Bombay High Court
Mep Infrastructure Developers ... vs Msrdc Sea Link Ltd. And 3 Ors on 20 August, 2022
Bench: Makarand Subhash Karnik
Judgment-WPL.23639.2022
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL APPELLATE
WRIT PETITION (L) NO. 23639 OF 2022
1. MEP Infrastructure }
Developers Ltd. }
A company incorporated }
under the Companies Act, }
1956 having its office at }
2102, Floor-21st, Plot }
No. 62, Kesar Equinox, Sir }
Bhalchandra Road, Hindu }
Colony, Dadar (East), }
Mumbai 400 014, through }
its authorised signatory }
Mr. Mandar Karandikar }
}
2. Ozoneland Private Limited }
Through Mr. Manoj }
Upadhyay, authorized }
signatory, having office }
address at 4, Vaswani }
Mansion, 120 Churchgate, }
Mumbai 400 020 }
}
3. Mrs. Anuya J. Mhaiskar }
Director of MEP }
Infrastructure Developers }
Ltd., 2102, Floor-21st, Plot }
No. 62, Kesar Equinox, }
Sir Bhalchandra Road, }
Hindu Colony, Dadar (East), }
Mumbai 400 014 }
}
4. Mr. Manoj Upadhyay }
Having office address at }
4, Vaswani Mansion, 120 }
Churchgate, Mumbai }
400 020 } Petitioners
Versus
Page 1 of 23
J.V.Salunke,PS
Judgment-WPL.23639.2022
1. MSRDC Sea Link Ltd. }
A company incorporated }
under the Companies Act, }
2013 having its registered }
office Near Lilavati }
Hospital, Opp. Bandra }
Reclamation Bus Depot, }
K C Marg, Bandra (West) }
Mumbai 400 050 }
}
2. Maharashtra State }
Road Development }
Corporation Ltd. }
A company incorporated }
under the Companies Act, }
1956 having its registered }
office at MSRDC }
Limited, Opp. Bandra }
Reclamation Bus Depot, }
K C Marg, Bandra (West), }
Mumbai 400 051 }
}
3. State of Maharashtra }
Through the Government }
Pleader, High Court, Bombay } Respondents
Mr. Venkatesh Dhond, Senior Advocate a/w Mr.
Ashish Kamat, Mr. Yashesh Kamdar, Mr. Deepak
Deshmukh, Ms. Swati Singh and Mr. Rakesh Gupta
i/by Naik Naik & Company for petitioners.
Dr. Milind Sathe, Senior Advocate a/w Mr. Prashant
Chawan, Mr. Arun Siwach, Ms. Priyanka Mitra and
Mr. Karan Gandhi i/by Cyril Amarchand Mangaldas
for respondent nos.1 and 2.
Mr. Abhay Patki, Addl. Government Pleader a/w Mr.
Hemant Haryan, AGP for respondent no.3/State.
CORAM: DIPANKAR DATTA, CJ &
M. S. KARNIK, J.
RESERVED ON: 17th AUGUST, 2022
PRONOUNCED ON: 20th AUGUST, 2022
J.V.Salunke,PS
Judgment-WPL.23639.2022
JUDGMENT: [Per the Chief Justice]
1. After several abortive exercises initiated by it for
selection and appointment of a toll collecting operator,
Maharashtra State Road Development Corporation Sea Link
Limited (hereafter "respondent no. 1", for brevity) floated
tender notice dated 7th June 2022 for appointment of an
operator for collection of toll at Rajiv Gandhi Sea Link
(Bandra-Worli Sea Link) Toll Plaza (2nd call). Clause No. 2 laid
down "eligibility and qualification criteria". Clauses 2.1 and
2.2.6 thereunder read as follows: -
"2.1 Any bidder/its directors/its subsidiary/controlling
interest including their Directors/JV partners/Partner in
case of partnership firm, etc, who is minor or who has
been adjudged insolvent or who has been convicted in a
Court of Law for an offence under Indian Penal Code or
offence involving moral turpitude or other criminal
activities or detained under any preventive Law in force
or who has been black listed by the Central/State
Government or Semi Government organization or
Corporation or MSRDC or its subsidiary, or who has
defaulted in payment of outstanding dues or has
breached terms and conditions resulting in termination
of contract to MSRDC/MSLL/any of its subsidiary
company/ies, such bidder/its subsidiary/JV
Partner/partner in case of partnership firm etc. in
respect of any other contract with MSRDC/MSLL/any of
its subsidiary company/ies shall not be eligible to
submit any offer/s. Offer/s if submitted by such bidder/
its subsidiary/JV Partner/partner in case of partnership
firm, the same shall be treated as invalid.
******
2.2.6 Bidder/Offerer shall submit a no dues
certificate issued by MSRDC's/MSLL's Accounts
department in the Technical Envelop."
2. The petitioners 1 and 2 are companies which, as a
consortium, submitted their bid in response to such tender
J.V.Salunke,PS
Judgment-WPL.23639.2022
notice. Since clause 2.2.6 (supra) required submission of no-
dues certificate issued by the Accounts Department of the
respondent no. 1 as well as Maharashtra State Road
Development Corporation Limited (hereafter "respondent no.
2", for brevity), the petitioner no. 1 had requested the
respondent no. 2 vide letter dated 10th June 2022 to issue a
no-dues certificate. In pursuance of such a request, a
certificate dated 14th June 2022 was issued by the respondent
no. 2 reading as follows: -
"TO WHOMSOVER IT MAY CONCERN
Sub: - Appointment of Contractor for collection of
toll at Rajiv Gandhi Sea Link Toll Plaza
Ref: M/s. MEP Infrastructure Developers Ltd.
vide request letter dtd. 10/06/2022
M/s. MEP Infrastructure Developers Ltd. does not have
any outstanding dues as on 14th June, 2022.
However, the subsidiary companies of the Applicant
have outstanding dues of Rs.408.83 Crore as on 14th
June, 2022.
The details are as follows: -
Sr. Company Toll station Name Particulars Outstanding
No. Name Amount (Rs)
Rajiv Gandhi Sea On Going 69,49,39,626
1 MEP RGSL Toll Link Contract
Bridge Pvt. Ltd. Rajiv Gandhi Sea Revenue 71,11,25,786
Link Sharing
Rajiv Gandhi Sea Anti- 16,30,52,186
Link carbonation
Rajiv Gandhi Sea Negative 19,38,17,326
Link variation
2 Raima Kini & Tasawade Revenue 1,41,92,23,036
Manpower & Toll Sharing
Consultancy
Pvt. Ltd.
3 MEP Mumbai Entry Revenue 88,58,28,040
Infrastructure Points Sharing
Pvt. Ltd. (2015-20)
4 MEP Mumbai Entry Renewal of 2,03,21,836
Infrastructure Points B.T. surface
Pvt. Ltd.
Total 4,08,83,07,837
J.V.Salunke,PS
Judgment-WPL.23639.2022
In addition to above, subject to further that present
we do not have any information on holding companies
or its subsidiary companies, controlling interest or
common management. Bidder has not submitted any
such disclosure/details in the said request letter.
This certificate is issued as conditional certificate
only to the extent of participation of tender invited by
TAD."
3. In view of the outstanding dues owed by the subsidiary
companies of the petitioner no. 1 to the extent of Rs. 408.83
crore as on 14th June 2022, the respondent no.1 on 6th July
2022 considered and held the bid of the petitioners 1 and 2 to
be non-responsive and, accordingly, rejected such bid.
4. By instituting this writ petition, the petitioners have,
inter alia, prayed for the following substantive relief: -
(a) this Hon'ble Court be pleased to Issue a writ of
certiorari or a writ in the nature of certiorari or any
other appropriate orders or directions calling for
the records for the papers and proceedings in
respect of the impugned Tender process and the
rejection of bid/technical disqualification of the
Petitioner, and after perusing the legality and
propriety of the same, be pleased to quash and set
aside: -
(i) the impugned rejection dated 06 July 2022
inter alia rejecting the Petitioners bid; or
(ii) in the alternative to prayer clause (a)(i)
above, the impugned Tender process.
(b) That this Hon'ble Court be pleased to issue a Writ
of Mandamus or any other appropriate Writ, order
or direction, directing Respondent No.1 to consider
the Financial Proposal of the Petitioners along with
and at par with all other qualified bidders by
ignoring the qualifications and additional
surplusage contained in the No Dues Certificate
dated 14th June 2022;
J.V.Salunke,PS
Judgment-WPL.23639.2022
(c) this Hon'ble Court be pleased to issue an
appropriate writ, order or direction under Article
226 of the Constitution of India prohibiting the
Respondents from taking any action pursuant to
and/or in furtherance of the impugned rejection
dated 6th July 2022;
(d) That only in the event of this Hon'ble Court coming
to the conclusion that the No Dues Certificate dated
14th June 2022 can be looked at by Respondent
No.2 in entirety (i.e., by giving regard to the
surplusage therein) this Hon'ble Court be pleased
to issue a Writ of mandamus or a Writ in the nature
of Mandamus or any other appropriate Writ, order
or direction directing Respondent No.2 to forthwith
issue a No Dues Certificate without any surplusage
and then consider the same for the purposes of the
Tender and until then keep further proceedings/
steps in the tender process (including issuing a
Letter of Acceptance or Work Order or Contract and
taking any steps/action pursuant thereto) in
abeyance;
(e) That this Hon'ble Court be pleased to declare that,
the disqualification contained in Clause 2.1 cannot
attach to the Petitioner, inter alia because it is an
admitted position that no contract between the
Petitioner and/or its subsidiaries and Respondent
Nos.1 and 2 and/or its subsidiaries has been
terminated for the non-payment of the alleged
amounts outstanding as reflected in the No Dues
Certificate dated 14th June 2022 and/or there are
admittedly no outstanding dues from Petitioner
No.1."
5. The short question that we are called upon to decide is
whether, by invoking clause 2.1, the technical bid of the
petitioners could be rejected by the respondent no. 1.
6. As it appears from the pleaded case in the writ petition,
the petitioners have read clause 2.1 to connote that mere
J.V.Salunke,PS
Judgment-WPL.23639.2022
default in payment of outstanding dues would not amount to a
disqualification; if only such default has resulted in
termination of contract, such clause could be attracted.
7. On the other hand, it appears from the reply affidavit of
the respondent no. 1, being the author of the tender, that it
has urged us to uphold the impugned rejection of the
technical bid of the petitioners 1 and 2 by reading clause 2.1
in the following manner: -
"Clause 2.1
Any bidder/its directors/its subsidiary/
controlling interest including their Directors/JV
partners/Partner in case of partnership firm, etc.,
who is minor
or
who has been adjudged insolvent
or
who has been convicted in a Court of Law for an
offence under Indian Penal Code or offence involving
moral turpitude or other criminal activities
or
detained under any preventive law in force
or
who has been blacklisted by the Central/State
Government or Semi Government organization or
Corporation or MSRDC or its subsidiary,
or
who has defaulted in payment of outstanding
dues
or
has breached terms and conditions resulting in
termination of contract
to MSRDC/MSLL/ any of its subsidiary company/ies,
J.V.Salunke,PS
Judgment-WPL.23639.2022
such bidder/its subsidiary/JV Partner/partner in
case of partnership firm etc., in respect of any
other contract with MSRDC/MSLL/any of its
subsidiary company/ies shall not be eligible to
submit any offer/s. Offer/s if submitted by such
bidder/its subsidiary/JV Partner/partner in case
of partnership firm, the same shall be treated as
invalid."
(emphasis supplied by the respondent no.1)
8. We record that at the outset, Dr. Sathe, learned senior
counsel for the respondents 1 and 2 raised certain preliminary
objections to the maintainability of the writ petition, namely,
that the writ petition suffers from suppression of material
facts, that the petitioner no. 2 cannot challenge the tender
terms having participated in the tender unconditionally and
that the question raised in the writ petition is academic in the
context of dues/liability having been admitted by the
petitioner no. 1.
9. We have not found the preliminary objections weighty
enough for foreclosing a discussion on the merits of the rival
claims. Suppression is alleged by Dr. Sathe by referring to a
particular agreement dated 29th September 2017 titled
"Contract Agreement" annexed to the reply affidavit of the
respondents 1 and 2 (at page 288 of the paper book). The
respondent no.2, the petitioner no.1 and MEP RGSL Toll Bridge
Private Limited, which is alleged to be one of its subsidiaries
and referred to as "Contractor" in the said agreement, are
parties thereto. By such agreement, the petitioner no.1 bound
itself to be jointly and severally liable with the subsidiary to
the respondent no.2 under such agreement. According to Dr.
Sathe, this agreement has not been annexed to the writ
J.V.Salunke,PS
Judgment-WPL.23639.2022
petition and, thus, constitutes suppression of a material fact.
However, we find this agreement to have been referred to in
paragraph 8 of the writ petition and the petitioners also
craved for leave to refer to and/or rely upon it as and when
required. The point of suppression, in our opinion, is thus not
well substantiated. The other two objections, in our further
opinion, are also not in the nature of 'demurrer'. Such points
touch upon the merits of the rival claims and, therefore, we
intend to decide the fate of the petitioners based on our
reading and understanding of what clause 2.1. is all about.
10. Appearing in support of the writ petition, Mr. Dhond,
learned senior counsel contended that clause 2.1 could have
been invoked by the respondents 1 and 2 and a
disqualification would have been incurred by the petitioners 1
and 2 only if any contract owing to default in payment of
outstanding dues were terminated by either of the first 2
(two) respondents. In other words, 'termination of contract' in
clause 2.1 would apply to both, i.e., termination not only for
breach of the terms and conditions but also for default in
payment of outstanding dues.
11. Mr. Dhond further argued that default in payment of
outstanding dues is not to be viewed as a 'standalone
category' on the occurrence of which a bidder could be
disallowed to cross the threshold. Disqualification of a bidder
could be resorted to if there be a prior termination of a
contract on the ground of either default or breach of the
terms and conditions. Simplicitor default in payment of
outstanding dues could not have given ground for
disqualification.
J.V.Salunke,PS
Judgment-WPL.23639.2022
12. Moving on to the next point, Mr. Dhond contended that
the no dues certificate should have indicated whether the
petitioner no.1 owes any outstanding dues to the respondents
1 and 2. The answer to the same correctly given in the
negative left no further information to be provided. However,
to the extent the certificate proceeds to say what the
subsidiaries of the petitioner no.1 owe to the respondents 1
and 2 is surplusage. According to him, the certificate not only
should not have contained information about the dues of the
subsidiaries in view of clause 2.2.6, such information ought
not to have been considered while rejecting the technical bid
of the petitioners 1 and 2.
13. Next, Mr. Dhond urged that 'admitted liability' as
referred to by Dr. Sathe in his preliminary objections is a 'non-
issue'. In this regard, he contended that this was not the first
time that the respondent no.1 floated a tender for
appointment of an operator for collection of toll at the
concerned site with similar terms and conditions; in fact, this
tender was preceded by 7 (seven) earlier attempts made by
the respondent no.1 to appoint such operator and majority of
such tenders stood cancelled to fulfil the oblique motive of
denying appointment as operator to the petitioner no.1 which
had ultimately emerged as the L-1 bidder after crossing the
various stages. No-dues certificate bearing similar contents,
as extracted above, to the effect that the petitioner no.1 had
no outstanding dues to the respondent no.2 but that the
subsidiaries of the petitioner no.1 owed certain amounts to
such respondent (which, of course, are vehemently disputed)
had been submitted and were accepted by the respondent
J.V.Salunke,PS
Judgment-WPL.23639.2022
no.1 without any reservation. Dues, if any, owed by the
subsidiaries by itself did not constitute a ground for
disqualification earlier and, therefore, the present rejection
defies logic and reason.
14. Mr. Dhond further contended that one of the other two
bidders had not even submitted the no dues certificate, yet,
such bid was not rejected. This was deliberate, to ensure that
the process does not fall through because of a single valid bid
being received.
15. It was also submitted by Mr. Dhond that if the financial
bid, as offered by the petitioners, were to be accepted by the
respondent no. 1 and not the financial bid of one of the two
qualified bidders, who bid lower than the other, and which the
respondent no.1 is intending to accept and act upon, it would
save the public exchequer of unnecessary drainage in excess
of Rs. 20 crore per year. Since the respondents 1 and 2 are
supposed to be the guardians of the finances of the "State",
he sounded extremely critical of the impugned action of
rejection of the technical bid of the petitioners 1 and 2.
16. Having regard to the aforesaid contentions, Mr. Dhond
submitted that the petitioners are entitled to seek an order
from this Court to set aside the impugned rejection of their
financial bid with consequential order for awarding of the
contract in their favour.
17. Per contra, Dr. Sathe contended that there has been no
illegality in rejecting the technical bid of the petitioners 1 and
2. Clause 2.1, according to him, has been misread by the
petitioners. The object and purpose of clause 2.1 read with
clause 2.2.6 is clear and the substance thereof is to be seen.
J.V.Salunke,PS
Judgment-WPL.23639.2022
The respondents 1 and 2 do not wish to enter into any
relationship with a party which, in course of previous dealings,
has not honoured its obligations under the relevant contracts.
There are huge dues that the subsidiaries of the petitioner
owe to the respondent no.2 and, therefore, if the respondents
1 and 2 wish not to enter into any relationship with a clear
defaulter, illegality or arbitrariness cannot be raised as a valid
plea to impugn such action. The petitioner no.1 cannot, in any
event, escape liability by referring to absence of any
outstanding dues on its part. Clause 2.1 in no uncertain terms
bars participation by a bidder even if its subsidiary is in
default. Every default in payment of outstanding dues may
not result in termination but a single default could lead to
disqualification. That is how the author of the tender wants
the relevant clause to be read. After all, terms of a
commercial document are under consideration and not terms
of a statute. To buttress his argument that different
considerations apply while interpreting a statute and a
commercial document, reliance was placed on paragraph 43 of
our decision dated 27th June 2022 in Writ Petition (L)
No.14657 of 2022 (Adani Ports and Special Economic
Zone Limited vs. The Board of Trustees of Jawaharlal
Nehru Port Authority & ors.).
18. Referring to the "Contract Agreement" dated 29th
September 2017, to which we have adverted above, Dr. Sathe
contended that the respondent no.2 had selected the
petitioner no.1 as the bidder for development, maintenance
and operation of Worli-Bandra Sea Link (now known as Rajiv
Gandhi Sea Link) and Letter of Acceptance (LoA) was issued
J.V.Salunke,PS
Judgment-WPL.23639.2022
to such selected bidder on 28th June 2017 requiring inter alia
execution of Contract Agreement with 45 (forty-five) days.
Acting on the request of the petitioner no.1 and based on the
representation of MEP RGSL Toll Bridge Private Limited
(referred to therein as the "Contractor") that it was promoted
by the petitioner no.1, the respondent no.2 entered into such
agreement pursuant to the LoA. Inviting our attention to one
of the clauses at the concluding part of such agreement, Dr.
Sathe contended that the "Contractor" agreed and confirmed
that "the Parties forming the SPV will be jointly and severally
liable to MSRDC under this agreement" and "Parties" would
obviously include the petitioner no.1. It has been pointed out
from the no dues certificate dated 14th June 2022 that apart
from other subsidiary companies of the petitioner no.1, MEP
RGSL Toll Bridge Private Limited owes in excess of Rs. 19
crore to the respondent no.2. It has also been shown that
there was a meeting dated 1st February 2021 to discuss the
subject of "Operation and Maintenance of Rajiv Gandhi Sea
Link and Toll Plaza and collection of toll on upfront basis"
chaired by the Chief General Manager, TAD, of the respondent
no.2. From the minutes of meeting, which forms part of the
reply affidavit, it has been shown that the "CMD, M/s. RGSL
Toll Bridge Pvt. Limited has agreed to deposit
Rs.8,40,00,000/- on or before 3rd December 2021". Although
post-dated cheques were issued by MEP RGSL Toll Bridge
Private Limited, albeit 'under protest', most of such cheques
have been dishonoured. Dr. Sathe vehemently contended that
the petitioner no.1 cannot escape liability, having been
instrumental in appointment of its subsidiary, MEP RGSL Toll
J.V.Salunke,PS
Judgment-WPL.23639.2022
Bridge Private Limited, as a "Contractor" for development,
maintenance and operation of Rajiv Gandhi Sea Link. He
concluded his arguments on this point by contending that the
petitioner no.1 has been operating for the last 13 (thirteen)
years either through itself or through its subsidiary and dues
are owed to the respondent no.2 in respect of the very same
work for which the tender dated 7th June 2022 was floated.
19. Dr. Sathe also took serious exception to the petitioners'
raising pleas in their rejoinder affidavit (which could have
been raised but are untraceable in the writ petition) and
thereby, building up a new case altogether. According to him,
there is simply no justification for the petitioners to make
allegations in the rejoinder affidavit without making them part
of the writ petition and hence, contents of paragraphs 1 and
20 thereof do not merit any consideration.
20. Reacting to the allegation of Mr. Dhond that no dues
certificate was not submitted by one of the bidders, Dr. Sathe
contended that such a bidder had given a declaration that it
had no subsisting contract with the respondent no.2. Such a
declaration, upon inquiry, was found to be correct; hence, no
dues certificate was not insisted upon. According to Dr. Sathe,
this is one other unmeritorious plea that the petitioners have
raised which deserves outright rejection.
21. Answering Mr. Dhond's contention that earlier no dues
certificate containing similar contents was accepted by the
respondents 1 and 2, Dr. Sathe vehemently urged that the
petitioners have made incorrect statements in their rejoinder
affidavit. The relevant file was placed before us for our perusal
to demolish the contention of Mr. Dhond.
J.V.Salunke,PS
Judgment-WPL.23639.2022
22. Resting on the aforesaid arguments, Dr. Sathe prayed
that the writ petition be dismissed.
23. Having heard Mr. Dhond and Dr. Sathe at considerable
length and upon consideration of the materials on record, we
now proceed to answer the question noted at paragraph 5
(supra).
24. At the outset, we record our acceptance of the argument
of Dr. Sathe that the petitioner no.1 cannot wriggle out of the
terms of the "Contract Agreement" dated 29th September
2017. For any outstanding dues not cleared by MEP RGSL Toll
Bridge Private Limited, the liability would stand foisted on the
petitioner no.1 in view of the express and unambiguous
contractual terms and the no dues certificate cannot be
impeached on the ground that it contains surplusage.
25. We are also in agreement with Dr. Sathe that the pleas
raised in the rejoinder affidavit by the petitioners do not
deserve consideration in the absence of any valid reason for
not pleading the same facts in the writ petition itself, yet,
having regard to the arguments that have been addressed
from the bar, we would not shy away from dealing with a few
of them.
26. In Adani Ports and Special Economic Zone Limited
(supra), we had considered a plethora of decisions of the
Supreme Court. Inter alia, the decisions in Michigan Rubber
vs. State of Karnataka, (2012) 8 SCC 216, Afcons
Infrastructure Ltd. vs. Nagpur Metro Rail Corporation
Ltd., (2016) 16 SCC 818, Nabha Power Ltd. vs. Punjab
State Power Corporation Ltd., (2018) 11 SCC 508, Caretel
J.V.Salunke,PS
Judgment-WPL.23639.2022
Infotech Ltd. vs. Hindustan Petroleum Corporation
Limited, (2019) 1 SCC 81, and Silppi Constructions
Contractors vs. Union of India, (2020) 16 SCC 489, had
provided guidance for us to hold that interpretation of a
commercial contract stands on a footing distinct from
interpreting statutes and the Courts ought to show deference
to the interpretation of contractual terms placed by the
tendering authority since the author of the tender is better
placed to appreciate its requirements and interpret them.
27. Turning to clause 2.1, it admits of no doubt that it is not
grammatically correct. That careless drafting without proper
advertence results in proliferation of meritless litigation is a
sad reality of present times and the case at hand is a typical
example. The preposition 'to' has been erroneously placed
before the words "MSRDC/MSLL/any of its subsidiary
company/ies", with the sequitur that the sentence does not
carry a specific meaning and opens up ambiguity. We are
minded to observe that the present controversy could have
been avoided if the intention of the respondents 1 and 2, as
submitted before us, were expressed in clause 2.1, to the
extent relevant, in terms as follows:
"2.1 Any bidder/its directors/its subsidiary/controlling
interest including their Directors/JV partners/Partner in
case of partnership firm, etc,
who has defaulted in payment of outstanding dues to
or
has breached terms and conditions resulting in
termination of contract with (sic, instead of to)
MSRDC/MSLL/any of its subsidiary company/ies,
such bidder/its subsidiary/JV Partner/partner in case of
partnership firm etc. in respect of any other contract
J.V.Salunke,PS
Judgment-WPL.23639.2022
with MSRDC/MSLL/any of its subsidiary company/ies
shall not be eligible to submit any offer/s.
Offer/s if submitted by such bidder/ its subsidiary/JV
Partner/partner in case of partnership firm, the same
shall be treated as invalid.
28. Although the Courts are not precluded from ironing out
the creases, it would indeed be impermissible for us to alter
the material of which clause 2.1 is woven by transplanting
prepositions therein, as above. The simplest way of deciding
the controversy open to us is, to follow the dicta of the
Supreme Court in the aforesaid judicial authorities and to
accept what Dr. Sathe has said about the intention of the
respondents 1 and 2 that clause 2.1 has been inserted with
the purpose that they do not wish to have any relationship
with parties who have been defaulting in payment of the dues
arising out of existing contracts by and between them.
29. It is axiomatic that while interpreting clauses of
commercial contracts of the present nature, some leeway has
to be provided to the tendering authority and that the Courts
may not decide cases in a rigid spirit of legalism. While
considerations which are relevant for interpreting statutes
cannot be imported in understanding the scope and meaning
of certain terms, as in clause 2.1, a common-sense approach
should be taken when faced with grammatical errors in
clauses of a notice inviting tender. Bearing this in mind, we
may proceed a step further and examine whether clause 2.1.,
read in the context of the tender document, lends support to
the point that Dr. Sathe argued, i.e., termination of contract
governs only 'breach of terms and conditions' and not 'default
in payment of outstanding dues'.
J.V.Salunke,PS
Judgment-WPL.23639.2022
30. Law seems to be well settled that if a literal construction
does not yield sense, it has to give way to a purposive
approach. We need to understand the object or purpose of the
clause and attempt to ascertain, based on the language or
phraseology used, the interpretation that would be consonant
with such object or purpose.
31. Clause 2.1 is no doubt a condition of eligibility. We once
again agree with Dr. Sathe that the substance thereof has to
be seen to determine the nature of requirement that the
tendering authority had in mind. If indeed the words
"resulting in termination of contract" are to be read twice, i.e.,
once after who "has defaulted in payment of outstanding
dues" and again after who "has breached terms and
conditions", it leads to an incongruity. Default in payment of
outstanding dues could be an incident of breach of the terms
and conditions of the contract. If default in payment of
outstanding dues were not a standalone category attracting
disqualification and governed by termination of contract, it
would not have been required to be kept in clause 2.1. This,
for the reason that the rest of the clause would have taken
care of the condition of eligibility which the respondents 1 and
2 had in mind of not allowing a defaulter to bid. Harmonious
reading of the terms of the tender notice, in the context of the
factual setting that the tender is for the same work which, at
the instance of the petitioner no.1, is presently being
performed by MEP RGSL Toll Bridge Private Limited, and that
there are outstanding dues not cleared by it despite issuing
cheques, since dishonoured, the question that would
obviously arise in the circumstances is, whether the
J.V.Salunke,PS
Judgment-WPL.23639.2022
respondents 1 and 2 would have encouraged the petitioner
no.1 to bid despite its omission/neglect/failure to have the
outstanding dues cleared? If the answer is in the negative,
and we do not have any reason to say why it should not be
so, coupled with our observation at paragraph 24 (supra), the
inevitable conclusion is that clause 2.1 requires a bidder not
to have defaulted in payment of outstanding dues to the
respondents 1 and 2 notwithstanding the fact that such
default has not resulted in termination of the contract. We
also do not see reason to hold that the tender terms and
conditions could not have been so designed to keep defaulting
parties out of the process. After all, the respondents 1 and 2
do have the freedom to contract and choose a party without
blemishes for working out the contract. In a case of this
nature, Article 14 of the Constitution also does not stand
offended.
32. The arguments of Mr. Dhond, to the contrary, do not
appeal to us to be sound and hence, stand rejected.
33. After considering a host of precedents including, inter
alia, Tata Cellular vs. Union of India, AIR 1996 SC 11, the
Supreme Court in Jagdish Mandal vs. State of Orissa,
(2007) 14 SCC 517, observed 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
J.V.Salunke,PS
Judgment-WPL.23639.2022
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. ***
34. Applying the tests laid down, we have no hesitation in
holding that this is not a case where the decision to reject the
technical bid of the petitioners 1 and 2 is either mala fide or
that the decision made is so arbitrary and irrational that an
authority acting reasonably and in accordance with the
relevant law could never have reached such decision or that
the decision is against public interest.
J.V.Salunke,PS
Judgment-WPL.23639.2022
35. We are, therefore, of the considered opinion that clause
2.1 was rightly invoked for disqualifying the petitioners 1 and
2 and that they are not entitled in law to claim consideration
of their financial bid.
36. The contention that one of the bidders was declared
eligible without it having produced the no dues certificate, in
our opinion, is one advanced in desperation. It stands to
reason that a case of outstanding dues might arise if there is
a subsisting contract. If there is none, we fail to see why such
bidder should be compelled to produce a no dues certificate.
It is only the veracity of the declaration that has to be
ascertained and we record our satisfaction, on perusal of the
relevant file produced by Dr. Sathe that there has been due
ascertainment that the respondent no.2 and the concerned
bidder are not parties to a subsisting contract. The contention
is meritless and, accordingly, fails.
37. Insofar as the contention of Mr. Dhond that on previous
occasions similar no dues certificate was accepted by the
respondents is concerned, the same is equally without merit.
An administrative decision cannot be elevated to the level of
precedents, as understood in the judicial world. Law is well
settled that a previous illegal decision cannot be a ground for
impugning a subsequent correct decision. Even otherwise, the
incorrectness of Mr. Dhond's contention has been shown by
Dr. Sathe from the relevant file. On a previous occasion too,
the technical bid of the petitioner no.1 stood rejected on the
ground of non-payment of outstanding dues by its
subsidiaries. Hence, this contention too stands overruled.
J.V.Salunke,PS
Judgment-WPL.23639.2022
38. Before parting, we wish to dwell upon the argument of
Mr. Dhond that the financial bid of the petitioners 1 and 2, if
accepted, would have resulted in the respondents 1 and 2
saving public money. No doubt, as Mr. Dhond submitted, the
respondents 1 and 2 are duty bound to look for the best offer
that would suit the interest of the "State" being the guardian
of its finances. However, such a duty would arise when
competing interests of equals are under consideration and not
among unequals. In terms of the tender terms and conditions,
the financial bids of only those bidders whose technical bids
qualify and cross the threshold to enter the second round are
required to be considered. So long they do not cross the
threshold, no duty was cast on the respondents 1 and 2 to
consider the financial bid of a bidder who is not technically
qualified. The petitioners 1 and 2 being ineligible to bid in the
first place, the question of crossing the threshold to have their
financial bid considered does not and cannot arise. In such
view of the matter, their financial bid could not have been
considered to be a valid bid that would merit consideration.
39. That apart, drawing from our judicial experience, we
may unhesitatingly refer to a common trend of ineligible
bidders offering a lower/higher bid than the eligible bidders
and then raising a plea of how the "State" would have
benefited financially if its bid were accepted to arouse judicial
conscience to prevent unnecessary drainage from the public
exchequer. Unmeritorious pleas such as these ought not to
detain us for a moment and deserve outright rejection, which
we hereby do.
J.V.Salunke,PS
Judgment-WPL.23639.2022
40. The writ petition is devoid of any merit and, accordingly,
stands dismissed. Interim order, if any, stands vacated
forthwith. Parties are, however, left to bear their own costs.
(M. S. KARNIK, J.) (CHIEF JUSTICE)
LATER:
1. Mr. Dhond seeks stay of operation of this order. The
prayer is opposed by the learned advocate for respondents 1
and 2.
2. The prayer is considered and rejected.
SALUNKE
JV
Digitally signed
by SALUNKE J V
Date: 2022.08.20
(M. S. KARNIK, J.) (CHIEF JUSTICE)
16:23:12 +0530
J.V.Salunke,PS
