and others9.
(6) Baxalta Bioscience India Pvt., Ltd., Vs. The State of Telangana10.5
(2016) 8 SCC 622 6 (1979) 3 SCC 389 7 (2014) 5 ALT 59 AP 8 (2004) 4 SCC 19 9 (2000) 2 SCC 617 6
8. In the above background, now, the issues which this Court is called upon to answer in the present Writ Petition are:-
(1) Whether the Respondent-Railway Authorities are justified in disqualifying petitioner No.1 from the tender process on the ground of non-production of Power of Attorney duly registered/notarized by the company (backed by the resolution of Board of Directors) in favour of the individual signing the bid on behalf of the company?
(2) Whether the present Writ Petition, filed under Article 226 of the Constitution of India, is maintainable, having regard to the facts and circumstances of the case?
9. It is absolutely not in controversy nor it is the case of the petitioners herein that along with the tender, they filed Power of Attorney. After receipt of e-mail on 10.04.2021 from the Railway Authorities, the petitioners herein addressed a letter dated 12.04.2021 in the following manner:
"To:
The Sr. DMM, Vijayawada Railway Division, Vijayawada.
Sub: Mechanized Coach Cleaning, Vijayawada - Bid in GoM - Reg.
Ref: GeM Bid No.GEM/2021/B/1029182. Sir, 10 (2017) 3 ALD 352 AP 7 Greetings from Agile Security Force Pvt Ltd.
1. We are the existing service providers of Mechanized Coach Cleaning , Vijayawada Coach Depot. Our contract will be expiring on 3rd July 2021. In the meanwhile, your offices have floated a new tender vide Bid Number. GEM/2021/B/1029182 dated 11th February 2021 ("Tender") in GeM portal. We have participated in the Tender cited above in the reference through GeM portal.
2. On Saturday, 10th April 2021 at 12:02 p.m., we have received an e-mail from the GeM portal saying that the technical evaluation of the Tender was completed and the results have been uploaded on the portal. Since, Saturday and Sunday being holidays, we have seen the email only on Monday 12th April 2021.
3. The result says that we have been disqualified in the technical evaluation and the reason shown is that "the notarized power of attorney is not enclosed". We have tried giving our representation in the GeM portal immediately, but the portal didn't show us the option of submitting our representation.
4. In this regard, we would like to bring to your offices kind attention, as below:
(a) Firstly, the Tender document does not provide any specific formate for submission of the Power of Attorney;
(b) Secondly, since no formate of the Power of Attorney was provided in the Tender document, we had along with our bid only submitted the certified copy of the Board Resolution passed by the Company. In view of the same, the non-submission of the notarized Power of Attorney is not fatal, that we should be disqualified;
(c) Thirdly, without prejudice to the above, we state that the non-submission of the notarized Power of Attorney is not so critical due to which our technical qualifications are over-looked and we stand disqualified for the same;
(d) Fourthly, the Hon'ble Supreme Court of India and various Hon'ble High Courts have 8 clearly held in a catena of judgments that aspects which are non-critical, and which would not affect the technical evaluation should be overlooked, in the interest of justice;
(e) Fifthly, Clause 2 (Evaluation of Technical Bid) of Chapter 5 of the Tender document does not even list/show/indicate that non-
submission of the notarized Power of Attorney would lead to any disqualification;
(f) Sixthly, it is humbly submitted that the non- submission of the notarized Power of Attorney was only due to oversight and not in act of deliberate show of disrespect; and
(g) Seventhly, without prejudice to the above, please find enclosed the notarized Power of Attorney.
5. Technically, we are very well-qualified as far as the work experience is concerned. We have been executing the same contract from the year 2017. We request you to kindly qualify us in the tender. Disqualifying a well experienced bidder for nor, uploading a single document is injustice.
In view of what is stated above, we kindly request you to consider the present representation and qualify us in the bid.
Thanks and Regards.
FOR AGILE SECURITY FORCE PVT. LTD.:
Authorised Signatory ENCLOSURES:
1. Duly notarized Power of Attorney."
10. For the purpose of sustaining his contention as to non-essential nature of Power of Attorney, learned counsel for the petitioners seeks to place reliance Clause 2 of Chapter-IV of the tender document, which deals with evaluation of technical bid. Clause 2.1.2 of Chapter-IV of the 9 tender documents stipulates that the bidders shall submit a declaration in the prescribed format as per Annexure-N to the effect that the submission of certificate either not properly filled in or in a format other than the prescribed format, shall lead to summary rejection of the offer.
Annexure-N to the tender document is a format for certificate to be submitted/uploaded by the tenderer along with the tender documents and the said Annexure reads as under:
"FORMATE FOR CERTIFICATE TO BE SUBMITTED/UPLOADED BY TENDERER ALONG WITH THE TENDER DOCUMENTS ................... (Name and designation)**** Appointed as the attorney/authorized signatory of the tenderer (including its constituents) M/s______________________ (hereinafter called the tenderer) for the purpose of the Tender documents for the work of ___________________________ as per the tender No._______________________ (Railway), do hereby solemnly affirm and state on the behalf of the tenderer including its constituents as under:
1. I/we the tenderer (s) am/are signing this document after carefully reading the contents.
2. I/we the tenderer (s) also accept all the conditions of the tender and have signed all the pages in confirmation thereof.
3. I/we hereby declare that I/we have downloaded the tender documents from Indian Railway website www.gov.in. I/we have verified the content of the document from the website and there is no addition, no decision or no 10 alteration to the content of the tender document. In case of any discrepancy noticed at any stage i.e. evaluation of tenders, execution of work or final payment of the contract, the master copy available with the railway Administration shall be final and binding upon me/us.
4. I/we declare and certify that I/we have not made any misleading or false representation in the forms, statement and attachments in proof of the qualification requirements.
5. I/we also understand that my/our offer will be evaluated based on the documents/credentials submitted along with the offer and same shall be binding upon me/us.
6. I/we declare that the information and documents submitted along with the tender by me/us are correct and I/we are fully responsible for the correctness of the information and documents, submitted by us.
7. I/we understand that if the certificates regarding eligibility criteria submitted by us are found to be forged/false or incorrect at any time during process for evaluation of tenders, it shall lead to forfeiture of the tender EMD besides banning of business for a period of up to five year. Further, I/we (insert name of the tender)**_____________________ and all my/our constituents understand that my/our offer shall be summarily rejected.11
8. I/we also understand that if the certificate submitted by us are found to be false/forged or incorrect at any time after the award of the contract, it will lead to termination of the contract, along with forfeiture of EMD/SD and performance guarantee besides any other action provided in the contract including banning of business for a period of up to the year.
SEALED AND
SIGNATURE OF THE
TENDERR
Place:
Dated:
** The contents in italics are only for guidance purpose. Details as appropriate are to be filled in suitably by tenderer.
Sd. DME:/BZA/SCR For & on behalf of the President of India For Agile Security Force Pvt. Ltd., V.Amarnath Managing Director."
11. It is very much candid from a reading of Clause 2 of Chapter-IV that the said Clause does not indicate that the submission of Power of Attorney is optional and not mandatory. On the other hand, as per Clause 7 of Annexure-
N, which is a declaration filed along with the tenders, the petitioners made a categoric declaration that if the certificates regarding eligibility criteria are found to be forged/false or incorrect, the tender is liable to be summarily 12 rejected. Therefore, neither Clause 2 of Chapter-IV nor Annexure-N would come to the rescue of the petitioners to sustain their stand as regards the non-essentiality of the Power of Attorney along with the tender documents.
12. In this context, it would be highly essential and appropriate to refer to Chapter-II of the tender documents which deals with Regulations for Tender and Contracts.
Clause 1.0 of Chapter-II reads as follows:
"All the clauses of GCC for service contracts-2018 shall be applicable to this contract unless and otherwise mentioned, GCC for service contracts- 2018 is available in Indian Railway Website through path: www.indianrailways.gov.in/ railwayboard>>" Directorate">> "Transformation cell">>. The General Conditions of Contract for services" (File No.2018/Trans. Cell/Mech,/Service Contracts).
It is hereby agreed that it shall be the duty of the contractor to keep himself informed of all corrections, and amendments of the said General conditions of contract made up to the date of the execution of these presents and no objection shall be taken by the contractor on the ground that he was not aware of such amendments and corrections of the said General Conditions of Contract or to any of them.
Any modifications/Amendments issued to GCC for services during the course of this 13 contract period are applicable to this contract also.
The tenderers/Contractors are advised to refer and follow GCC (Services)-2018. In case of any dispute, Special Conditions of Contract (SCC) will prevail over GCC."
13. Highly crucial and important Clause around which the entire issue in the case on hand revolves is, Clause 13(d) of Chapter-II. Clause 13.0 deals with Partnership Deeds, Power of Attorney, etc.. Admittedly, petitioner No.1 herein is a company, registered under the Companies Act, 1956, and Clause 13(d), which is relevant and pertinent, reads as follows:
"Company registered under Companies Act- 1956: The Bidder shall submit (i) the copies of MOA (Memorandum of Association) and ADA (Articles of Association) of the Company; and (ii) Power of Attorney duly registered/notarized by the company (backed by the resolution of Board of Directors) in favour of the individual, signing the Bid on behalf of the Company."
14. It is very much evident from the above Clause that the bidder, in case of company is obligated to submit Power of Attorney also backed by resolution of the Board of Directors, apart from Memorandum of Association and Articles of Association. Even, as per the check list of 14 documents, tenderer is required to file other related documents specified in the tender. As per Clause 15 of the General Conditions of the Contract, the submission of Power of Attorney is mandatory. It is also not in dispute that Power of Attorney was not in existence as on the date of uploading tender documents and was made ready only on 12.04.2021.
15. This Court, having regard to the facts and circumstances of the case and the language of the above relevant Clauses of the tender documents, finds sufficient force in the stand taken by the respondent-Railways and respondent No.3 that non-submission of crucial information relating to identification of tender is material deviation from the bid documents and is fatal to the case of the petitioners.
This Court, is of the opinion that the petitioners herein also liable to be non-suited on the said ground.
16. In this context, it would be highly appropriate to refer to the judgments cited by the learned counsel for the petitioners and the respondents.
17. In MSK Projects India Limited's case (1 supra), the Delhi High Court at paragraph Nos.27 and 28 held as follows:
"27. This Court is of the view that in the facts of the present case, the terms of the RFP were duly compliant with the RFP documents and requirement of the bid being accompanied by an additional PoA 15 along with the Board resolution was not a term of the instructions to bidders, let alone an essential term. Clearly, the decision of NHAI to reject the petitioner's bid as unresponsive is irrational and falls squarely within the limited scope of challenge available in respect of administrative decisions.
28. As observed by the Supreme Court in Central Coalfields Ltd. and Ors. Vs SLL-SML (Joint Venture Consortium) and Ors (supra), the issue of acceptance of a bid must be examined from the point of view of the employer. In this case, the only object of NHAI in including provisions for a PoA in favour of the signatory was to ensure that the bid was signed by a person duly authorised to do so. Given the wide language of the Board of Resolution furnished in favour of Ms Patel, there could be no doubt that she was duly authorised to sign the bid."
18. A reading of the above judgment reveals that in the said case, the notes to Appendix-III of the Tender document contained a condition that the production of one out of two documents, viz., Shareholders Resolution and Power of Attorney, was essential, and the bidder therein produced Shareholders Resolution, as such, the Delhi High Court held that the bidder complied with the condition completely. But, in the instant case, Clause 13(d) of Chapter-II stipulates and mandates production of both the documents, i.e., Power of Attorney and Resolution of Board of Directors, apart from Memorandum of Association and 16 Articles of Association. Therefore, the judgment of the Delhi High Court has absolutely no relevance to the present case.
19. In Poddar Steel Corporation's case (2 supra), at paragraph No.6, the Hon'ble Apex Court held like this:
"6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank the clause no. 6 of the tender notice was not obeyed literally, but the question is as to whether the said non- compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories-those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. This aspect was examined by this Court in GJ Fernandez v. State of Karnataka 7 Ors., [1990] 2 SCC 488 a case dealing with tenders. Although not in an entirely identical situation as the present one, the observations in the judgment support our view. The High Court has, in the impugned decision, relied upon Ramana Dayaram Shetty v. International 17 Airport Authority of India & Ors., [1979] 3 SCC 489 but has failed to appreciate that the reported case belonged to the first category where the strict compliance of the condition could be insisted upon. The authority in that case, by not insisting upon the requirement in the tender notice which was an essential condition of eligibility, bestowed a favour on one of the bidders, which amounted to illegal discrimination. The judgment indicates that the Court closely examined the nature of the condition which had been relaxed and its impact before answering the question whether it could have validly condoned the shortcoming in the tender in question. This part of the judgment demonstrates the difference between the two categories of the conditions discussed above. However it remains to be seen as to which of the two clauses, the present case belongs."
20. It is very much evident from a reading of the above judgment that the contingencies as contained in the above said case are not existing in the case on hand and in view of the said factual and circumstantial variation and having regard to the language in the above referred conditions, the condition of production of Power of Attorney cannot be said to be optional and it needs to be treated as mandatory.
21. In AZZ Maintenance & Engineering Services Limited's case (3 supra), at paragraph No.39, the Bombay High Court held as under:
18" 39. It is well-settled that whenever the condition of the tender document requires an act to be done in a particular manner and lays down the consequences in case of failure to comply with such requirement shall result in disqualifying such tender, such condition is an essential eligibility condition and compliance thereof is mandatory. However, substantial compliance may suffice to satisfy the requirement of ancillary conditions of tender. It is equally true that right to choose a bidder is always with an authority and the Court does not sit in appeal on the decision taken by the authority. However, if the authority exercises such power for any collateral purpose, exercise of that power can be struck down by the Court. Similarly, it is also equally well-settled that the principles of judicial review would apply to exercise of contractual powers by the Government bodies in order to prevent arbitrariness or favouritism. The decision taken by the State while accepting bids and awarding contract must be free from arbitrariness and should not be affected by bias and actuated by mala fides."
22. Condition No.13 (d) of Chapter-II, having regard to the language employed therein, by any stretch of imagination, cannot be said to be ancillary and in the considered opinion of this Court, non-submission of the Power of Attorney would lead to disqualification.
23. In Tata Cellular's case (4 supra), the Hon'ble Apex Court at paragraph No.144 held as follows:
19"144. The alternate submission is the question of even clerical error does not arise here because one month before acceptance Hutchison Max had sent the compliance form. Where the matter is purely technical the court should not exercise the power of judicial review. We find great force in this submission. We are clearly of the opinion that the mistake is in relation to a non-essential matter that is in relation to peripheral or collateral matter. There has been every intention to comply with the terms of the bid. For an accidental omission it cannot be punished. We concur with the High Court."
24. In the above judgment, the Hon'ble Apex Court also laid down certain guidelines at paragraph No.94 and the said paragraph reads as under:
" 94. The principles deducible from the above are :
(1) The modem 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, 20 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."
25. In view of the specific condition in the form of Condition 13(d) of Chapter-II and having regard to the guidelines laid down by the Hon'ble Supreme Court at paragraph No.94 of Tata Cellular's case (4 supra), the said judgment relied on by the learned counsel for the petitioners also would not render any assistance to the petitioners.
26. Coming to the judgments cited by the learned counsel for respondent No.3 -- In Central Coalfields Limited's case (5 supra), the Hon'ble Apex Court at paragraph Nos.35, 38, 43 to 49, 52, 55 and 56 held as under:
21"35. In Ramana Dayaram Shetty v. International Airport Authority of India, this Court held that the words used in a document are not superfluous or redundant but must be given some meaning and weightage:
"It is a well-settled rule of interpretation applicable alike to documents as to statutes that, save for compelling necessity, the Court should not be prompt to ascribe superfluity to the language of a document "and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use". To reject words as insensible should be the last resort of judicial interpretation, for it is an elementary rule based on common sense that no author of a formal document intended to be acted upon by the others should be presumed to use words without a meaning. The court must, as far as possible, avoid a construction which would render the words used by the author of the document meaningless and futile or reduce to silence any part of the (1979) 3 SCC 489 document and make it altogether inapplicable."
In that case, the expression "registered IInd Class hotelier" was recognized as being inapt and perhaps ungrammatical; nevertheless common sense was not offended in describing a person running a registered II grade hotel as a registered II Class hotelier. Despite this construction in its favour, respondents 4 in that case were held to be factually ineligible to participate in the bidding process.
2238. In G.J. Fernandez v. State of Karnataka, both the principles laid down in Ramana Dayaram Shetty were (1990) 2 SCC 488 reaffirmed. It was reaffirmed that the party issuing the tender (the employer) "has the right to punctiliously and rigidly" enforce the terms of the tender. If a party approaches a Court for an order restraining the employer from strict enforcement of the terms of the tender, the Court would decline to do so. It was also reaffirmed that the employer could deviate from the terms and conditions of the tender if the "changes affected all intending applicants alike and were not objectionable." Therefore, deviation from the terms and conditions is permissible so long as the level playing field is maintained and it does not result in any arbitrariness or discrimination in the Ramana Dayaram Shetty sense.
43. Continuing in the vein of accepting the inherent authority of an employer to deviate from the terms and conditions of an NIT, and re-introducing the privilege-of-participation principle and the level playing field concept, this Court laid emphasis on the decision making process, particularly in respect of a commercial contract. One of the more significant cases on the subject is the three-judge decision in Tata Cellular v. Union of India, which gave importance to the lawfulness of a decision and not its soundness. If an administrative decision, such as a (1994) 6 SCC 651 deviation in the terms of the NIT is not arbitrary, irrational, unreasonable, mala fide or biased, the Courts will not judicially review the decision taken. Similarly, the Courts will not countenance interference with the decision at the behest of an unsuccessful bidder in respect of a technical or procedural violation. This was quite clearly stated by 23 this Court (following Tata Cellular) in Jagdish Mandal v. State of Orissa, in the following words:
"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 24 years, or delay relief and (2007) 14 SCC 517 succour to thousands and millions and may increase the project cost manifold." This Court then laid down the questions that ought to be asked in such a situation. It was said:
"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."
44. On asking these questions in the present appeals, it is more than apparent that the decision taken by CCL to adhere to the terms and conditions of the NIT and the GTC was certainly not irrational in any manner whatsoever or intended to favour anyone. The decision was lawful and not unsound.
45. Rashmi Metaliks was a comparatively different case inasmuch as clause (j) of the NIT was the subject matter of consideration. This clause required a bidder to submit "Valid PAN No., VAT No., copy of acknowledgment of latest income tax return and professional tax return." The employer interpreted this to be an essential term for qualifying in the bidding 25 process. This view was upheld by a learned Single Judge and the Division Bench of the Calcutta High Court. This Court reversed in the following words:
"We think that the income tax return would have assumed the character of an essential term if one of the qualifications was either the gross income or the net income on which tax was attracted. In many cases this is a salutary stipulation, since it is indicative of the commercial standing and reliability of the tendering entity. This feature being absent, we think that the filing of the latest income tax return was a collateral term, and accordingly the Tendering Authority ought to have brought this discrepancy to the notice of the appellant Company and if even thereafter no rectification had been carried out, the position may have been appreciably different." Essentially therefore, this Court substituted its view for that of the employer who interpreted this term of the NIT to be mandatory for compliance. Rashmi Metaliks followed Poddar Steel and apparently overlooked the dictum laid down in Ramana Dayaram Shetty, G. J. Fernandez, Tata Cellular and Jagdish Mandal and must be confined to its own peculiar facts. In any event, this decision does not advance the case of any of the parties before us."
46. It is true that in Poddar Steel and in Rashmi Metaliks a distinction has been drawn by this Court between essential and ancillary and subsidiary conditions in the bid documents. A similar distinction was adverted to more recently in Bakshi Security and 26 Personnel Services Pvt. Ltd. v. Devkishan Computed Pvt. Ltd., through a reference made to Poddar Steel. In that case, this Court held a particular term of the NIT as essential (confirming the view of the employer) and also referred to the "admonition" given in Jagdish Mandal followed in Michigan Rubber (India) Limited v. State of Karnataka. Thereafter, this Court rejected the challenge to the employer's decision holding Bakshi Security and Personnel Services ineligible to participate in the tender.
47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of the NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision making process can certainly be subject to judicial review. The 2016 (7) SCALE 425 (2012) 8 SCC 216, soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision "that no responsible authority acting reasonably and in accordance with relevant law could have reached"
as held in Jagdish Mandal followed in Michigan Rubber.
48. Therefore, whether a term of the NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the 27 employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.
49. Again, looked at from the point of view of the employer if the Courts take over the decision-making function of the employer and make a distinction between essential and non-essential terms contrary to the intention of the employer and thereby re-write the arrangement, it could lead to all sorts of problems including the one that we are grappling with. For example, the GTC that we are concerned with specifically states in Clause 15.2 that "Any Bid not accompanied by an acceptable Bid Security/EMD shall be rejected by the employer as non-responsive." Surely, CCL ex facie intended this term to be mandatory, yet the High Court held that the bank guarantee in a format not prescribed by it ought to be accepted since that requirement was a non-essential term of the GTC. From the point of view of CCL the GTC has been impermissibly re-written by the High Court.
52. There is a wholesome principle that the Courts have been following for a very long time and which was articulated in Nazir Ahmad v. King Emperor, 28 namely "Where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden." There is no valid reason to give up this salutary principle or not to apply it mutatis mutandis to bid documents. This principle deserves to be applied in contractual disputes, particularly in commercial contracts or bids leading up to commercial contracts, where there is stiff competition. It must follow from the application of the principle laid down in Nazir Ahmed that if the employer prescribes a particular format of the bank guarantee to be furnished, then a bidder ought to submit the bank guarantee in that particular format only and not in any other format. However, as mentioned above, there is no AIR 1936 PC 253, inflexibility in this regard and an employer could deviate from the terms of the bid document but only within the parameters mentioned above.
55. On the basis of the available case law, we are of the view that since CCL had not relaxed or deviated from the requirement of furnishing a bank guarantee in the prescribed format, in so far as the present appeals are concerned every bidder was obliged to adhere to the prescribed format of the bank guarantee. Consequently, the failure of JVC to furnish the bank guarantee in the prescribed format was sufficient reason for CCL to reject its bid.
56. There is nothing to indicate that the process by which the decision was taken by CCL that the bank guarantee furnished by JVC ought to be rejected was flawed in any manner whatsoever. Similarly, there is nothing to indicate that the www.doingbusiness.org/ 29 rankings (World Bank Group) decision taken by CCL to reject the bank guarantee furnished by JVC and to adhere to the requirements of the NIT and the GTC was arbitrary or unreasonable or perverse in any manner whatsoever. "
27. In Ramana Dayaram Shetty's case (6 supra), the Hon'ble Apex Court at paragraph No.7 held in the following manner:
"7. ........ It is a well settled rule of interpretation applicable alike to documents as to statutes that, save for compelling necessity, the court should not be prompt to ascribe superfluity to the language of a document "and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use". To reject words as insensible should be the last resort of judicial interpretation, for it is an elementary rule based on common sense that no author of a formal document intended to be acted upon by the others should be presumed to use words without a meaning. The court must, as far as possible, avoid a construction which would render the words used by the author of the document meaningless and futile or reduce silence any part of the document and make it altogether inapplicaple."
28. In C.S.R.Infratech India Private Limited's case (7 supra), the composite High Court held at paragraph Nos.10 to 15 as follows:
30"10. Every action of the State must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes not difference whether the exercise of the power involves affection of some right or denial of some privilege. (Ramana Dayaram Shetty v. International Air Port Authority of India ). An action which is unfair or unreasonable cannot be sustained. Objective satisfaction must be the basis for an executive action. The State is required to act bona fide and not arbitrarily when its action is like to prejudicially affect the rights of others. (Bharat Petroleum Corpn. Ltd. v. Maddula Ratnavalli ). An act, uninformed by reason, is arbitrary. The rule of law contemplates governance by laws and not by humour, whim or caprice. (Ravi Yashwant Bhoir v. Collector ; Shrilekha Vidyarthi v. State of U.P. ). Article 14 of the Constitution prohibits the State or its instrumentality from arbitrarily choosing a contractor at its will and pleasure. In awarding contracts, it has to act reasonably, fairly and in public interest. At the same time, no person can claim a fundamental right to carry on business with the government or its instrumentalities. All that he can claim is that, in competing for the contract, he should not be unfairly treated and discriminated to the detriment of public interest. (Association of Registration Plates v. Union of India ). The Court can interfere if the decision making process is vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. (Air India Ltd. v. Cochin International Airport Ltd ). The basic requirement of Article 14 is 31 fairness in action by the State and non-arbitrariness, in essence and substance, is the heartbeat of fair play. Their actions are amenable to judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. In the matter of formulating conditions of a tender document, and in 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, interference by Courts is not warranted. If the State or its instrumentalities act reasonably, fairly and in public interest in awarding the contract, interference by the Court is limited. (M/s. Michigan Rubber (I) Ltd. v. State of Karnataka ).
11. The award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. Commercial transactions, of a complex nature, involve balancing and weighing of all relevant factors and a final decision is taken on an overall view of the transaction. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down 32 by them and cannot depart from them arbitrarily. Though their decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. (Air India Ltd. Vs. Cochin Int., Airport Ltd. And Others.).
12. While contractual matters are not beyond the realm of judicial review, its application is limited (Noble Resources Ltd.2; Indian Oil Corpn. Ltd. v. Amritsar Gas Service ; and LIC of India v. Escorts Ltd. ) primarily to the infirmity in the decision making process, and whether it is reasonable and rational or arbitrary and in violation of Article 14 of the Constitution of India. (Sterling Computers Ltd v. M & N Publications Ltd ). The Court does not sit as a Court of appeal, but merely reviews the manner in which the decision was made. Although the terms of the invitation to tender is not open to judicial scrutiny as it is in the contractual realm, Courts can examine the award of contract, by the Government or its agencies, to prevent arbitrariness or favouritism. (Noble Resources Ltd.2; Binny Ltd. v. V. Sadasivan ; G.B. Mahajan v. Jalgaon Municipal Council ; Directorate of Education v. Educomp Datamatics Ltd. ). There are inherent limitations in the exercise of judicial review of contractual powers as the Government must have the freedom of contract and a free- play in the joints. The duty to act fairly will vary in extent, depending upon the nature of cases to which the said principle is sought to be applied. The State has the right to refuse the 33 lowest or any other tender, provided it tries to get the best person or the best quotation, and the power to choose has not been exercised for collateral purposes or in infringement of Article 14. (Tata Cellular v. Union of India ).
13. The Court should not substitute its own decision, for the decision of an expert evaluation committee, in evaluating tenders. Often when an evaluation committee of experts is appointed to evaluate offers, the expert committee's special knowledge plays a decisive role in deciding which is the best offer. (Union of India v. Laxmi Builders, Secunderabad ; Raunaq International Ltd. v. I.V.R, Construction Ltd. ). If two views are possible, and no mala fides or arbitrariness is alleged or shown, there is little scope for interference with the view taken by the authorities in inviting tenders. (Reliance Airport Developers (P) Ltd. v. Airports Authority of India ; Siemens Public Communication Networks (P) Ltd. v. Union of India ).
14. The limited question that has to be considered in a writ petition filed by the unsuccessful tenderer is whether the authority had acted unreasonably in taking the decision to reject the tender. Before interfering in tender or contractual matters, in the exercise of its power of judicial review, the Court should pose to itself the following questions : i) Whether the process adopted or decision made by the authority is malafide or intended to favour someone or whether the process adopted or the 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 34 reached'; and ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226 of the Constitution of India. (Jagdish Mandal v. State of Orissa ; M/s. Michigan Rubber (I) Ltd.9; Himachal Pradesh Housing and Urban Development Authority v. Universal Estate; and Tejas Constructions & Infrastructure (P) Ltd. v. Municipal Council, Sendhwa ).
15. 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. The limited scope of judicial review by the High Court envisages examination of the question whether there is any material irregularity in the decision making process or whether the decision to reject the tender is irrational, unreasonable or arbitrary. If the decision relating to the award of contract is bonafide and in public interest, Courts will not 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 invoked to protect private interest at the cost of public interest or to decide contractual disputes. The tenderer or a contractor with a grievance can always seek damages in a civil court. (Jagdish Mandal21; Sterling Computers Ltd12; Tata Cellular16; Raunaq International Ltd.18; Air India Ltd.8; Association of Registration Plates7; and B.S.N. Joshi v. Nair Coal Services Ltd. ; Siemens Public Communication Networks (P) Ltd.20). "35
29. In Educomp Datamatics Ltd.'s case (8 supra), the Hon'ble Apex Court held at paragraph Nos.1, 9 and 12 as under:
"1. The core point which calls for determination in these appeals is the extent of judicial review permissible in exercise of jurisdiction under Article 226 of the Constitution to the terms of tender prescribing eligibility criteria. Whether the High Court could change the terms incorporated in the tender notice on the ground of its being inappropriate and that the objective would be better served by adopting a different eligibility criteria?
9. It is well settled now that the courts can scrutinise the award of the contracts by the government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular vs. Union of India [1994 (6) SCC 651]. After examining the entire case law the following principles have been deduced.
"94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.36
(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 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.
12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the government must have a free hand in setting the terms of the tender. It must have 37 reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide."
30. In Baxalta Bioscience India Pvt., Ltd.'s case (10 supra), the composite High Court held at paragraph Nos.5, 6, 7 and 17 as under:
"5. Learned Senior Counsel appearing for the petitioner submits that, though the petitioner could not upload the required documents online, since it supplied the balance documents within the time of verification of pre-qualifications, its bid should have been considered along with other bids, as it is a valid bid. He further submits that since the bid of the petitioner was considered for technical evaluation crossing the barrier of pre-qualification, non- consideration of the bid for price evaluation after technical evaluation is bad in law. He relied on the decisions of the Supreme Court in Poddar Steel Corporation v. Ganesh Engineering Works , B.S.N.Joshi & Sons Ltd. v. Nair Coal Services Ltd. , a decision of this Court in M/s.Cyano Pharma (P) Limited v. The State of Telangana , and a decision of the Madras High Court in Renaatus Projects Private 38 Limited v. The Tamil Nadu Police Housing Corporation Ltd. 2016 Supreme (Mad) 3787.
6. Learned Counsel for the second respondent as well as the learned Senior Counsel for the third respondent submit that in view of the specific condition in the tender document at para 1.2 that offline bids will not be accepted and bids submitted online and supported by offline documents will only be considered, the bid of the petitioner does not qualify for consideration and the petitioner cannot take advantage of consideration of the bid at the technical evaluation stage when the bid of the petitioner was ineligible even at the threshold. They relied on W.B.State Electricity Board v. Patel Engineering Co. Ltd , Jagdish Mandal v. State of Orissa and Michigan Rubber (India) Limited v. State of Karnataka .(2012) 8 SCC 216.
7. In the light of the above facts and submissions made by the learned Counsel appearing for the parties, the point that arises for consideration in the present case is whether the bid of the petitioner is qualified to be considered for evaluation along with other qualified bids, though the petitioner submitted the documents through online partially and rectified the deficiency by submitting the balance documents offline.
17. But, in this case the deficient documents were submitted offline after the stipulated date. Thus on facts, the said decision is distinguishable. The theory of prejudice has no role in deciding tender cases. The other decision relied on by the learned Counsel for the petitioner is Renaatus Projects Private Limited case (supra). In the said case the 39 Writ Petitions were filed by the tenderers whose tenders were rejected on the ground that the tender document mentioned in the check list containing 32 pages was not properly uploaded by the petitioners. The Writ Petitions were allowed by taking into consideration the difference in price quoted by the petitioners and other tenderers in the interest of the exchequer by making the following observations:"
31. In the instant case also, the Power of Attorney was not produced through online. It is very much manifest and crystal clear from a reading of the judgments cited by the learned counsel for respondent No.3 that while dealing with the issues pertaining to contracts, the Constitutional Courts are required to act with utmost care, caution and circumspection and are required to be very slow in entertaining the Writ Petitions, unless the impugned action is patently perverse, arbitrary and suffers from mala fides and involves public interest. In the considered opinion of this Court, no such contingencies are existing in the case on hand. The language employed in the conditions of the tender also does not give any scope to draw a distinction as to whether a condition is mandatory or optional, and in view of the same and having regard to the law laid down in the decisions cited by the learned counsel for respondent No.3, this Court does not find any reason to hold in favour of the 40 petitioners. Accordingly, issue No.1 is answered in favour of the respondents and against the petitioners.
32. As observed supra, since there is no element of public interest and in the absence of patent arbitrariness and the allegation of mala fides, a writ in the nature of mandamus cannot be issued by this Court under Article 226 of the Constitution of India. Therefore, on issue No.2 also, this Court is inclined to hold in favour of the respondents and against the petitioners herein and accordingly, this Court holds that the present Writ Petition is not maintainable.
33. For the aforesaid reasons, the Writ Petition is dismissed. There shall be no order as to costs of the Writ Petition.
As a sequel, interlocutory applications, if any pending in the Writ Petition, shall stand closed.
__________________ A.V.SESHA SAI, J 22.11.2021 siva 41 THE HON'BLE SRI JUSTICE A.V.SESHA SAI WRIT PETITION No.10864 OF 2021 22.11.2021 siva 42 *THE HON'BLE SRI JUSTICE A.V.SESHA SAI + WRIT PETITION No.10864 OF 2021 % 22.11.2021 # Between:
1. M/s. Agile Security Force Private Limited, 5th Floor, Uma Enclave, Road No.9, Banjara Hills, Hyderabad-500034, Through V.Amarnath, Managing Director.
And another - - - Petitioners
And
1. South Central Railway,
Represented by its General Manager,
Rail Nilayam, Hyderabad
And others --- Respondents
! Counsel for the Petitioners : Sri Durga Bose Gandham
^ Counsel for Respondents : Smt. K.Aruna
Standing Counsel for Railways
Respondent Nos.1 and 2
Sri J.Ugranarasimha
Counsel for respondent No.3
< Gist:
> Head Note:
? Cases referred:
1. W.P. (C) 4945/2010 CM Appl. 9779/2019 and 19899/2010 dated 28.01.2019 of the Delhi High Court
2. (1991) 3 SCC 273
3. W.P. No.3859 of 2010 dated 28.07.2010 of the Bombay High Court
4. (1994) 6 SCC 651
5. (2016) 8 SCC 622
6. (1979) 3 SCC 389
7. (2014) 5 ALT 59 AP
8. (2004) 4 SCC 19
9. (2000) 2 SCC 617
10. (2017) 3 ALD 352 AP This Court made the following:43