Gujarat High Court
M/S Zeel Corporation vs The Food Corporation Of India on 10 May, 2018
Bench: M.R. Shah, A.Y. Kogje
C/SCA/4689/2018 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4689 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE M.R. SHAH sd/
and
HONOURABLE MR.JUSTICE A.Y. KOGJE sd/
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1 Whether Reporters of Local Papers may be allowed to see NO
the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law as NO
to the interpretation of the Constitution of India or any
order made thereunder ?
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M/S ZEEL CORPORATION
Versus
THE FOOD CORPORATION OF INDIA
=============================================
Appearance:
MR PS CHAMPANERI(214) for the PETITIONER(s) No. 1
ASR LEGAL SERVICES LLP(9734) MR AMIT PANCHAL for the
RESPONDENT(s) No. 2
MS TEJAL A VASHI(2704) for the RESPONDENT(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE A.Y. KOGJE
Date : 10/05/2018
CAV JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. By way of this petition under Article 226 of the Constitution of India, the petitioner one of the bidder who has been found technically disqualified has prayed for an appropriate writ, direction and order to quash and set aside the impugned communication / order dated 09.03.2018, by which, the petitioner Page 1 of 28 C/SCA/4689/2018 CAV JUDGMENT has been communicated that it has been found technically disqualified. It is also further prayed for issuance of appropriate writ, direction and order directing the respondent Corporation to consider the petitioner's tender technically qualified and thereafter direct the respondent to consider petitioner's price bid for said tender notice.
2.0. The facts leading to the present Special Civil Application in nutshell are as under:
2.1. That the respondent Food Corporation of India through its General Manager, Gujarat Region Office invited online tender for appointment of H & T contractor for loading / unloading / handling and transporting of food grain and allied material etc. in and around Mehsana for a period of two years on 16.12.2017. That the petitioner submitted online tender for the said tender. That vide communication dated 09.03.2018, the petitioner has been communicated that the petitioner has found technically disqualified due to following reasons.
(1). Person signing the tender has to produce valid power of attorney as per MTF but in your case the power of attorney submitted is not valid i.e. Faulty power of attorney.
(2). Mismatch in name of the firm in partnership deed and power of attorney submitted.
2.2. Feeling aggrieved and dissatisfied with the impugned decision declaring petitioner technically disqualified for the tender Page 2 of 28 C/SCA/4689/2018 CAV JUDGMENT in question, the petitioner has preferred present Special Civil Application under Article 226 of the Constitution of India.
3.0. Shri P. S.Champaneri, learned advocate for the petitioner has submitted that impugned decision declaring the petitioner technically disqualified at a technical stage is absolutely illegal, arbitrary and perverse. It is submitted by Shri Champaneri, learned advocate for the petitioner that the petitioner has been declared technically disqualified on two grounds. It is submitted that so far as one of the ground on which the petitioner has been declared technically disqualified is "mismatch in the name of firm in partnership deed and power of attorney submitted". It is submitted that in the type copy of the instead of "Zeel" it has been typed as "Zeal". It is submitted that on the aforesaid ground i.e. on the spelling mistake, the petitioner could not have been declared disqualified at technical stage. It is submitted that therefore, the impugned decision is absolutely arbitrary and perverse which deserves to be quashed and set aside.
3.1. Now, so far as second ground on which, the petitioner has been declared disqualified at technical stage is that power of attorney submitted is not valid i.e. faulty power of attorney.
3.2. It is submitted by Shri Champaneri, learned advocate for the petitioner that considering the power of attorney produced by the petitioner, it cannot be said that the same is faulty power of Page 3 of 28 C/SCA/4689/2018 CAV JUDGMENT attorney. It is submitted that the said power of attorney is notarized and signed by both the partners of the partnership firm as well as the person / partner who was given the power of attorney who was given the power under the power of attorney. It is submitted that therefore, by no stretch of imagination, it can be said to be faulty power of attorney.
3.3. It is submitted by Shri Champaneri, learned advocate for the petitioner that as such on producing their power of attorney produced along with bid with respect to the present tender, the petitioner has been awarded contract by other region in Rajasthan where the power of attorney is not found to be faulty by another region of respondent Corporation.
3.4. It is submitted by Shri Champaneri, learned advocate for the petitioner that in response to the tender notice, three tenders were received by the respondent Corporation. It is submitted that the petitioner believes and expects that the petitioner rate is lowest one and therefore, technical bid of the petitioner has not been accepted on vague and general ground.
Making above submissions , it is requested to allow the present petition and grant the reliefs as prayed for.
4.0. Ms. Tejal Vashi, learned advocate for the respondent no.1 - Employer Food Corporation of India. An affidavit in reply is filed on behalf of the respondent Corporation opposing the present Page 4 of 28 C/SCA/4689/2018 CAV JUDGMENT petition. Ms. Vashi, learned advocate for the respondent - FCI has also taken us and drawn attention of the Court to relevant / essential clauses of the tender notice / document, more particularly, clauses 10 to 17. She has also drawn the attention of the Court to some of the essential clauses of the tender form, more particularly, Clause 5(b). It is submitted that as per the clause 5(b)
(iii) the power of attorney signed by all the partners in case of partnership concerned. It further provides that power of attorney duly signed should be scanned and uploaded. It is submitted that in the present case the power of attorney which was produced by the petitioner was found to be faulty inasmuch as (1) that all the partners have not signed the power of attorney and that the person / partner in whose favour the power has been given has not signed at the place it should have been signed and in place one of the partner who is giving the power has signed. It is submitted that the aforesaid is apparent on bare reading and / or considering the power of attorney produced by the petitioner. It is submitted that therefore, on true interpretation of the relevant terms and conditions of the tender document / tender form and as the power of attorney is found to be faulty, the bid submitted by the petitioner has been declared disqualified at technical stage.
4.1. It is further submitted by Ms. Tejal Vashi, learned advocate for the respondent FCI that after scrutiny of the documents online submitted by the petitioner, more particularly, power of attorney and partnership deed of the petitioner's firm the Technical Evaluation Committee came to the conclusion that both Page 5 of 28 C/SCA/4689/2018 CAV JUDGMENT the documents are not clear as person signing the tender has not produced the valid power of attorney as per the MTF and the power of attorney is no ambiguous that it is not clear from the said power of attorney as to who is giving power to whom and the name of the partnership firm in the power of attorney and partnership deed is differed. It is submitted that therefore, technical bid of the petitioner has not been accepted. It is submitted that the impugned decision has been taken on a due application of mind by the Technical Evaluation Committee which is neither perverse nor arbitrary nor mala fide.
4.2. It is further submitted by Ms. Tejal Vashi, learned advocate for the respondent FCI that as such there are no specific allegation of mala fide. It is submitted that the respondent Corporation conducted the whole tender process in just and fair manner.
4.3. It is further submitted by Ms. Tejal Vashi, learned advocate for the respondent FCI that as such the power of attorney was prepared and submitted by the petitioner itself which is found to be faulty, for which, the respondent Corporation is nothing to do with such mistake made by the petitioner.
4.4. It is further submitted by Ms. Tejal Vashi, learned advocate for the respondent FCI that while going through the power of attorney submitted by the petitioner, respondent Page 6 of 28 C/SCA/4689/2018 CAV JUDGMENT corporation could gather the fact that M/s. Zeel Corporation has appointed one Shri Jitendra M Maheshwari as its power of attorney holder, who represents himself as partner of the said Zeel Corporation. It is submitted that the respondent Corporation could not notice in the said power of attorney as to who is the other partner of the Zeel Corporation, who is authorizing Mr. Jitendra M Maheshwari as the power of attorney holder and if the second page of power of attorney is perused the same bears the signature and details of Mr. Rafikbhai F Meman as "the signature and name of authorized signatory being given power of attorney. It is submitted that thus the power of attorney is not clear as to who is giving power to whom and if the body of the power of attorney is seen, it curls out that M/s. Zeel Corporation is appointing Mr. Jitendra M Maheshwari as the power of attorney but in the end of power of attorney signature and name of authorized signatory being given the power of attorney changes to Shri Rafikbhai F Meman. It is further submitted that hence the power of attorney furnished by the petitioner himself is contradictory in itself and the same cannot be termed as legal clause no. 5(b)(i) & (ii)of MTF No. S & C/13(5)/2017 Mehsana, which demands to submit "a proper power of attorney" by the bidder as per clause 5(b)(ii) and clause 5(b)(iii) provides that, the POA should be signed by all partners. It is submitted that POA duly signed should be signed and uploaded. It is submitted that the POA of the petitioner firm is not signed by all partners and not even duly signed as required in MTF. It is submitted that thus, there is no arbitrariness or illegality in disqualifying the technical bid of the petitioner. It is submitted that the stamp and the signature of Mr. Jitendra M Maheshwari as a Page 7 of 28 C/SCA/4689/2018 CAV JUDGMENT partner of M/s. Zeel Corporation, which appears on each page is appended by the petitioner of the tender which is one of the requirement of MTF. It is submitted that thus, POA does not bear signatures of all partners on each page of the POA. Therefore, it is submitted that impugned decision is absolutely just and proper and in accordance to the terms and conditions of the tender document / tender form which is neither perverse nor arbitrary and / or mala fide as alleged. It is further submitted by Ms. Vashi, learned advocate for the respondent FCI that after the petitioner was declared disqualified the respondent Corporation has open price bid of the of the successful bidder who has considered and declared technically qualified on 20.03.2018 and thereafter has further issued the accepted the letter on 22.03.2018 to L1 bidder i.e. M/s. Jay Somnath Transport Company i.e. respondent no.2 herein and thereby conveying the acceptance of its rate of 84.08% ASOR. It is submitted that respondent no.2 has also deposited 50% of Security Deposit as per tender terms and conditions with FCI in its bank account on 26.03.2018. It is submitted that therefore, it is requested to dismiss the present petition.
5.0. Present petition is also opposed by Shri Amit Panchal, learned advocate for the respondent no.2 M/s. Jay Somnath Transport Company in whose favour LOA has been issued. He has supported the submission on behalf of the respondent no.1.
Making above submissions and relying upon the following decisions of the Hon'ble Supreme Court on judicial review in the contractual matter, by the High Court, it is requested to dismiss the Page 8 of 28 C/SCA/4689/2018 CAV JUDGMENT present petition.
(1). Goldstone Infratech Limited vs. State of Gujarat reported in 2018 SCC Online Guj 262. (Para 65 and 66) (2). Sam Built Well Private Limited vs. Deepak Builders and Ors reported in (2018) 2 SCC 176. (Para 10 to 12( (3). Montecarlo Limited vs. National Thermal Power Corporation Limited reported in (2016) 15 SCC 272.
(4). Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited and Another reported in (2016) 16 SCC 818. (Para 14 to 16).
(5). Master Marine Services (P) Ltd. vs. Metlalfe & Hodg Kinson (P) Ltd. and another reported in (2005) 6 SCC 138. (para 12 to 14) (6). Directorate of Education and Ors vs. Educomp Datamatics Ltd and ors reported in (2004) 4 SCC 19. (Para 9 and 12).
(7). Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Others reported in (2000) 5 SCC 287.
(8). Jagdish Mandal v. State of Orissa, reported in 2007 14 SCC
517. (9). Tata Cellular v. Union of India reported in (1994)6 SCC 651.
(10). Michigan Rubber (Ind) Limited vs. State of Karnataka and ors reported in (2012) 8 SCC 216.
(11). Bakshi Security and Personnel Service Pvt Ltd vs. Devkishan Computed Private Limited and ors reported in (2016) 8 SCC 446.
(12). Central Coalfields Ltd vs. SLLSML reported in (2016) 8 SCC Page 9 of 28 C/SCA/4689/2018 CAV JUDGMENT
622. (13). Ramana Dayaram Shetty v. International Airport Authority of India, 1979 3 SCC 489.
(14). G.J Fernandez v. State of Karnataka, reported in 1990 2 SCC
488. (15). Maa Binda Express Carrier & Anr. vs. North Eastern Frontier Railway & Ors. reported in (2014)3 SCC 760.
(16). Raunaq International Limited vs. I.V.R. Construction Ltd. and Ors. reported in (1999)1 SCC 492.
(17). Haryana Urban Development Authority and others vs. Orchid Infrastructure Developers Private Limited reported in (2017) 4 SCC 243 (18). Reliance Telecom Limited and another vs. Union of India and another reported in (2017) 4 SCC 269.
(19). Global Energy Ltd. and Another V/s. Adani Exports Ltd. and Others reported in (2005)4 SCC 435..
(20). Siemens Aktiengeselischaft and Siemens Limited V/s. Delhi Metro Rail Corporation Ltd. and Others reported in (2014)11 SCC
288. (21). Poddar Steel Corporation vs. Ganesh Engg. Works reported in (1991) 3 SCC 273.
6.0. Heard the learned advocates for the respective parties at length. At the outset, it is required to be noted that by the impugned decision respondent Food Corporation of India has Page 10 of 28 C/SCA/4689/2018 CAV JUDGMENT declared the petitioner disqualified at technical stage on the ground that (1). Person signing the tender has to produce valid power of attorney as per MTF but in your case the power of attorney submitted is not valid i.e. Faulty power of attorney; (2)Mismatch in name of the firm in partnership deed and power of attorney submitted.
6.1. Having heard the learned advocates for the respective parties, we are of the opinion that the second ground on which the petitioner has been disqualified at technical stage viz. Mismatch in the name of the firm in partnership deed and power of attorney submitted, cannot be sustained as there is typographical error in typing "Zeal" instead of "Zeel".
7.0. Now, so far as first ground on which, the petitioner has been disqualified at technical stage is concerned, on considering the power of attorney produced by the petitioner which was produced along with bid, produced at page 239, it appears and it can be seen that on the first page of the power of attorney only one partner who as such is receiving the power has signed and both the partners of the partnership firm have not signed the power of attorney. Even on the second page of the power of attorney both the partners of the partnership firm have not signed at the place given power to the power of attorney holder. It can also be seen that at the place of signature and name of power of attorney, the partner who is receiving the power has not signed and in place one of the power who is given the power has signed. Therefore, from the power of attorney it does not reflect a clear picture as to who is Page 11 of 28 C/SCA/4689/2018 CAV JUDGMENT giving the power of attorney to whom, the name mentioned in the body is different from the name of the person signing the document. As observed herein above, on the first page, the same person "J.M. Maheshwari" has signed for both the partners under their respective seals/ stamps and on the second page the power of attorney is signed by another partner "Rafikbhai F Maman" has given the power where both the partners were required to be signed. Therefore, when such power of attorney was found to be ambiguous and thereafter when considering the relevant clause of tender form and Tender Evaluation Committee has taken a conscious decision, it cannot be said that such decision is arbitrary and / or perverse. Due care ought to have been taken by the petitioner to produce the unambiguous power of attorney. At this stage, it is required to be noted that in earlier contracts for the year 2012 to 2015, the petitioner had produced the unambiguous power of attorney which is evident from additional affidavit in reply filed on behalf of the respondent Corporation. However, so far as present tender is concerned, the petitioner has produced another power of attorney, which as observed herein above is found to ambiguous and lacks clarity. It is also required to be noted that in the further affidavit in reply on behalf of the respondent no.2, it is specifically submitted that the petitioner submitted power of attorney in their bid for same H & T work at FSD Alwar, FCI, Rajasthan, which came to be rejected. It is further submitted that tender process at FSD Alwar came up for retendering as all the tender bids are rejected. It is further stated that when same tender was up for retendering the petitioner rectified his mistakes and submitted a new power of attorney through which he got selected.
Page 12 of 28 C/SCA/4689/2018 CAV JUDGMENTThe aforesaid is not countered and denied by the petitioner by filing any surrejoinder.
7.1. At this stage, the relevant and essential clauses of the tender document / tender form are required to be referred to and considered. The relevant clauses are as under:
"10. In case of failure to comply with any of the requirements, the technical bid will be summarily rejected.
12. The price bids of only TECHNICALLY QUALIFIED tenderers shall be opened on the date, time and place of which notice will be given to them.
14. The tenderers should comply with all the instructions/ terms / conditions mentioned in the tender form.
15. The General Manager ( Gujarat) reserves all the rights to accept or reject any or all tenders without assigning any reasons.
16. The bidder / tenderers are required to go through the detailed tender terms and conditions, carefully before submitting the tender online on eprocure.gov.in . It will be understood that the bidder is well aware of all the terms and conditions before submitting the tender.
17. The tenderers should comply with all the instructions/terms/ conditions mentioned in the tender form. Tenderers are also advised to fill up all the particulars / information in the relevant column of tender form such as volume of work performed, names of the partners etc. Merely writing remarks such as "as per sheet/ documents enclosed" in the tender form will make the tender liable for rejection."
Clause 5 of the instructions for submitting the tender, more particularly, clause 5(b)(iii), reads as under:
"The Power of Attorney should be signed by all the Page 13 of 28 C/SCA/4689/2018 CAV JUDGMENT partners in the case of a partnership concern, by the proprietor in the case of proprietary concern, and by the person who by his signature can bind the company in the case of a limited company. The Power of Attorney duly signed should be scanned & uploaded."
7.2. Considering the aforesaid relevant clause and considering the Power of Attorney produced which is found to be ambiguous and not clear thereafter when Technical Evaluation Committee has taken a conscious decision, same cannot be said to be either arbitrary and / or perverse. At this stage, it is required to be noted that as such there are no specific allegations of mala fide alleged in the petition. It is alleged that as the petitioner believes that the petitioner is L1 and therefore, petitioner has been declared disqualified at technical stage is concerned, the same cannot be said to be specific allegation of mala fide. There is no basis for the petitioner to make such allegation. Such allegations are too vague and on the basis of assumption that the petitioner believes that the petitioner is L1. At the time when the impugned decision was taken, the price bid of the successful bidders who were declared successful at technical stage were not opened.
7.3. Therefore, the impugned decision as such cannot be said to be arbitrary and / or perverse that no prudent person would take such decision. At this stage, few decisions of the Hon'ble Supreme Court on judicial review by the High Court in contractual matter are required to be referred to.
7.4. In the case of Educomp Datamatics Ltd. & Ors [(2004) 4 SCC 19], the Hon'ble Supreme Court has observed and held that terms of initiation to tender are not open to judicial scrutiny, the Page 14 of 28 C/SCA/4689/2018 CAV JUDGMENT same being in the realm of contract. It is observed that the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. It is further observed that the Court can scrutinize the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favoritism. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. It is further observed and held that 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. While observing that in 9 , the Hon'ble Supreme Court has observed and held as under:
9. It is well settled now that the courts can scrutinize the award of the contracts by the government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular vs. Union of India [1994 (6) SCC 651].
After examining the entire case law the following principles have been deduced.
94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a Page 15 of 28 C/SCA/4689/2018 CAV JUDGMENT 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 7.5. In the case of Central Coalfields Limited and Ors. (Supra), the Hon'ble Supreme Court after considering the host of decisions, has observed and held that the decision making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with. It is observed and held that interference is permissible only if the decision making process is mala fide or is intended to favour someone. It is further observed that similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that Page 16 of 28 C/SCA/4689/2018 CAV JUDGMENT the decision is one which no responsible authority acting reasonably and in accordance with law could have reached. It is further observed that in other words, the decision making process or the decision should be perverse and not merely faulty or incorrect or erroneous. In the aforesaid decision, the Hon'ble Supreme Court has considered its earlier decision in the case reported in (1989) 3 SCC 293 as well as decision in the case reported in (1994) 6 SCC 651 as well as in the case of (2007) 4 SCC 517. After considering the aforesaid decisions, the Hon'ble Supreme Court has went a step further and has held that the decision if challenged, the Constitutional Court can interfere if the decision is perverse. However, the Constitutional Courts are expected to exercise restrain in interfering with the administrative decision and ought not to substitute its view for that of the administrative authority. Similar view has been taken by the Hon'ble Supreme Court in the case of Afcons Infrastructure Ltd (Supra).
7.6. In the case of Central Coalfields Limited (Supra), the Hon'ble Supreme Court has further observed and held that the Court, 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 document and make it altogether inapplicable. It is further observed and held that whether a term is essential or not is a decision taken by the employer, which should be respected and soundness of that decision cannot be questioned by Court. It is further observed in the case of Central Coalfields Limited (Supra) that it is well settled rule of interpretation Page 17 of 28 C/SCA/4689/2018 CAV JUDGMENT 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. It is further observed that 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. Even in the case of Michigan Rubber (India) Limited (Supra), the decision which has been relied upon by the learned counsel for the petitioner, the Hon'ble Supreme Court has observed that the Court cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical.
7.7. In the case of G.J Fernandez v. State of Karnataka, 1990 2 SCC 488, after reaffirmed the principles laid down by the Hon'ble Supreme Court in the case of Ramana Dayaram Shetty v. International Airport Authority of India, 1979 3 SCC 489, the Hon'ble Supreme Court has reaffirmed that party issuing the tender (the employer) "has the right to punctiliously and rigidly"
enforce the terms of the tender. It is further observed that 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. In the case of Central Coalfields Limited and Ors. (Supra) in para 43, 47, 48, 49 and 52, the Hon'ble Supreme Court has observed and held as under:Page 18 of 28 C/SCA/4689/2018 CAV JUDGMENT
43. Continuing in the vein of accepting the inherent authority of an employer to deviate from the terms and conditions of an NIT, and reintroducing 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, 1994 6 SCC 651 which gave importance to the lawfulness of a decision and not its soundness. If an administrative decision, such as a 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 this Court (following Tata Cellular) in Jagdish Mandal v. State of Orissa, 2007 14 SCC 517 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 Page 19 of 28 C/SCA/4689/2018 CAV JUDGMENT 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 succor 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."
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 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 employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential Page 20 of 28 C/SCA/4689/2018 CAV JUDGMENT bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.
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 if the employer and thereby rewrite he arrangement, it could lead to all sorts of problems including the one that were 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 rewritten 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 Ahmed v. King Emperor, 1936 AIR(PC) 253 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 Page 21 of 28 C/SCA/4689/2018 CAV JUDGMENT other format. However, as mentioned above, there is no inflexibility in this regard and an employer could deviate from the terms of the bid document but only within the parameters mentioned above.
7.8. In the case of Tata Cellular (Supra), the Honble Supreme Court in para 94 has observed and held as under:
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 s 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 subsisting its own decision, without the necessary expertise which itself may be fallible.
[4] The terms of the invitation of 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 quasiadministrative 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.
7.9. The Honble Apex Court in the case of Jagdish Mandal vs. State of Orissa and others reported in (2007)14 SCC 517 (Two Judges), reiterated the aforesaid principles by stating that before Page 22 of 28 C/SCA/4689/2018 CAV JUDGMENT interfering in a tender and contractual matter, in exercise of its power of judicial review, Court should pose itself the following question:
(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 answer is in the negative, there should be no interference under Article 226. Most recently the Honble Supreme Court in the case of Central Coalfields Limited (Supra), observed that: If an administrative decision, such as a 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 .
7.10. In case of Siemens Aktiengeselischaft and Siemens Limited V/s. Delhi Metro Rail Corporation Ltd. and Others reported in (2014)11 SCC 288, the Honble Supreme Court relying upon the decision in the case of Tata Cellular (Supra), observed as under:
23. There is no gainsaying that in any challenge to the award of contact before the High Court and so also before this Court what is to be examined is the legality and regularity of the process leading to award of contract. What the Court has to constantly keep in mind is that it does not sit in appeal over the soundness of the decision. The Court can only examine whether the Page 23 of 28 C/SCA/4689/2018 CAV JUDGMENT decision making process was fair, reasonable and transparent. In cases involving award of contracts, the Court ought to exercise judicial restraint where the decision is bonafide with no perceptible injury to public interest.
7.11. In the case of B.S.N. Joshi and Sons Ltd. v. Nair Coal Services Ltd. (2006) 11 SCC 548, this Court while summarising the scope of judicial review and the interference of superior courts in the matter of award of contracts, observed thus:
66.We are also not shutting our eyestowards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarised as under:
(I)if there are essential conditions, the same must be adhered to;
(ii)if there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully;
(iii)if, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing;
(iv) the parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance with another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction;
(v)when a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found thatsuccessful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may Page 24 of 28 C/SCA/4689/2018 CAV JUDGMENT not ordinarily be interfered with;
(vi) the contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority;
(vii) where a decision has been taken purely on public interest, the court ordinarily should exercise judicial restraint."
7.12. In the case of Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. and Ors. (2016) 16 SCC 818, as hereunder:
"15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given."
8.0. Considering the aforesaid decisions of the Hon'ble Supreme Court and the decisions which are relied upon by the learned counsel for the respondent no.2 herein on the scope of judicial review by the High Court in the contractual matter it emerges as under:
8.1. The modern trend points to judicial restraint in administrative action. The Court does not sit as a Court of Appeal but merely reviews the manner in which the decision wasmade. The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted, it will be Page 25 of 28 C/SCA/4689/2018 CAV JUDGMENT substituting its own decision without the necessary expertise which itself may be fallible. 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 a quasiadministrative sphere. However, the decision must not only be tested by the application of the Wednesbury principle of reasonableness, but must also be free from arbitrariness and not affected by bias or actuated by mala fides.
The judicial review of administrative action is intended to prevent arbitrariness. The purpose of judicial review of administrative action is to check whether the choice or decision is made lawfully and not to check whether the choice or decision is sound. If the process adopted or decision made by the authority is not mala fide and not intended to favour someone; if the process adopted or decision made is neither so arbitrary nor irrational that under the facts of the case it can be concluded that no responsible authority acting reasonably and in accordance with relevant law could have reached such a decision; and if the public interest is not affected, there should be no interference under Article 226.
It is well settled that the award of contract, whether it is by a private party or by a public body or by the State, is essentially a commercial transaction. In arriving at a commercial decision, the considerations which are of paramount importance are commercial considerations. These would include, inter alia, the price at which the party is willing to work; whether the goods or services offered are of the requisite specifications; and whether the person tendering the bid has the ability to deliver the goods or services as Page 26 of 28 C/SCA/4689/2018 CAV JUDGMENT per the specifications. It is also by now well settled that the authorities/State can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. The State, its corporations, instrumentalities and agencies have a public duty to be fair to all concerned. Even when some defect is found in the decisionmaking process, the Court must exercise its discretionary power under Article 226 with great caution and should exercise them only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere.
9.0. Applying the law laid down by the Hon'ble Supreme Court in the aforesaid decisions to the facts of the case on hand and the ground no.1, on which, the petitioner has been disqualified at technical stage, it cannot be said that such a decision is arbitrary and / or perverse and / or so arbitrary that no prudent person would take such a decision. While disqualifying the petitioner at technical stage on non fulfillment of certain terms and conditions and having found that there is no clarity in the power of attorney and that the power of attorney is ambiguous, it cannot be said that such a decision warrants interference of this Court in exercise of powers under Article 226 of the Constitution of India. As observed herein above, neither there are any specific allegation of mala fide Page 27 of 28 C/SCA/4689/2018 CAV JUDGMENT nor any allegation of favoritism made. The decision seems to be absolute bona fide and on true interpretation of the relevant essential terms and conditions of the tender document / tender form. Under the circumstances, we are of the opinion that in the facts and circumstances of the case, the interference of this Court in exercise of power under Article 226 of the Constitution of India is not called for.
10.0. In view of the above and for the reasons stated above, present petition fail and same deserve to be dismissed and is accordingly dismissed. Rule discharged sd/ (M.R. SHAH, J) sd/ (A.Y. KOGJE, J) KAUSHIK J. RATHOD Page 28 of 28