Calcutta High Court (Appellete Side)
Bharat Sanchar Nigam Ltd. & Ors vs Kec International Ltd. & Ors on 15 September, 2009
Author: Surinder Singh Nijjar
Bench: Surinder Singh Nijjar
In the High Court at Calcutta
Civil Appellate Jurisdiction
Appellate Side
Presents :
Hon'ble Mr. Surinder Singh Nijjar, Chief Justice
And
Hon'ble Mr. Justice Biswanath Somadder
MAT No. 710 of 2009
CAN No. 6840 of 2009
Bharat Sanchar Nigam Ltd. & Ors.
Versus
KEC International Ltd. & Ors.
For the Appellants : Mr. Pratap Kumar Chatterjee,
Mr. Aniruddha Roy,
Mr. Anil Kumar Gupta,
For Respdt. No. 1 & 2 : Mr. Anindya Mitra,
Mr. Abhijit Chatterjee,
Mr. O.P.Jhunjhunwalla,
Mr. Anirban Roy
For Respdt. No. 3 : Mr. Dipankar Prasad Gupta,
Mr. Jayanta Kumar Mitra,
Mr. Ranjan Bachawat,
Mr. Sandeep Narain,
Ms. U.S.Menon,
Mr. Rajeev Kumar Jain,
Mr. Sayan Roychowdhury.
Heard on : 10.8.2009
Judgment on : 15.09.2009
Surinder Singh Nijjar, C.J : This appeal has been filed by Bharat Sanchar
Nigam Ltd. (hereinafter referred to as the BSNL) against the judgment and order
dated July 8, 2009 passed by Justice Sanjib Banerjee in W.P. No. 9770(w) of
2009. There is no dispute that the appellant is a Government Company and is
engaged in running, maintaining, developing the modernization and widening of
the telecommunication system of the country.
On May 1, 2008, the appellant issued a notice inviting tenders (hereinafter
referred to as NIT) which envisaged planning, designing, engineering, supply,
installation, testing, commissioning and annual maintenance contract for 18
million lines of GSM/UMTS R6 equipments in four parts of BSNL network. The
NIT is in four parts which are as follows:
i) Part 1 = covers planning, engineering, supply, installation, testing
and commissioning of GSM based cellular network together with
3GPP R4 Core, IMS, IN and VAS.
ii) Part 2 = covers the planning, engineering of 3G network and
MBMS.
iii) Part 3 = covers supply, installation, testing and commissioning of
infrastructure and associated items for radio sites.
iv) Part 4 = covers the OSS/BSS.
The value of work awarded under the NIT is about Rs. 8000 crores.
The dispute herein relates to Part 3 of the NIT in the Eastern Zone. In response
to the NIT, the following five intending bidders submitted their offers which are as
follows:-
"i) KEC International Ltd. (KEC for short), writ petitioner no. 1.
ii) ACME Tele Power Ltd. (ACME for short), the
respondent no. 3 herein.
iii) Aster Teleservices Ltd.,
iv)Nextera Telecom Pvt. Ltd.,
v)GTL Ltd."
A pre-bid conference with the aforesaid bidders took place on 27th/28th June, 2008. The queries raised by the bidders and the clarifications given by the appellants are recorded in the proceedings of the aforesaid meeting. By virtue of clause 5 of Section II of the tender documents, the clarifications became part of the tender document. The bidders including KEC accepted the same without raising any objection. One of the essential components under the subject tender is Engine Alternators. Initially, the tender terms specified that the Engine Alternators should be of Air cooled specification. Accordingly, the schedule of requirement was prepared containing the Air Cooled engines only. During the pre-bid conference, some of the bidders suggested that since the work under the tender is huge in nature, if only Air Cooled Engine Alternators are necessarily to be supplies, the cost of the Project as well as the offer under the tender would become exorbitant. The bidders, therefore, suggested procurement of Water Cooled Engine Alternators in place of the Air Cooled Engine Alternators. Considering the aforesaid suggestions, the appellants agreed to modify/amend the Schedule of Requirement (SOR) making provision for Water Cooled Engine Alternators as well as Air Cooled Engine Alternators. Therefore, on 5.9.2008, the appellants issued Addendum no. 4 in continuation of its earlier Addendum/amendments and made an amendment of the tender conditions in partial modification of clause 4.7.2 of the Detailed Technical Requirement (hereinafter referred to as the DTR) of Part 3 of the tender. Related clarification was issued to the extent that Water Cooled Engine Alternators can also be supplied alongwith the Air Cooled Engine Alternators in the ratio of 30:70 respectively. According to the appellants, apart from the aforesaid amendment to clause 4.7.2, there was no restriction imposed on the bidders who were prepared to supply Air Cooled Engine Alternators for the entire tendered quantity. Subsequently, the appellants issued a further Addendum being Addendum 4.2 on 6.9.2008 (revised SOR) for the tender. According to the appellants, the revised consolidated SOR was formulated under Addendum 4.2 to avoid any further complication or confusion.
The tender process consisted of a two-tier system, namely, Techno Commercial Bid and Priced Financial Bid. Tender Opening Committee opened the Techno Commercial Bids on 10.9.2008 submitted by the five bidders. At that stage, one participant, namely, Nextera Telecom Pvt. Ltd. became disqualified. The other four bidders were found to be qualified in the Techno Commercial Bid. This bid was opened in the presence of the representatives of the bidders. None of the bidders raised any objection. The minutes were duly signed by their representatives at the time of opening of the bids. The Priced Financial Bid of the Techno Commercially responsive bids were opened on 28th February, 2009. Again, none of the bidders raised any objection. After the opening of the Priced Financial Bids and in the course of evaluation by the Evaluation Committee of BSNL, it was discovered that KEC did not quote anything on account of spares relating to Annual Maintenance Contract (hereinafter referred to as AMC). According to the appellants, in terms of Serial no. 19 of the SOR read with clause 2.4 of the AMC (MC-II) of the tender, an obligation was cast upon the bidders to submit a list of spares required alongwith the bid. The cost of the spares was also to be quoted in the price schedules. At the pre-bid conference, the bidders had also been informed that the price of the spares will not be part of the Price Bid evaluation. This clarification was duly accepted by the bidders including KEC. At the time of evaluation, it was also seen that the Priced Financial Bid of ACME quoted the price on account of the spares in terms of the tender documents.
The figures quoted by both the parties as noted in the affidavit of the appellant filed before the Learned Single Judge at the time of hearing of the writ petition are as under :-
"3. ... ... .... .... ... ... ... ... ... ... ... ... ... ...
"(u) During evaluation of the Priced Financial Bid, it was found that the petitioners' total quoted price including annual maintenance contract for all the three phases was Rs.8442,08,22,686/- whereas the gross price quoted by the respondent No. 4 for all the three phases was of Rs.8512,38,12,353/-.
(v) The gross price quoted by the petitioner for all the three phases put together without AMC is Rs.5202,58,74,641/- whereas the gross price quoted by the respondent No. 4 was Rs.5247,46,92,353/-. (w) After evaluation, the gross price without AMC and spares for the petitioner was Rs.5203,55,44,214/- whereas that of the respondent No.
4 was Rs.5123,61,26,720/-. It is, therefore, clear that the quotation made by the respondent No. 4 decreased by the spare price amounting to Rs.135,76,61,769/- as submitted by the respondent No. 4 as against the absence of any quotation by the petitioner for the spares. I further say that after detailed evaluation in compliance of Clause 46.2 of the tender condition, the total evaluated price for the petitioner was Rs.50490393037/- as against that of the respondent No. 4 of Rs.50205833517/-. In view of the aforesaid, the respondent No. 4 emerges to be the L-1 bidder whereas, the petitioner emerges to be the L-2 bidder ..."
From the above, it becomes apparent that the gross price quoted for all the three parts without AMC by KEC is Rs. 5202,58,74,641/- whereas the price quoted by ACME is Rs. 5247,46,92,353/-. After evaluation the gross price without AMC and spares for BSNL was Rs. 5203,55,44,214/- whereas that of KEC was Rs. 5123,61,26,720/-. It would appear that the quotation made by ACME decreased by the spare price amounting to Rs. 135,76,61,769/- as against the absence of any quotation by KEC for the spares. Therefore, after detailed evaluation in compliance of clause 46.2 (VII) of the SCC of the tender conditions, total evaluation price for KEC was Rs. 5049,03,93,037/- as against that of ACME of Rs. 5020,58,83,3517/-. Consequently, ACME was declared to be L-1 bidder whereas KEC was declared to be L-2 bidder. The appellants claimed that the entire tender process had been conducted bona fide by maintaining utmost transparency. At every stage, the bidders had the opportunity to participate in the tender process. No objection was raised by KEC at any time with regard to the conduct of the tender process.
Being dissatisfied with the aforesaid evaluation process, KEC filed writ petition being W.P. No. 9770(w) of 2009 on 10.6.2009 claiming the following reliefs :-
"a) A writ or in the nature of Mandamus or appropriate directions do issue commanding and directing the respondent to with draw, recall and cancel the detailed evaluation carried out by the respondent as stated in the letter no.
CTD/IMPCS/Tender/Phase-VI/2008-09 dated 8th May, 2009 being Annexure 'P-6' hereto and to forbear from giving any effect thereto or acting in terms thereof;
b) A writ of or in the nature of a prohibition or appropriate directions do issue prohibiting the respondent from taking any steps pursuant thereto or acting in terms pursuant thereto or acting in terms thereof to the said letter dated 8th May, 2009 included in Annexure 'P-6' hereto;
c) A writ of or in the nature of Certiorari or appropriate directions do issue calling upon the respondents to certify and send up to this Hon'ble Court the records relating to evaluation of the Notice inviting Tender No. CTD/IMPCS/Tender/Phase-VI/08-09 (Part-III) dated 1st May, 2008 issued by Bharat Sanchar Nigam Limited, Kolkata and issuance of the impugned communication dated 8th May, 2009 (Annexure P-6 hereto) so that the same may be quashed and conscionable justice rendered;
d) An appropriate Writ, Order or Direction do issue for production of all relevant records and for protection of all the rights of your petitioners and for granting your petitioners such reliefs as in the circumstances of the case shall be just;
e) Rule NISI in terms of prayers (a) to (d) above;
f) If the respondent fails to show sufficient cause or shown
insufficient cause, the Rule NISI be made absolute;
g) Injunction restraining the respondent and each of them,
their servants, agents and/or assigns from making any further evaluation and/or negotiation with regard to the Tender no. CTD/IMPCS/Tender/Phase-VI/08-09 (Part- III) dated 1st May, 2008 and/or from taking any steps pursuant thereto or acting in terms thereof;
h) Ex-parte ad-interim orders be issued in terms of Prayer (g) above;
i) Suitable order as to costs be given;
j) Such further or other order or orders be passed and/or
direction or directions be given as this Hon'ble Court may deem fit and proper."
The writ petition was moved on 10.6.2009 and the Learned Single Judge was pleased to pass an interim order on 12.6.2009 restraining the appellant authority from issuing any work order to ACME. The interim order was extended by the Learned Single Judge on 19.6.2009. Upon completion of the pleadings and after hearing the parties, the Learned Single Judge by judgment and order dated 8.7.2009, allowed the writ petition. A writ in the nature of mandamus has been issued cancelling the evaluation of the bids conducted by the appellant with the direction to re-assess the bid by treating the SOR published under the Addendum 4.2 as the applicable list of materials and quantities thereof.
Being aggrieved and dissatisfied with the aforesaid judgment, BSNL has filed this present Letters Patent Appeal.
We have proceeded to hear the appeal, in view of the claimed urgency of the matter. It is submitted by Mr. Pratap Chatterjee, learned counsel appearing for BSNL, that the tender process involves, "planning, engineering, supply, installation, testing and commissioning of infrastructure for 18 million lines of cellular Mobile expansion Project Phase-VI in East Zone". By the impugned judgment and order, the entire development of the telecommunication system in East India has come to a standstill. Therefore, in order to avoid repeated hearings, we have proceeded to decide the appeal on merits, rather than to take up just the application for interim relief for consideration.
The submissions made before the Learned Single Judge have been reiterated before us. It is submitted by Mr. Pratap Chatterjee, the learned senior counsel for BSNL and Mr. Dipankar Gupta, the learned senior counsel for ACME that by issuing the Addendum no. 4.2 dated 6.9.2008, BSNL has merely issued a revised consolidated SOR. This included partial modifications and revisions already made of SOR in respect of Engine Alternators by Addendum no. 4 dated 5.9.2008. The Engine Alternators were reflected at Serial nos. 13 to 35 to the revised SOR. This could not be said to be a further amendment to the amendments already made by Addendum no. 4 dated 5.9.2008. According to BSNL, the Learned Single Judge failed to appreciate that in view of clause 1 of Section IV of Special Conditions of Contract (SCC for short) of which DTR containing clause 4.7.2 was an annexure, it would only supplement the provisions of Sections I, II and III. It was also provided that wherever there was a conflict, the provisions of Section IV would prevail over those in GRS and Sections I, II & III. Sections V and XII of the tender document contain various requirements and formats only. Section IV would also prevail over Section V which contained the SOR and its amendments by Addendum 4.2 dated 6.9.2008. Clause 4.7.2 of the DTR originally stipulated provision of 100% Engine Alternators of Air Cooled type only. By virtue of Addendum no. 4 dated 5.9.2008, it provided that in addition of 100% Air Cooled Engine Alternators, the bidders could also supply Water Cooled Engine Alternators and Air Cooled Engine Alternators in the ratio of 30:70 respectively. This provision for supply of Water Cooled Engine Alternators to a maximum of 30% of the required quantity would be in addition to and not in exclusion of the option to the bidders to supply 100% Air Cooled Engine Alternators, as originally stipulated under clause 4.7.2. It is further submitted that SOR attached to Addendum no. 4.2 dated 6.9.2008 could not prevail over the original clause of 4.7.2. The Learned Single Judge erred in concluding that if the second amendment was only to reiterate the earlier position reflected in the SOR attached to Addendum no. 4 dated 5.9.2008, it would not be required. According to the learned counsel, the correct interpretation of the clause would be that the requirement of the 100% Air Cooled Engine Alternators as originally required was modified by giving an option to the bidders to supply Engine Alternators of water cool and air cool type in the ratio of 30:70 respectively.
The learned counsel further submitted that the supply of spares was an essential component of the price evaluation. Therefore, it had to be mentioned, though it would not be included in the price. This clarification was duly given and is reflected in the official documents. Even though the writ petitioner (KEC) did not quote any price for the spares, it was not held to be disqualified. Therefore, neither the bona fides of BSNL can be doubted; nor can the decision to declare ACME as L-1 be termed arbitrary. According to the learned senior counsel, KEC has miserably failed to make out a case of discrimination. Therefore, no relief could be granted to KEC.
On the other hand, Mr. Anindya Mitra, learned counsel appearing for KEC, submitted that the grievance of KEC was repeatedly brought to the notice of BSNL. However, BSNL brushed it aside, without any application of mind. Learned counsel relied upon the communications between the parties, on the issue involved. Reference is first made to a letter dated May 1, 2009. Paragraph 6 of this letter is reproduced hereunder :-
"6. However, it appears that the line items of SoR Addendum 4.2 dated 06/09/2008 (Revised SoR) for which M/S ACME Tele Power Ltd. has not quoted any price have not been loaded by the highest price quoted by any other bidder as per sub clause 46.2(vii)(a). We believe that the application of procedures as mentioned in Para 46 in respect of M/s ACME would have resulted in its bid being higher than KEC International Ltd. in the zone."
It is submitted that KEC confirmed its understanding of Addendum no. 4.2 at the earliest available opportunity and put BSNL on notice. Whether it was because BSNL did not wish to engage in greater detail with a less successful bidder or BSNL altogether missed the point, it dealt with such assertion in the following manner in the letter of May 8, 2009 which is as follows :-
"Para-6: As bid conditions have been fulfilled by M/s. ACME, no loading has been necessitated."
After receipt of this letter, KEC confirmed its understanding of Addendum No. 4.2 on 11.05.09, and on 14.05.09. Learned counsel relies on the following lines, in the two letters :-
"Letter dated May 11, 2009:
"3. The opening narrative of Addendum 4.2 dated 06.09.2008 thus makes it mandatory on the part of the bidder to quote the prices as per the given SCHEDULE OF REQUIREMENT (PART-I), Section-V and hardly leaves room for further interpretations or reference to earlier related addendums issued by the BSNL, at the time of financial evaluation."
Letter dated May 14, 2009:
"10. It appears that CET deloaded the prices of the spares from the ACME Telepower Ltd and did not load the line items of SoR Addendum 4.2 dated 06/09/2008 (Revised SoR) for which M/S ACME Tele Power Ltd. had not quoted any price. The items for which ACME Telepower were to be loaded by the highest price quoted by any other bidder as per sub Clause 46.2(vii)(a) Section-IV SCC. ..."
This plea was reiterated by KEC in paragraphs 12 and 19 of the writ petition as follows :-
"12. BSNL thereafter issued a further Addendum bearing No. Addendum 4.2 dated 6th September, 2008 stating therein that there were a lot of queries regarding the items and quantities in the Schedule of Requirements for Part 3 of the said tender and issued a revised consolidated schedule of requirements for Part 3. The said revised Schedule of Requirements, inter alia, incorporated the modifications prescribed by Addendum No. 4 dated 5th September, 2008. It is pertinent to note that with the said modification bidders had to mandatorily submit the price schedule for the price bid under Part VII of the tender document by including all the items of the consolidated schedule of requirements relating to water cooled engine alternator as well as the original tender requirement of air cooled engine alternator. Copy of Addendum 4.2 to the tender document dated 6th September, 2008 is annexed hereto and marked as ANNEXURE "P-4"."
"19. Further and in any event, the failure of the Respondent No. 4 to quote any prices for supply and services relating to water cooled engine alternators as required under the amended Schedule of Requirements attracted Clause 46.2(vii) of the SCC which provides that if a bidder has not quoted the price of the item mentioned in the Schedule of Requirements and has not given any justification for the same, the price bid would be loaded with the maximum price quoted for that item by any other bidder for the purpose of evaluation. In view of this provision, the Petitioners state that the bid submitted by Respondent No. 4 ought to have been loaded with the highest quoted price in respect of Line Items No. 13.1(b) to 13.5(b), 35.1(b) to 35.5(b) for each phase of the bid."
According to the learned senior counsel, the correspondence between the parties clearly shows that the evaluation process is arbitrary and, therefore, violates Article 14 of the Constitution of India. The bid of KEC was the lowest on the basis of the prices announced. Instead of inviting KEC for negotiation, it was ACME, inspite of having quoted highest price, that was invited for price negotiations. Learned counsel emphasized the discrepancies in the bid of ACME which were tabulated in the letter dated May 1, 2009 as under :-
"a) The quantity variation in the items mentioned from Ser No. 13.1(a) to 13.5(a) & 35.1(a) for each phase of the bid as prescribed in the SOR Addendum 4.2 dated 6.09.2008 (Revised SOR) for the reference Tender.
b) The bidder had not quoted the prices of the line items mentioned from Ser No. 13.1(b) to 13.5(b), 35.1(b) to 35.5(b) for each phase of the bid as prescribed in the SOR Addendum 4.2 dated 6.9.2008 (Revised SOR). Copy of Addendum 4.2 dated 6.09.2008 enclosed for ready reference.
c) The bidder did not provide any explanation for the above in the hard copy of the bid."
It is submitted by the learned counsel that the price evaluation is in violation of the evaluation procedure described in clause 46 of the tender document in general and sub-clauses 46.2(vii)(a) and 46.2(vii)(d) and 46.7(e) in particular of SCC. The only explanation offered by BSNL was that in view of the clarification given in the Addendum no. 4 dated 5.9.2008 to Part 3 of the tender, clause 4.7.2 of DTR was modified. It was provided that the Water-cooled Engine Alternators can also be supplied along with Air-cooled Engine Alternators in the ratio of 30:70 respectively. Therefore, the bids have been evaluated based on the SOR as in the Addendum no. 4.2 dated 6.9.2008 duly taking into consideration Addendum no. 4. BSNL informed that all the bids including that of KEC have been accordingly examined and evaluated. It was also mentioned in the reply dated May 8, 2009 that while the bid of KEC was the lowest on the basis of prices announced, further evaluation have been carried out with respect to the bid conditions. Thereafter, the bidder who has emerged as the lowest bidder following detailed evaluation has been called for negotiation. With regard to the loading it had been mentioned that as the bid conditions have been fulfilled by ACME, no loading has been necessitated. BSNL reiterated that the opening narrative of Addendum 4.2 dated 6.9.2008 makes it mandatory on the part of the bidder to quote the prices as per the given SOR (Part - 1), Section V and hardly leaves room for further interpretations or reference to earlier related Addendums issued by the BSNL at the time of financial evaluation.
The protests made by the KEC were arbitrarily ignored by BSNL. At the time when the matter was heard by the Learned Single Judge at the initial stage, BSNL were unable to give any cogent reasons. Learned senior counsel reiterated that the bids had to be in accordance with SOR dated 6.9.2008. It applied to all items. Therefore, the interpretation given by the Learned Single Judge is correct and does not call for any interference.
The learned senior counsel for BSNL reiterated that the SOR Addendum no. 4 dated 5.9.2008 is in two Parts. The first Part deals with the items and the quantities to be supplied and there is a change only in one or two items. Second Part of the document clearly shows that it was issued to clear all queries of items and quantities in the SOR for Part 3 by issuing a consolidated SOR. Engine Alternators are to be found at item No. 13 which would show that there is mixture of Water-cooled Engine Alternators and Air-cooled Engine Alternators. The evaluation of the bids was to be made as a package quoted by the bidders for various equipments/materials/services as per the criteria set out in clause 46.2 of the SCC contained in Section IV of the tender document. This procedure has been meticulously followed. The learned senior counsel further submitted that the interpretation placed on the tender document by BSNL has to be accepted especially in view of the specialized nature of the contract. It is also submitted by the learned senior counsel that the Court ought not to exercise its jurisdiction under Article 226 of the Constitution of India in a contractual matter which did not involve any public interest.
We may notice here that the learned senior counsel for KEC, ACME as well as for BSNL have relied on the same set of judgments which were cited before the Learned Single Judge. Learned senior counsel for KEC has relied upon the following judgments :-
1) Tata Cellular v. Union of India [(1994) 6 SCC 651]
2) West Bengal State Electricity Board vs. Patel Engineering Co. Ltd. [(2001) 2 SCC 450]
3) Reliance Energy Ltd. v. Maharashtra State Road Development Corpn. Ltd ((2007) 8 SCC 1) On the other hand learned counsel for BSNL and ACME have relied upon :-
(1) Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. & anr. ((2005) 6 SCC 138) (2) Jagdish Mandal v. State of Orissa & ors. [(2007) 14 SCC 517] (3) Provash Chandra Dalui & anr. v. Biswanath Banerjee & anr.
(1989 Supp (1) SCC 487) (4) Deokabai v. Uttam ((1993) 4 SCC 181) The conclusions reached by the Learned Single Judge are that the dispute is limited between KEC and ACME as to who is entitled to be recorded as the lowest bidder or L-1 in tender parlance. It is also noticed that the fundamental submission made on behalf of KEC was that SOR attached to Addendum No. 4, dated 5/9/2008 had been superceded by the revised SOR attached to Addendum No. 4.2 on 6.9.2008 and the bid submitted by ACME was not responsive to the revised SOR. It was submitted that either the bid of ACME had to be rejected or, in accordance with the tender conditions, the amount quoted in respect of the relevant material had to be appropriately loaded to the extent of the variance. The Learned Single Judge notices that there will be a substantial difference in the quantum of work to be handled by L-1 and L-2. The difference would be over Rs. 1000 crores. On the other hand, the ultimate difference in the rates quoted by the two parties' works out to about "one half of one percent".
It is noticed that there were several modifications to the original documents as indicated in the tender documents. Queries were also raised from time to time. Tender terms required strict adherence, but the appellants retained the right to overlook minor irregularities. According to the Learned Single Judge, the essential feature of the tender condition was that if the price of any component was not quoted in the bid, then, for the purpose of evaluation of the offer, the highest price for the relevant item quoted by any of the other eligible bidders would be reckoned as the price quoted for such item by omitting bidder. If the quantity quoted was less than what the SOR stipulated, the evaluation of the bid would be by adding the price of the shortfall in the quantity on a prorata basis. This loading was referred to as the notional adding of amount to the value of the bid. After noticing the relevant parts of the tender document including the clarifications and modifications as well as the correspondence exchanged between the parties, the Learned Single Judge observed as follows :-
"At the time that the petition was instituted on June 8, 2009 the petitioners were aware that the price of spares for the annual maintenance contract had not been discounted from the petitioner company's bid at the evaluation. A letter of May 14, 2009 issued by the petitioner company to the chief general manager, Kolkata telecom district, would reveal that the petitioners were aware that the cost of spares for the annual maintenance contract had not been deducted from the total price quoted by the petitioner company. Paragraph 25(h) of the petition also refers to such matter, though only to demonstrate that the petitioner company had been penalised for not adhering to the tender conditions but the fourth respondent had not been similarly treated in the matter relating to engine alternators. None of the 31 grounds taken in the petition complain of any arbitrariness on BSNL's part in including the unspecified cost of spares in the petitioner company's price for the purpose of evaluation of the bid. Ground N refers to the matter but in the context of the dissimilar treatment of the fourth respondent and in furtherance of the argument that what is sauce for the gander should be sauce for the goose. There is no prayer for any direction on BSNL to deduct the cost of spares from the petitioner company's bid price."
The Learned Single Judge also concluded that the emphasis of the submissions on behalf of KEC has more to do with its attempt to establish arbitrariness on the part of the appellant in applying different sets of rules to two bidders, than to seriously complain that the tender conditions did not permit the same. It is concluded that there is no lack of clarity in clause 2.4 of the annexure pertaining to AMC and after the clarification given by the appellant following a query being raised, there cannot be any dispute on such score. The Learned Single Judge concludes that KEC have been consistent in its challenge with regard to the arbitrariness of BSNL in dealing with the claims of the two highest bidders. The Learned Single Judge also notices the submission on behalf of ACME that it had quoted the higher priced Air-cooled Engine Alternators and was ready to face consequence thereof. The other bidders have the choice of quoting a lower price by offering to supply 70% Air-cooled Engine Alternators and 30% Water-cooled Engine Alternators. Learned Single Judge also notices the further submission on behalf of ACME that it would be unfair for it to be loaded with the price for the Water-cooled Engine Alternators that it did not wish to supply as it preferred more efficient Air-cooled Engine Alternators that require less maintenance and no monitoring since Water-cooled Engine Alternators would require a minimum level of water therein to be maintained.
The Learned Single Judge also notices the submission made on behalf of BSNL that KEC is quite unreasonably dubbing the action of BSNL arbitrary inspite of the fact that it was not disqualified for not adhering to the tender specifications, by not giving list or cost of spares in the AMC. The judgment also notices that BSNL seeks to make a distinction between an Addendum and an amendment and that since clarification of 6.9.2008 was an Addendum and not an amendment, it could not obliterate what was provided for in the Addendum issued on the previous date. It was further suggested by the learned senior counsel for ACME that the amendment, SOR was to the Addendum of 5.9.2008. Clause 4.7.2 of the DTR in Section IV of the tender papers was retained notwithstanding the document of 5.9.2008 and 6.9.2008 respectively. Since, the bid of ACME had adhered to the requirement of clause 4.7.2, it was accepted by BSNL. The decision of BSNL could not be labeled as arbitrary. It is reiterated by ACME that there is no ultimate public interest involved in the challenge launched by KEC. It was reiterated that it is only an attempt by KEC to further its cause for obtaining a larger chunk of the work. Since ACME was already in negotiation with BSNL, it was submitted that it would not be appropriate for the court to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India which would result in inevitable delay in the implementation of a Project of great public importance.
The Learned Single Judge accepts that no entrenched right inheres in the bidder quoting the lowest price for the supply that it seeks to make. The State or an authority may have reasons to prefer a better person over the one who has quoted the lowest. Such right to choose is incidental to the State's right to contract. Yet, the State being the State, its every action has to pass the test of Article 14 of the Constitution; the power to choose cannot be exercised for any collateral purpose or run the risk of failing upon judicial review. The essential feature of judicial review is to set at right any unfair action. A mere illegality may not always amount to unreasonableness, but at the end of the day it is the reasonableness of the decision-making process that falls for scrutiny in judicial review.
Thereafter, the Learned Single Judge considers the issue as to whether the decision making process of BSNL would satisfy the test of equality under Article 14 of the Constitution of India. It is held as follows :-
"Clause 4.7.2 of the detailed technical requirement specified that engine alternators "shall be of air cooled type." The moment addendum 4 was published, the "shall be" in the second sentence of clause 4.7.2 had per force to be read as "may be." The argument of the fourth respondent that clause 4.7.2 was not subservient to addendum 4.2 cannot be accepted since its mandate stood already diluted by addendum 4 issued on the previous day. There is an element of vagueness about addendum 4. There is no doubt that it gave a choice to bidders to offer to supply water-cooled alternators along with air-cooled ones. Did it then require bidders to offer to supply the full compliment in air-cooled alternators or a combination of exactly 70:30 of air-cooled and water- cooled alternators or any combination of the two as long as air-cooled alternators did not fall below 70 per cent and water-cooled alternators did not exceed 30 per cent? If the air-cooled alternators are the more preferred, as both BSNL and the fourth respondent suggest, it would be irrational that a bidder with an 80:20 mix of air-cooled alternators and water-cooled alternators would stand disqualified though it would appear to be a better offer than a 70:30 mix of air-cooled and water- cooled alternators. But it is unnecessary to get into such issue save to appreciate the nature of the queries that may have been raised following the obvious option given by addendum 4. The last sentence above the table in addendum 4 referred to modifications in the SOR and the SOR being revised "in relation to Engine Alternators." As a stand- alone sentence it would imply that the SOR in respect of engine alternators stood modified to the extent indicated in the table. But since such sentence followed the option offered earlier in the addendum for water-cooled alternators to also be supplied along with air-cooled alternators, it is reasonable to read the modified SOR relating to engine alternators in addendum 4 to permit bidders to offer to supply only air- cooled alternators as per the original SOR or a mix of air-cooled and water-cooled alternators in accordance with the modification provided in such addendum.
The document issued on September 6, 2008, however, had an element of finality and firmness about it. It spoke of there being many queries relating to the items and quantities in the SOR. The document professed to clear all doubts and proclaimed the table appended to it to be the "revised consolidated SOR." The table carried the same heading as did the original SOR in section V of the tender documents. Some of the quantities, pertaining to engine alternators, stood modified from the SOR relating to engine alternators published the previous day. Item 13.2(a) of addendum 4, for instance, required 15 kva air-cooled three- phase 1500 rpm diesel generator to be supplied in the amounts of 1400, 1050 and 1050, respectively, over the three phases. This stood modified to 490, 280 and 280, respectively, in item 13.2(a) of the "revised consolidated SOR" of the following day. It was not an isolated case. The quantities in respect of items 13.2(b), 13.3(a) and 13.3(b) as appearing in addendum 4 were also altered in addendum 4.2. What was item no. 13.4(a) in addendum 4 answered to item no. 13.5(a) in addendum 4.2. Item 13.4(b) in addendum 4 became item 13.5(b) in addendum 4.2. Item 31 and all sub-items thereunder in addendum 4 relating to services for engine alternators stood renumbered as item 35 with its sub-items in addendum 4.2.
Clause 31(v) of the instructions to bidders in the tender papers provided that the failure of a bidder to fill in the prices as prescribed in the price schedule would result in the rejection of the bid. Clause 46.2(vii) of the special conditions of contract stipulated that in case a bidder had not quoted the price of any item mentioned in the SOR and had not justified for not quoting the same, the price bid was to be loaded with the maximum price quoted for that item by any other bidder for the purpose of evaluation. It is true that the tender documents gave BSNL some elbow room to exercise discretion to not reject a bid on a technical transgression. But as much as BSNL's reasonable stand in not rejecting the petitioner company's bid for it not quoting for spares in its annual maintenance contract has to be applauded, its interpretation of addendum 4.2 cannot be appreciated. It is possible that BSNL understood addendum 4.2 to be as it suggests, but that is of no importance. What is of consequence is as to how a reasonable bidder would understand addendum 4.2 to imply. For, the document was intended for bidders and its interpretation lies in what it conveyed rather than what it intended to convey. The expression "to clear it all"
and the firm finality in the publication of "the revised consolidated SOR"
would admit of no other construction but that it was such modified SOR that bidders had to adhere to.
In the context of sending messages or issuing instructions, communication is, in its barest sense, the transfer of information from one point to another. The intention of any piece of communication is for the sender to get the desired result when the receiver has interpreted what is being sent through the channels. If, for any reason, what the receiver understands differs from what was intended to be sent (and this could be because of an inefficient use of language, of using an improper channel or medium, or even because of noise in the channel), the "information" has not, in fact, been "transferred." The very act of communication is rendered useless and the communication has never happened. The onus is on the sender to ensure that the receiver is conveyed that which the sender intended to communicate; that it retains the fidelity of what he meant to communicate as it is transferred to the receiver.
Language is but a tool in the communication process. In real terms, the mere denotation of a word does not really convey its entire meaning. The connotations attached to the word, the context in which it is said, the tone of voice (or punctuations) used when it is spoken, the body language of the sender when the word is expressed, the environment in which it is uttered, the very appropriateness of the word on the occasion it is articulated, the receiver's faith in the reliability of the sender and his own attitude to the sender, the subject and to himself - all contribute to the meaning that is finally garnered by the receiver.
Language, particularly in cold writing, is an inexact mode of communication. The nuance of a word used by the communicator may often be lost in transit. In the written word, the communicator does not have the advantage of his tone or voice or gesture to convey the exact meaning of that which is being communicated. The intent has necessarily to be culled out from the expression of it in a written communication. The interpretation of that which has been communicated in writing should lend more towards how it is capable of being understood rather than how it was intended to be understood. If beauty is in the eye of the beholder, the true meaning of a written word is as it appears to a reasonable reader. A revised and consolidated SOR issued by a statutory authority in the context of the strict adherence clauses strewn all over the tender documents would necessarily imply that such revised SOR overwrote all previous SORs and was the only one that was to be complied with.
On such assessment of the purport of addendum 4.2, the process of evaluation adopted by BSNL is found to be inappropriate. There may not have been any mischief about the way that BSNL approached the evaluation but the very fact that there was a gap in what it says was intended to be communicated and what was, in fact, communicated would result in the decision-making process being rendered arbitrary from the petitioner company's - or any reasonable bidder's - perspective even if there may not have been any obvious mala fides on BSNL's part. The arbitrariness is in BSNL failing to see the point despite its attention being drawn to the interpretation of addendum 4.2 and its cursory response thereto. The unfairness is in BSNL refusing to read addendum 4.2 from the reasonable reader's, or rational bidder's, perspective. The unreasonableness is in BSNL failing to appreciate that all the strict adherence clauses in its tender documents applied with all stringency to the "revised consolidated SOR." The irrationality is in BSNL's carelessness to ensure that what it says it intended to convey was, in fact, conveyed by addendum 4.2; a simple indication of the option or the alternative figures being indicated in parentheses in the relevant columns would have sufficed. After all, it was a project of value in excess of Rs 8000 crore which required sophisticated equipment to be supplied and a complicated system to be set up, ironically, to enable better communication.
The test of equality as recognised by Article 14 of the Constitution has to be seen more from the recipient's point of view than the State's. An erroneous yardstick equally applied to all results in discrimination and smacks of arbitrariness. The flawed benchmark may not have been chosen out of malice or caprice and yet the high test under Article 14 would render the State action unreasonable. Equality is as much about the sanctity of the decision-making process as it is about the uniform application thereof. Public interest lies in ridding the decision-making process of any element that would lead to discrimination.
In matters pertaining to the challenge to a tender process there is, almost invariably, a clash of commercial interest that is involved. A petitioner in such circumstances espouses a personal cause against a commercial rival through the medium of the State or an authority. Such petitioner is rarely a champion of public interest; it is for the court in judicial review to assess whether there is an element of public interest involved. If the rules of the game are blemished such that the decision- making process precludes a level playing field, then, irrespective of the commercial interest of the challenger, the court sees a facet of public interest. The incidental commercial interest then pales into the background.
The process of evaluation in the instant case is found to be faulty as a reasonable bidder would have understood the table appended to addendum 4.2 to be the final, and inviolable, schedule of requirements. Whatever may have been BSNL's perception or whatever may have been its intention, the test is in the sense that addendum 4.2 communicated to any reasonable bidder keen to adhere to the strict terms of the tender documents.
A writ of mandamus do issue cancelling the evaluation of the bids conducted by BSNL with a direction to reassess the bids by treating the schedule of requirements published under addendum 4.2 as the applicable list of materials and quantities thereof. The exercise should be completed as expeditiously as possible so as not to occasion any delay in the implementation of the project. WP No. 9770 (W) of 2009 is allowed as indicated. Since no mala fides can be attributed to either BSNL or the fourth respondent, there will be no order as to costs."
From the above it appears that the Learned Single Judge has misconstrued the tender document, in particular the provisions contained in Clauses 4.7.2 DTR, Addendum 4 and Addendum no. 4.2. The whole tender document had to be construed as a composite document consisting of many parts complementary to each other. Section 1 of the tender document is the notice inviting the tender. It sets out the object of the notice inviting tender. It specifies and divides the tender into four parts. It provides for the eligibility criteria which is common for all parts. It also sets out the eligibility criteria for different parts. The eligibility criteria for Part 1, clauses 4.1.1 and 5 provides that the bidder shall undertake AMC as per the provisions made in this tender document. Section II of the tender document contains instructions to bidders. It specifically provides that the bidders are bound by all instructions, terms and specifications in the tender documents. Failure to furnish all information required as per the tender document may result in rejection of the bid. Clause 5 of the instructions clearly provides for clarification of tender document. Clause 5.2 is as under:
"Any clarification issued by BSNL in response to query raised by prospective bidders shall form an integral part of tender document and would amount to amendment of relevant clauses of the tender document."
From the above it become apparent that any clarification issued forms an integral part of the tender document and would amount to amendment of relevant clauses of the tender document. The aforesaid clause leaves no manner of doubt that any clarifications and amendments would relate only to the specific items or aspects and not to the entire tender document. Clause 6 of Section II deals with amendment of tender document. Clause 6.1 enables the appellant for any reason at its own initiative or in response of a query raised by a prospective bidder to modify tender document by amendments. The bidders are required under clause 6.4 to keep a watch on the BSNL website with reference to any amendment to the tender document or to the clarifications to the queries raised by the bidders till a day prior to the opening of the tender. The BSNL also has a right to reject the bids if the same are not submitted taking into account the amendments/clarifications. Under clause 21 of the tender document the appellant conducts a technical and commercial evaluation whereas clause 22 enables it to conduct all financial evaluation of substantively responsive bids and comparisons. Upon such evaluation, the supply order may be placed with the selected bidder. There is no amendment of this Section. Section 3 provides for General Conditions of Contract (hereinafter referred to as the GCC) whereas Section 4 provides for Special Conditions of Contract (hereinafter referred to as the SCC). It is specifically mentioned here that SCC shall supplement the notice inviting tender as contained in Sections I, II and III. Where there is a conflict, the provisions herein shall prevail over those in GRS, Sections I, II and III. Clause 8 of the SCC provides for seeking clarification on tender document. Clause 8.1 provides that only those queries received within the prescribed schedule of time shall be considered for issue of clarification. Clause 8.2 is as under:
"Clarifications issued by the purchaser, either by its own volition or in response to the queries raised by the prospective bidders shall form an integral part of tender document and shall b e treated as amendment of relevant clauses of the tender document."
This clause reiterates that clarification shall be integral part of the tender document and shall be treated as amendment of relevant clause of the tender document. In our opinion, this clause makes it abundantly clear that any individual amendment cannot be construed as an obliteration or substitution of any other clauses of the tender condition on an interpretation given by one of the bidders. It would clearly negate the submission of KEC that the SOR attached to Addendum 4.2 dated 6.9.2009 would replace the earlier clause 4.7.2.
Keeping in view the aforesaid, we may now examine the provision with regard to loading as contained in clause 46.2. This clause provides as under:
"Clause 46.2 - further, the tender shall be evaluated as a package quoted by the bidders for various equipments/materials/services as per the criterion given below:
i) The price of various components forming part of the package detailed in the SOR at Section V shall be evaluated. It shall also include all those items which respective bidders consider essential for commissioning purposes. The sanctity of the price of individual items shall be maintained by the bidders within the package even though the evaluation is package based."
A perusal of the aforesaid would clearly show that the tender had to be evaluated as a package quoted by the bidder. Clause 46.2 (vii)(a) is as under:
"vii) In order to establish techno-commercial parity among the bids, the financial bids shall be loaded as below:
a) Cases in which bidder has not quoted the price of the item mentioned in the SOR of the tender document and has not given any comments/justifications for not quoting the same, the price bid will be loaded with the maximum price quoted for that item by any other bidder for the purpose of evaluation."
The question of loading in the case of ACME under this clause would have arisen only if the SOR attached to Addendum no. 4.2 is held to be in supercession of clause 4.7.2 of DTR in Part III of the tender document.
In this context, we may now examine the clauses of DTR wherein clause 4.7.2 provides as follows:
"REQUIREMENT : The Engine Alternators supplied should be of ready - to - use type (RTU). The BHP of engine may be suitably enhanced as per site conditions in order to deliver the minimum required KVA at site. The engine alternators shall be of air cooled type."
The Addendum no. 4 dated 5.9.2008 is in Part 3 of the tender document which covers supply, installation, testing, commissioning of infrastructure and associated items for radio sites. It provides as under:
"Addendum No. 4 dated 5th September, 2008 to the Part III of the EZ tender:
In continuation of the earlier addendums/amendments the following amendment may be noted against Part III of the tender CTD/IMPCS/TENDER/PH-VI/2008-09 dated 1st May, 2008.
1. In partial modification of the Clause 4.7.2 of the Detailed Technical Requirements (DTR) of the Part III of the above tender and the related clarifications issued, water cooled Engine Alternators can also be supplied along with Air Cooled Engine Alternators in the ratio 30:70 respectively. Similar functionalities as asked for Air Cooled Engine Alternators apply for the water cooled Engine Alternators as well.
Specifically, the following modifications may be noted in the revised SOR of Part III in relation to the Engine Alternators."
A perusal of the above would show that it is in continuation of the tender document dated 1.5.2008 which contained clause 4.7.2 of DTR annexure I to the tender document. It clearly provides that in partial modification of clause 4.7.2 of the DTR Part 3 Water-cooled Engine Alternators can also be supplied alongwith the Air-cooled Engine Alternators in the ratio of 30:70 respectively. It further specifies the modifications which were required to be noted in the revised SOR of Part 3 in relation to the Engine Alternators.
Thereafter, the Addendum proceeds to tabulate different items in which the modifications have been made. This modification was required with the introduction of the ratio of 30:70 respectively between the Water-cooled Engine Alternators and Air-cooled Engine Alternators. The items specified the need at particular places of either Air-cooled Engine Alternators or Water-cooled Engine Alternators, or both. We are, therefore, unable to detect any confusion or vagueness in the aforesaid document.
We accept the submission of the learned counsel for the appellants that the Addendum no. 4.2 dated 6.9.2008 (revised SOR) merely put all the clarifications with regard to the SOR in one document. This document cannot be said to be a replacement of the original criteria. In our opinion, there is no change in the criteria except for the modification that the reservation in favour of the Air-cooled Engine Alternators has been supplemented with an alternative that a bidder may supply either only Air-cooled Engine Alternators or a combination of both Air- cooled Engine Alternators as well as Water-cooled Engine Alternators in the ratio prescribed.
So far as the loading of the price difference is concerned, we are of the opinion that it is equally applicable to all categories as specified in the tender document. Clause 46.2 (Section-IV) SCC may now be considered. However, before considering the same, it is necessary to take note of clause 1 of SCC which is as under:
"The special conditions of the contract shall supplement the 'Notice Inviting Tender' as contained in Section I, 'Instructions to the Bidders' as contained in Section II, 'General Conditions of the Contract' as contained in Section III and wherever there is a conflict, the provisions herein shall prevail over those in GRs, Section I, Section II and Section III."
This clause clearly provides that the SCC shall supplement the notice inviting tender. It is only in cases of conflict that the provisions of this Section would prevail over those in GRs, and Sections I, II and III. In our opinion, there is no conflict between any of these provisions in the tender document. Therefore, the provisions contained in this Section cannot be held to be in supercession or substitution of any other provisions in the tender document. In the Affidavit in Opposition filed by BSNL before the Learned Single Judge the pleas taken in paragraphs 12 and 19 of the writ petition have been emphatically denied. It has been stated as follows:
"16. ......It is emphatically denied under the said addendum 4.2 dated September 6, 2008 the bidder to submit the price bid relating to Water Cooled Engine Alternators only as alleged or at all. I say that addendum 4.2 has not altered the tender terms as alleged. I say that any bidder who intends to supply the Air Cooled Engine Alternators for the entire tendered quantity is also valid and as such the offer of the respondent no. 4 who submitted its offer for Air Cooled Engine Alternators only for whole of the tender quantity is valid.
19. with further reference to paragraph 15A to C of the said petition, I reiterate the statements made hereinabove and deny and dispute the allegations which are contrary thereto and/or inconsistent therewith. I say that the terms governing the supply of Engine Alternator was amended by the said addendum 4 dated 5th September, 2008 in which it is clearly stated that any partial modification of Clause 4.7.2 of the DTR of the tender and related clarification issued Water Cooled Engine Alternators can also be supplied along with Air Cooled Engine Alternators in the ratio of 30:70 respectively. As such the petitioners chose to supply both Air Cooled and Water Cooled Engine Alternators in the ratio of 70:30 whereas the respondent no. 4 chose to supply 100% Air Cooled Engine Alternators. Therefore, both the offers are otherwise valid under the tender terms. Save as above and save what are matters of record allegations made in subject paragraphs under reply are denied and disputed. The lowest bid amount could only be ascertained after calculation and evaluation in terms of the tender document.
22. with reference to paragraphs 19 and 20 of the said petition, I reiterate the statements made hereinabove and deny and dispute the allegations which are contrary thereto and/or inconsistent therewith. It is denied that to provide the price for supply of Water Cooled Engine Alternators is a necessity under the tender terms or under the amended schedule of the requirement as alleged or at all. I crave leave to refer to Clause 46.2 of the subject conditions of contract to ascertain its true scope and effect thereof and any allegation to the contrary are denied and disputed. I say that to supply Water Cooled Engine Alternators was an optional provision as staged above and the said addendums issued by the respondent no. 2 envisaged no restriction upon supply of Air Cooled Engine Alternators only for the whole of the tendered quantity. Save as above and save what are matters of record the allegations made in subject paragraphs under reply are denied and disputed."
A perusal of the aforesaid would show that BSNL had clearly explained that the bidders were not only required to submit the price relative to Water-cooled Engine Alternators. Any bidder who intended to supply Air cooled Engine Alternators for the entire tendered quantity could also make the tender bid. In such circumstances, since ACME had submitted its offer for Air cooled engines only for the whole of the tender quantity, it was valid. The explanation further goes on to state that the terms governing the supply of Engine Alternators was amended by the Addendum no. 4 dated 5.9.2008. It is also stated that the addendum was in partial modification of clause 4.7.2 of DTR. The petitioner (KEC) chose to supply both Air cooled and Water cooled Engine Alternators whereas ACME choose to supply 100% Air Cooled Engine Alternators. Both the offers are valid under the tender terms. The explanation proceeds to deny the suggestion that to provide the price for supply of Water Cooled Engine Alternators was a necessity under the tender terms or under the amended SOR. It goes on to suggest that to supply Water Cooled Engine Alternators was an optional provision, and the Addendums issued by BSNL envisaged no restriction upon supply of Air Cooled Engine Alternators only for the whole tender quantity. In our opinion, such an elaborate explanation cannot be ignored unless it falls in the realm of such irrationality which cannot be justified as the reasonable opinion of a statutory authority seeking to interpret the clauses of a document of which it is the author. The scope of the judicial review in such matters is confined within very narrow limits. The exact parameters within which the High Court exercises judicial review in exercise of its extraordinary discretionary jurisdiction under Articles 226/227 of the Constitution of India have been elaborately defined by the Supreme Court in a number of judgments which shall be noticed presently.
The Learned Single Judge has accepted that scope of the judicial review in tender matters is limited to examining the decision making process. This conclusion is in consonance with the law laid down in the case of Tata Cellular (supra). Learned Single Judge has, however, only made a reference to a part of paragraph 148 of this judgment as follows :-
"148. ...From this letter we are not able to fathom the reason for omission. As seen above, Tata Cellular was originally selected for Delhi. By implementation of the judgment of the High Court it has been left out. Before doing so, as rightly urged by Mr Soli J. Sorabjee, this appellant ought to have been heard. Therefore, there is a clear violation of the principle of natural justice. On an overall view we find it has two distinctive qualifications. In that:
1. It has not borrowed from any commercial bank.
2. It has an annual turnover from Indian parameters of Rs 12,000 crores and the annual turnover of the foreign parameters of Rs 51,000 crores. Comparatively speaking, the other companies do not possess such high credentials yet it has been awarded low marks with regard to the reliance on Indian public financial institutions and financial strength of the parameters/partner companies.
These qualifications could have been validly urged had it been heard. Then, we do not know what decision could have been arrived at." This paragraph evidently only deals with the factual situation as it obtained in the case before the Supreme Court. It did not lay down the ratio of law with regard to the scope and ambit of the power of judicial review to be exercised by the Supreme Court. The ratio of the judgment is as follows :-
74. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself.
75. In Chief Constable of the North Wales Police v. Evans [(1982) 3All ER 141, 154] Lord Brightman said :
"Judicial review, as the words imply, is not an appeal from a decision, but a review of the manner in which the decision was made.
* * * Judicial review is concerned, not with the decision, but with the decision-making process. Unless that restriction on the power of the court is observed, the court will in my view, under the guise of preventing the abuse of power, be itself guilty of usurping power."
In the same case Lord Hailsham commented on the purpose of the remedy by way of judicial review under RSC, Ord. 53 in the following terms :
"This remedy, vastly increased in extent, and rendered, over a long period in recent years, of infinitely more convenient access than that provided by the old prerogative writs and actions for a declaration, is intended to protect the individual against the abuse of power by a wide range of authorities, judicial, quasi-judicial, and, as would originally have been thought when I first practised at the Bar, administrative. It is not intended to take away from those authorities the powers and discretions properly vested in them by law and to substitute the courts as the bodies making the decisions. It is intended to see that the relevant authorities use their powers in a proper manner (p. 1160)."
In R. v. Panel on Take-overs and Mergers, ex p Datafin plc [(1987) 1 ALL ER 564], Sir John Donaldson, M.R. commented :
"An application for judicial review is not an appeal."
In Lonrho plc v. Secretary of State for Trade and Industry [(1989) 2 All ER 609], Lord Keith said:
"Judicial review is a protection and not a weapon."
It is thus different from an appeal. When hearing an appeal the Court is concerned with the merits of the decision under appeal. In Amin,[Amin v. Entry Clearance Officer, (1983) 2 ALL ER 864], Lord Fraser observed that :
"Judicial review is concerned not with the merits of a decision but with the manner in which the decision was made.... Judicial review is entirely different from an ordinary appeal. It is made effective by the court quashing the administrative decision without substituting its own decision, and is to be contrasted with an appeal where the appellate tribunal substitutes its own decision on the merits for that of the administrative officer."
76. In R. v. Panel on Take-overs and Mergers, ex p in Guinness plc [(1990) 1 QB 146], Lord Donaldson, M.R. referred to the judicial review jurisdiction as being supervisory or 'longstop' jurisdiction. Unless that restriction on the power of the court is observed, the court will, under the guise of preventing the abuse of power, be itself guilty of usurping power.
77. The duty of the court is to confine itself to the question of legality. Its concern should be :
1. Whether a decision-making authority exceeded its powers?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. Reached a decision which no reasonable tribunal would have reached or,
5. Abused its powers.
Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under :
(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time. .........."
78. What is this charming principle of Wednesbury unreasonableness? Is it a magical formula? In R. v. Askew [(1768) 4 Burr 2186], Lord Mansfield considered the question whether mandamus should be granted against the College of Physicians. He expressed the relevant principles in two eloquent sentences. They gained greater value two centuries later :
"It is true, that the judgment and discretion of determining upon this skill, ability, learning and sufficiency to exercise and practise this profession is trusted to the College of Physicians and this Court will not take it from them, nor interrupt them in the due and proper exercise of it. But their conduct in the exercise of this trust thus committed to them ought to be fair, candid and unprejudiced; not arbitrary, capricious, or biased; much less, warped by resentment, or personal dislike."
79. ......."The modern statement of the principle is found in a passage in the speech of Lord Diplock in Council of Civil Service Unions v. Minister for Civil Service[(1985) 1 AC 374] 'By "irrationality" I mean what can now be succinctly referred to as "Wednesbury unreasonableness" (Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn. [(1948) 1 KB 223]. It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at."
80. At this stage, The Supreme Court Practice, 1993, Vol. 1, pp. 849- 850, may be quoted :
"4. Wednesbury principle.-- A decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings where the court concludes that the decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it. (Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn.[(1948) 1 KB 223], per Lord Greene, M.R.)""
We have quoted in extenso the exact meaning of Wednesbury principle to clearly demonstrate the point that the evaluation process or decision of BSNL is not so outrageous in its defiance of logic as to fall within the Wednesbury Principle. We are of the opinion that the Court in exercise of its jurisdiction under Article 226 of the Constitution ought not to interfere in huge government projects unless the decision making process is indubitably vitiated by such irrationality, that no authority properly directing itself on law, the facts and other relevant factors could have reached such a conclusion. We may notice here that the Learned Single Judge has accepted that BSNL enjoyed a certain amount of discretion to ignore minor aberrations in the bids. Learned Single Judge also notices the suggestion made by BSNL that it being a huge project relating to development of telecommunications in the north eastern region of India certain knee-joint movement was permissible to BSNL. The Learned Single Judge itself came to the conclusion that it is possible that BSNL understood addendum 4.2 to be as it suggests, but then proceeds to hold that it is 'of no importance'. We are unable to agree with the opinion of the Learned Single Judge that the view of BSNL was of "no importance". The settled position of law is that if two views are possible on the construction of a particular clause or a document, the view expressed by the author of the document ought to be accepted. We are also unable to agree with the interpretation that the tender document would have to be construed in the manner suggested or was understood by the bidder. Such an interpretation may well lead to complications in case more than two bidders are in conflict with each other. Even in the present proceedings the views and interpretations of both KEC and ACME in conflict with each other. Since the authority BSNL has accepted the view of one of the biddings, even the test laid down by the Learned Single Judge would be satisfied. That apart, in case there are a number of bidders it is possible that each bidder would offer its own interpretation to suit its convenience. This would lead to chaos and pandemonium rather than certainty and harmony. Undoubtedly, the tender issuing authority is expected to know the message that is to be conveyed to the intending bidders. It cannot, however, be held responsible for any faulty understanding of any of the clauses by the bidder. In such circumstances, the interpretation suggested by the tender issuing authority would have to be taken into consideration as much as the interpretation suggested by the intending bidder, if not more so, it cannot be an "either" "or" situation in favour of the authority or the bidder. In any event the tender document is to be construed on the basis of the well-known principles applicable to the construction of documents. Normal rule is to construe the document by giving the words their natural and normal meaning. Text and context of the document are of primary importance in discovering the intention of the legislator or the author of the document. The words used in the clause, when clear, are the best guide to the intent of the author.
At this stage, we may make a reference to certain observations made by the Supreme Court in the case of Provash Chandra Dalui (supra) wherein it was held as follows:
"10. 'Ex praecedentibus et consequentibus optima fit interpretatio.' The best interpretation is made from the context. Every contract is to be construed with reference to its object and the whole of its terms. The whole context must be considered to ascertain the intention of the parties. It is an accepted principle of construction that the sense and meaning of the parties in any particular part of instrument may be collected 'ex antecedentibus et consequentibus;' every part of it may be brought into action in order to collect from the whole one uniform and consistent sense, if that is possible. As Lord Davey said in N.E. Railway Co. v. Hastings:
"... the deed must be read as a whole in order to ascertain the true meaning of its several clauses, and... the words of each clause should be so interpreted as to bring them into harmony with the other provisions of the deed if that interpretation does no violence to the meaning of which they are naturally susceptible...."
In construing a contract the court must look at the words used in the contract unless they are such that one may suspect that they do not convey the intention correctly. If the words are clear, there is very little the court can do about it. In the construction of a written instrument it is legitimate in order to ascertain the true meaning of the words used and if that be doubtful it is legitimate to have regard to the circumstances surrounding their creation and the subject-matter to which it was designed and intended they should apply."
If one reads the tender document as a whole, the interpretation placed by BSNL on the tender document would have to be accepted. The interpretation of BSNL on the documents cannot be held to be so gravely irrational as to justify it being dubbed as of "no importance". Addendum 4.2 was only a part of the tender document. It could not be interpreted as an isolated item. This view of ours will find support from the judgment of the Supreme Court in the case of Deokabai (supra). Therein the Supreme Court held as follows:
"5. It is well settled that the terms of a document, like the present one, have to be read as a whole. The document as translated, though wrongly at certain places, figures at pp. 45 to 47 of the paperbook. Taking out a term in isolation and giving it a meaning torn from the context may tend to lead to a wrong interpretation causing injustice. ..."
In our opinion, the evaluation made by BSNL was in accordance with the criteria stipulated in the tender document. We are unable to agree with the conclusion of the Learned Single Judge that the decision making process adopted by BSNL suffered from any irrationality, let alone such irrationality as to fall within the Wednesbury Principle.
We may further notice here that the observations made by the Supreme Court in the case of West Bengal State Electricity Board (supra). It was held as follows:-
"24. The controversy in this case has arisen at the threshold. It cannot be disputed that this is an international competitive bidding which postulates keen competition and high efficiency. The bidders have or should have assistance of technical experts. The degree of care required in such a bidding is greater than in ordinary local bids for small works. It is essential to maintain the sanctity and integrity of process of tender/bid and also award of a contract. The appellant, Respondents 1 to 4 and Respondents 10 and 11 are all bound by the ITB which should be complied with scrupulously. In a work of this nature and magnitude where bidders who fulfil prequalification alone are invited to bid, adherence to the instructions cannot be given a go-by by branding it as a pedantic approach, otherwise it will encourage and provide scope for discrimination, arbitrariness and favouritism which are totally opposed to the rule of law and our constitutional values. The very purpose of issuing rules/instructions is to ensure their enforcement lest the rule of law should be a casualty. Relaxation or waiver of a rule or condition, unless so provided under the ITB, by the State or its agencies (the appellant) in favour of one bidder would create justifiable doubts in the minds of other bidders, would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the rules, it has to be done strictly in compliance with the rules. We have, therefore, no hesitation in concluding that adherence to the ITB or rules is the best principle to be followed, which is also in the best public interest."
"31. The submission that remains to be considered is that as the price bid of Respondents 1 to 4 is lesser by 40 crores and 80 crores than that of Respondents 11 and 10 respectively, public interest demands that the bid of Respondents 1 to 4 should be considered. The Project undertaken by the appellant is undoubtedly for the benefit of the public. The mode of execution of the work of the Project should also ensure that the public interest is best served. Tenders are invited on the basis of competitive bidding for execution of the work of the Project as it serves dual purposes. On the one hand it offers a fair opportunity to all those who are interested in competing for the contract relating to execution of the work and, on the other hand it affords the appellant a choice to select the best of the competitors on a competitive price without prejudice to the quality of the work. Above all, it eliminates favouritism and discrimination in awarding public works to contractors. The contract is, therefore, awarded normally to the lowest tenderer which is in public interest. The principle of awarding contract to the lowest tenderer applies when all things are equal. It is equally in public interest to adhere to the rules and conditions subject to which bids are invited. Merely because a bid is the lowest the requirements of compliance with the rules and conditions cannot be ignored. It is obvious that the bid of Respondents 1 to 4 is the lowest of bids offered. As the bid documents of Respondents 1 to 4 stand without correction there will be inherent inconsistency between the particulars given in the annexure and the total bid amount, it (sic they) cannot be directed to be considered along with the other bids on the sole ground of being the lowest."
On the basis of the above we are unable to find any irrationality or carelessness in the procedure adopted by BSNL to ensure that KEC did not fail to understand the correct meaning of the document. Once the Learned Single Judge had accepted that there may not have been any mischief about the way that BSNL approached the evaluation, it could not have been nullified on the ground of partial or faulty communication. We may notice at this stage that all the parties had agreed that there was no allegation of mala fide against BSNL. Rather it is a matter of record that BSNL had earlier exercised the discretion in favour of KEC when it was not disqualified even though its bid had not been found to be responsive to the tender document. We may also take note of the fact that the competitors herein are not some sort of novices in the field of telecommunication. Their huge organizations undoubtedly, have access to vest reservoirs of high quality legal acumen. In other words, we are inclined to take the view that all the contending bidders would have been guided by experts in the field. We are, therefore, unable to countenance the suggestion of confusion in communication as advocated by KEC. The document had to be construed in accordance with the well-recognised rules concerning construction of documents. The view expressed by the bidders cannot be held to be a paramount consideration in construing the various provisions of the tender documents. We are, therefore, unable to agree with the conclusion of the Learned Single Judge that the decision making process of the appellant was faulty or so arbitrary as to bring it within principle of Wednesbury Principle.
We are, however, in agreement with the Learned Single Judge that the contract such as this cannot be said to be not involving any public interest. The cost factor is of vital importance to the entire project, as it would be undoubtedly reflected in the rates to be paid for the service by the ultimate consumer i.e., the general public. Therefore, the decision making process was clearly subject to judicial review of the court under Article 226 of the Constitution of India.
As noticed above by the Supreme Court that the power of judicial review of the Court under Article 226 of the Constitution of India is not the power of the Appellate Court. It only permits the Court to review the manner in which the decision was made. In other words, judicial review is concerned, not with the decision, but with the decision making process. The Supreme Court has clearly emphasized that unless this restriction on the power of the Court is observed, the court will under the guise of preventing the abuse of power, be itself guilty of usurping power. We are of the opinion that the evaluation conducted by the BSNL cannot be dubbed or styled as arbitrary or faulty.
KEC had also relied on a judgment of the Supreme Court in the case of Reliance Energy Ltd. (supra) to emphasise the expanse of judicial review in matters relating to consideration of bids by Government or Government agencies. In this case, the Supreme Court emphasized the need to have a level playing field for all bidders. Paragraphs 36 and 38 are reproduced in the judgment of the Learned Single Judge as follows :-
"36. We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of "non-discrimination".
However, it is not a free-standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to "right to life". It includes "opportunity". In our view, as held in the latest judgment of the Constitution Bench of nine Judges in I.R. Coelho v. State of T.N., Articles 21/14 are the heart of the chapter on fundamental rights. They cover various aspects of life. "Level playing field" is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". We may clarify that this doctrine is, however, subject to public interest. In the world of globalisation, competition is an important factor to be kept in mind. The doctrine of "level playing field" is an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equally placed competitors are allowed to bid so as to subserve the larger public interest.
"Globalisation", in essence, is liberalisation of trade. Today India has dismantled licence raj. The economic reforms introduced after 1992 have brought in the concept of "globalisation". Decisions or acts which result in unequal and discriminatory treatment, would violate the doctrine of "level playing field" embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of "equality" should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of "level playing field".
According to Lord Goldsmith, commitment to the "rule of law" is the heart of parliamentary democracy. One of the important elements of the "rule of law" is legal certainty. Article 14 applies to government policies and if the policy or act of the Government, even in contractual matters, fails to satisfy the test of "reasonableness", then such an act or decision would be unconstitutional."
"38. When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This "legal certainty" is an important aspect of the rule of law. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment. It may violate doctrine of "level playing field"."
In the aforesaid paragraphs of the judgment the Supreme Court has clearly emphasized strict adherence to the terms and conditions of the tender document. It also lays down that the projects undertaken for the benefit of the public had to be executed in such a manner as to ensure that the public interest is best served. In our opinion the conduct of BSNL in the proceeding would satisfy the standards laid down by the Supreme Court in the aforesaid judgment. As noticed earlier BSNL has given an elaborate explanation of the procedure followed. It has also given many cogent reasons in support of its decision of not loading the price of ACME. We are unable to hold that the evaluation decision of BSNL in any manner distorts the level playing field.
In the case of Master Marine Services (P) Ltd. (supra) the Supreme Court held as follows:
"15. The law relating to award of contract by the State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd. and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It 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. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision- making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it 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."
Keeping in view of the aforesaid observation we are of the considered opinion that it would not be possible for the Court to conclude that overwhelming public interest require us to interfere in the tender process in the present proceedings. In such matters the Court has to exercise its discretionary powers with caution and care. It is to be exercised only in furtherance of public interest and not merely on the making out of a legal point.
The legal position with regard to the scope of judicial review of administrative action has been further summed up by the Supreme Court in the case of Jagdish Mandal (supra). Therein it is held as follows:
"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;
OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached";
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."
In paragraph 94 the Supreme Court in the case of Tata Cellular (supra) laid down the principles with regard to judicial review of the administrative decisions taken in contractual matters as follows :-
"94. The principles deducible from the above are :
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in 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."
Keeping in view the above principles, we are unable to hold that the evaluation conducted by the BSNL was so faulty or so irrational as to render it null and void.
The judgments of the Supreme Court referred to above make it abundantly clear that the statutory authorities are mandated to comply with Article 14 in considering the relative merits of the bidders in a tender process. It is necessary to ensure that there is parity of treatment of all the concerned parties. In the present case, in our opinion, such parity has been maintained. We are unable to discern any confusion in Addendum 4 dated 5.9.2008. We also do not find the evaluation of tender bids by BSNL to be irrational or arbitrary. The interpretation placed on the document by the learned counsel for BSNL seems to us to be reasonable. At the very least it is a possible view that could be taken. The method adopted by BSNL to arrive at the decision is applicable to all the parties. It would, therefore, also satisfy the tests laid down by the Supreme Court, repeatedly.
In view of the aforesaid, the appeal is allowed. The judgment and/or order so passed by the Learned Single Judge is set aside. There shall be no order as to costs.
(Surinder Singh Nijjar, C.J.) I agree.
(Biswanath Somadder, J.) Later At this stage learned counsel for the respondents makes a prayer that the operation of the judgment be stayed for a fortnight. We see no reason to accept the submission. Prayer is considered and declined.
(Surinder Singh Nijjar, C.J.) I agree.
(Biswanath Somadder, J.)