Calcutta High Court (Appellete Side)
Damodar Valley Corporation And ... vs Bla Projects Private Limited And ... on 3 July, 2023
MAT NOS (894 OF 2023 & 895 OF 2023)
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APPELLATE SIDE
RESERVED ON: 08.06.2023
DELIVERED ON:03.07.2023
CORAM:
THE HON'BLE MR. CHIEF JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE HIRANMAY BHATTACHARYYA
MAT NO. 894 OF 2023
(I.A. NO. CAN 01 OF 2023)
WITH
MAT NO. 895 OF 2023
(I.A. NO. CAN 01 OF 2023)
DAMODAR VALLEY CORPORATION AND OTHERS
VERSUS
BLA PROJECTS PRIVATE LIMITED AND ANOTHER
Appearance:-
Mr. Anirban Ray, Learned Government Pleader.
Mr. Swarajit Dey, Advocate.
Ms. Riddhi Jain, Advocate.
...For the Appellants
Mr. Kishore Datta, Advocate.
Mr. Amitesh P. Ray, Advocate.
...For the Respondent/BLA Projects
Ms. P. Saha Saha (Das)
...For the Respondent No. 2 in
MAT No. 895 of 2023
Page 1 of 24
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JUDGMENT
(Judgment of the Court was delivered by T.S. SIVAGNANAM, CJ.)
1. These intra court appeals are directed against the common order
passed in WPA No. 26117 of 2022 and WPA No. 27405 of 2022. Since the
facts in both the cases are identical and common submissions were made by
the learned advocates for the parties, with their consent the appeals are
disposed of by this common judgement and order.
2. The first respondent in this appeal is the writ petitioner, BLA Projects
Private Limited, Kolkata. The writ petitions were filed challenging the
correctness of the decision taken by the appellant, DVC, as communicated
to the respondent vide email dated 15.11.2022. By the said communication,
the respondent writ petitioner was informed that their tender submitted for
the subject work has been rejected during the technical evaluation by the
duly constituted Committee for the reasons "administrative grounds". The
writ petition was filed challenging the rejection of the petitioners technical
bid primarily on the ground that the order of rejection did not contain any
reasons. On 24.11.2022 the appellant informed the respondent the reasons
for rejection in reply to the writ petitioner's letter dated 16.11.2022 wherein
they sought for reasons for rejection. In the communication dated
24.11.2022 the following were the reasons for rejection:-
Reference to your letter dated 16.11.2022, the reasons on which the
Technical Evaluation Committee has rejected your bid is furnished as
below:
1) Fraudulent practice was noticed against you
related to pilferaging of DVC's transported good
quality coal and replacement of the same with
some extraneous materials like boulders, mud,
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stones etc. While executing a coal
transportation contract of RTPS, DVC. Same
was proved on 01.06.2018 by RTPS officials in
presence of contract's representatives. Letter
was issued to you on 02.06.2018 intimating
this incident of ill practice by them FIR was
registered on 09.06.2018 by DVC official. The
Charge Sheet/Final Report was issued by
Raghunathpur PS, Dist, Purulia, W.B. on
24.10.2019.
2) You have repeatedly suppressed the above
charge of pilferage and fraudulent practices.
3) Thus, you have committed a transgression
through a violation of Section 3 of Integrity Pact.
4) Decision was taken on administrative grounds
as per legal opinion as the above investigation
towards the incident of pilferage and fraudulent
practices is sub-judice at Hon'ble Calcutta High
Court.
3. The writ petitioner contended that in the tender document/conditions
of tender there is no clause requiring the petitioner to disclose any FIR or
charge sheet. In any event the disclosure has to be made if it is within three
years and in the instant case three years had lapsed from the date on which
the FIR was lodged i.e. on 09.06.2018. The petitioner relied upon the stand
taken by the appellant before the Hon'ble Supreme Court in Special Leave
Petition arising out of an order passed by the Division Bench of this Court in
WPA No. 23775 of 2022 wherein the appellant had stated that a
transgression had been committed by the writ petitioner in June 2018 when
the incident occurred. Therefore it is submitted that in terms of Section 5 of
the tender conditions the three year period has been stipulated and the
subject tender having been invited much after the period of three years,
there is no requirement for any voluntary disclosure of the alleged
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transgression. Further by referring upon clause 2.3(iii) of the Policy for
Withholding and Banning of Business Dealings, the voluntary disclosure is
encouraged not with a view to reject the bid but to keep an alert watch on
the bidder's action in the tender and subsequent contract. Further it was
contended that the action of the appellant in rejecting tender was arbitrary
and meant for certain extraneous reasons and not as per terms of tender
and therefore the action is not only arbitrary but mala fide as well. Further
it was contended that in terms of the tender the Integrity Pact is required to
be signed by the intending bidder which does not provide for any scope for
disclosure of any information along with the Integrity Pact and all that the
bidder is required to do is to sign the Integrity Pact and submit the same to
the tender inviting authority. It was further submitted that even assuming
that there was a transgression, in terms of the clause 2.3(iii) of the Policy for
Withholding and Banning of Business Dealings it would not mean automatic
disqualification of the bid as conditions stipulates that the declared conflict
of interest may be evaluated and mitigating steps if possible should be taken
by the procuring entity. Further voluntary reporting of previous
transgression of code of integrity elsewhere should be evaluated and barring
cases of various grades of debarment, alert watch may be kept on the
bidder's action in the tender and subsequent contract. Further it is
submitted that the Director of the company was a person against whom the
charge has been laid in the criminal case and the company is not the
accused. Subsequently the criminal case has also been stayed in the
proceedings initiated by the writ petitioner before this Court. Further the
three year time limit prescribed in Section 5 of the conditions of tender
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should not be computed from the date on which the charge sheet was laid
but as admitted by the appellant from the date on which the FIR was
registered and if done so the subject tender having been invited much after
the period of three years, the technical bid of the writ petitioner ought not to
have been rejected. Further it was contended that the appellant had placed
reliance on the decision of the Division Bench of this Court in MAT No. 1932
of 2022 which was an appeal arising out of the order passed in WPA No.
23775 of 2022 filed by the respondent writ petitioner and the said decision
cannot be pressed into service as the respondent writ petitioner had
preferred appeal to the Hon'ble Supreme Court in Special Leave to Appeal
No. 3031 of 2023 and the Hon'ble Supreme Court after hearing the parties
by order dated 03.03.2023 ordered that the matter requires consideration.
Therefore the appellant cannot place reliance on the said decision.
4. The appellant resisted the prayer sought for in the writ petition inter
alia contending that the reasons for rejection was clearly set out and
communicated to the writ petitioner and the reasons cannot be said to be
bad in law. It was further contended that in terms of clause 2.3 of the policy
conditions the writ petitioner is obliged to disclose any previous
transgression of code of integrity whether asked or not and admittedly the
writ petitioner had suppressed the fact that their Managing Director had
been charge sheeted under various provisions of the Indian Penal Code on
24.10.2019. Furthermore the writ petitioner's bid has been rejected on the
ground that the writ petitioner has repeatedly suppressed the fact of the FIR
being registered and subsequently the laying of the charge sheet and
participated in 14 previous tender in the year 2021 and 2022 and
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admittedly in none of those tenders writ petitioner had disclosed about the
pendency of the criminal proceedings. Further by referring to the definition
of the "fraudulent practise" as defined in the policy it was submitted that
any omission or mis representation or making false declaration or providing
false information would be "fraudulent practice". It was contended that it is
the appellant who is entitled to interpret the terms of the tender and it is not
for the writ petitioner to make an independent interpretation to the said
terms. Further it was contended that Section 5 of the tender conditions
would have no application to the facts of the case as the order rejecting the
technical bid was by referring to Section 3 of the tender conditions wherein
there is no mention of any time limit of three years and time limit prescribed
in Section 5 cannot be read into Section 3 of the tender conditions. It was
further submitted that Section 3 of the tender conditions contains two
limbs. the first of which deals with transgression committed before or during
the execution of the work through the violation of Section 2 of the conditions
and the second limb is in any other form stage to put the bidder's reliability
or credibility in question and in either of the contingencies the appellant is
entitled to disqualify such bidder from the tender process or to terminate the
contract if already signed and take action as per procedure of "Banning of
Business Dealings". Thus, it was contended that suppression of material
fact regarding criminal proceeding itself is a transgression and in terms of
Section 3 of the Integrity Pact the appellant was entitled to reject the bid of
the writ petitioner. It was reiterated that even assuming that three years
period is applicable the same has not expired since three years had not
lapsed after the charge sheet was laid. Furthermore the suppression by the
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respondent writ petitioner has led to doubt the reliability and credibility of
the writ petitioner and the appellant was entitled to reject the bid in terms of
Section 3 of the Integrity Pact.
5. The Learned Single Bench proceeded to decide the question as to
whether the impugned rejection of the writ petitioner's technical bid falls in
Section 3 of the Integrity Pact or any of the relevant clauses which was
referred to by the parties. After noting Section 3 and Section 5, the learned
writ court took note of clause 2.3 of the Policy for Withholding and Banning
of Business and held that the from a conjoint reading of all the conditions, it
is clear that the obligations on the part of the writ petitioner was to disclose
past transgression which occurred in the three year period prior to the date
of the tender and hence does not cover the alleged fraudulent practice which
occurred before June, 2018 which is specifically the case as stated by the
appellant in their letter dated 24.11.2022. Further the learned writ court
held that the scheme of the terms and conditions makes it clear that the
culpability with regard to the violation of any of the sections relating to
transgression must relate to a fraudulent practice which is limited to three
years preceding the tender. Further the court held that the sharpness of the
penalty has somewhat been blunted by clause 2.3(iii) of the Policy.
Thereafter the learned writ court proceeded to note the decisions of the
Hon'ble Supreme Court with regard to the scope of interference of a writ
court in matters of tender and held that the decision of the Hon'ble Supreme
Court reinforce the view that the tender document is the best judge to
understand the requirements of the Tender and the Court should not
disturb the interpretation given by the Tendering Authority. The learned writ
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court then proceeded to point out that all the decisions of the Hon'ble
Supreme Court however preserve the window for arbitrariness and a mala
fide award or rejection of a Tender, including for extraneous considerations.
Ultimately the learned writ court came to the conclusion that the decision to
exclude the writ petitioner from participating in the Tender as arbitrary
unreasonable and would call for interference by the learned writ court. With
regard to the decision of the Division Bench of this court in MAT No. 1932 of
2022, the court held that the said judgment was challenged before the
Hon'ble Supreme Court and orders have been passed by the Hon'ble
Supreme Court on various dates which make it clear that the matter is
under consideration of the Hon'ble Supreme Court. Further the writ court
came to the conclusion that the order of rejection of the technical bid of the
writ petitioner amounts to virtually blacklisting the writ petitioner without
giving any opportunity of hearing. Accordingly the communications which
were impugned in the writ petitions were quashed and direction was issued
to the appellant to evaluate the technical bid of the writ petitioner and allow
the writ petitioner to participate in the Tenders. Challenging the correctness
of the orders passed by the learned writ court the present appeals have been
preferred.
6. We have elaborately heard Mr. Anirban Ray, learned Government
Pleader assisted by Mr. Swarajit Dey and Ms. Ridhhi Jain, learned
Advocates for the appellants and Mr. Kishore Datta, learned Senior Advocate
assisted by Mr. Amitesh P. Ray, learned Advocate for the respondent/BLA
Projects and Ms. P. Saha Saha (Das), learned Advocate for the Respondent
No. 2 in MAT/895/2023.
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7. The learned Advocates appearing on either side elaborately reiterated
the submissions made before the learned writ court and also placed reliance
on the decisions which were relied upon by them when the writ petition was
heard. The issue which falls for consideration in these appeals is whether
the action of the appellant in rejecting the technical bid of the respondent
writ petitioner in respect of subject tenders could be called in question in a
writ proceeding and if so under what circumstances and is there any
limitation or embargo placed upon the learned writ court to interfere in any
such matters.
8. Before we proceed to take a decision on the facts and circumstances of
the case on hand, it would be necessary and beneficial to take note of the
legal position which have been clearly enumerated/ adumbrated in various
decisions of the Hon'ble Supreme Court. To be noted that the learned writ
court in paragraph 19 of the impugned order has referred to various
decisions and has held that the author of the tender document is the best
judge to understand requirements of the Tender and the Court should not
disturb the interpretation given by the tender inviting authority.
Nevertheless the learned writ court quashed the decision of the appellant on
the ground that the same is arbitrary and unreasonable as it which was a
permissible a ground for the learned writ court to step in.
9. In Tata Cellular Versus Union of India 1 the Hon'ble Supreme Court
held that the principles of judicial review would apply to exercise all the
contractual powers by government bodies in order to prevent arbitrariness
or favouritism, however there are inherent limitations in exercise of that
(1994) 6 SCC 651
MAT NOS (894 OF 2023 & 895 OF 2023)
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power of judicial review. The government is the guardian of the finances of
the State and it is expected to protect the financial interest of the State. The
right to reflect the lowest offer in a tender is always available to the
government but the principles laid down in Article 14 of the Constitution
have to be kept in view while upsetting or refusing tender. There can be no
question of infringement of Article 14 if the government tries to get the best
persons or the best quotation. The right to choose cannot be considered to
be an arbitrary power and however if the said power is extraneous or for any
collateral purpose, exercise of that power will be struck down. Further it was
pointed out that the doubt of the court is to confine itself to the question of
illegality, that it's concern should be (i) whether the decision making
authority exceeded its powers? (ii) committed an error of law (iii) committed
the breach of rules of natural justice (iv) reached a decision which no
reasonable tribunal would have reached or (v) abused its powers. It was held
that it is not for the court to determine whether a particular policy or
particular decision taken in the fulfilment of the policy is fair and it is only
concerned with the manner in which those decisions have been taken. Thus,
the ground on which the administrative action could be subject matter of
judicial review were categorise in three categories namely illegality,
irrationality and procedural impropriety.
10. In an earlier decision in the case of Ramana Dayaram Shetty
Versus The International Airport Authority of India 2 it was held that
the terms of notice inviting tender cannot be ignored as been redundant or
(1979) 3 SCC 489
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being superfluous and they must be giving a meaning and necessary
significance.
11. In Silppi Constructions Contractors Versus Union of India and
Another 3 as it was held that the court must realise the limitations and the
havoc which needless interference in commercial matters would cause. In
contracts involving technical issues, the court should be even more
reluctant because most of the Judges do not have the necessary expertise to
adjudicate upon technical issues which is beyond the domain of the Court.
Further the Court should not use a magnifying glass while scanning the
tender and make small mistakes to appear as big blunders. The Court must
give fair play in the joints to the government and public sector undertakings
in the matter of contracts. Further that the Court should exercise restrain
while exercising the power of judicial review in commercial matters. The
Court will normally loathe to interfere in any contractual matters unless
clear cut case of arbitrariness or mala fide or bias or irrationality has been
met out.
12. In National High Speed Rail Corpn. Ltd. Versus Montecarlo
Limited 4 the Hon'ble Supreme Court sounded a word of caution while
entertaining the writ petition and/or granting stay which ultimately may
delay the execution of mega projects. In Jagdish Mandal Versus State Of
Orissa & Ors.5 it was held that evaluating tender and awarding contracts
are commercial functions; principles of equality and natural justice stay at a
distance; if the decision relating to award of contract is bonafide and is in
(2020) 16 SCC 489
(2022) 6 SCC 401
(2007) 14 SCC 517
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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 above decisions were noted by the Hon'ble
Supreme Court in M/S N.G. Projects Limited Versus M/S Vinod Kumar
Jain & Ors. 6 In the said decision it was held that the question as to
whether a term of the contract is essential or not is to be viewed from the
perspective of the employer and by the employer. It was held that
satisfaction whether a bidder satisfies the tender condition, is primarily
upon the authority inviting the bids, as such authority is aware of the
expectations from a tenderer while evaluating the consequences of non-
performance. It was further held that the Writ Court should refrain itself
from imposing its decision from the decision of the employer as to whether
or not to accept the bid of a tenderer. As the Court does not have the
expertise to examine the terms and conditions of the present day economic
activities of the State and this limitation should be kept in view and Court
should be even more reluctant in interfering with contracts involving
technical issues as there is a requirement of the necessary expertise to
adjudicate upon such issues. Further it was held that the approach of the
Court should not be to find fault with magnifying glass in its hands, rather
the Court should examine as to whether the decision making process is after
complying with the procedure contemplated by the Tender Conditions.
Further, it was held that if the Court finds that there is total arbitrariness or
(2022) 6 SCC 127
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that the tender has been granted in a malafide manner, still the Court
should refrain from interfering with the grant of tender, but instead relegate
the parties to seek for damages for wrongful exclusion rather than to injunct
the execution of the contract.
13. In Tata Motors Ltd. Versus Brihan Mumbai Electric Supply and
Transport & Ors.7, the Hon'ble Supreme Court after taking note of the
decision in Silppi Constructions Contractors (Supra) held that ordinarily
a Writ Court should refrain from imposing its decision from the decision of
the employer as to whether or not to accept the bid of a tenderer unless
something very gross or palpable is pointed out. The Court ordinarily should
not interfere in matters relating to tender or contract. To set at naught the
entire tender process at the stage when the contract is well under way,
would not be in public interest and initiate a fresh tender process may
consume lot of time and also loss to the public exchequer to the tune of
crores of rupees. Further, after referring to the decision of the Hon'ble
Supreme Court in Air India Ltd. Versus Cochin International Airport
Limited 8 it was held that award of a contract, whether by a private party or
by a State is essentially a commercial transaction. A State can choose its
own method to arrive at a decision and it is free to grant any relaxation for
bona fide reasons, if the tender conditions permit such relaxation, further
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 on public interest and not merely
2023 SCC Online SC 671
(2000) 2 SCC 617
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on making of a legal point that the Court should always keep the large
public interest in mind in order to decide whether its intervention is called
for or not and only when it comes to a conclusion that overwhelming public
interest requires interference, the Court should interfere.
14. Bearing the above legal principles in mind, we now examine the facts
of the case on hand. At the first instance, the writ petitioner was informed
by an auto-generated mail that their tender has been rejected during
technical evaluation by the duly constituted committee for the reason
"administrative ground". It is no doubt true that the said communication did
not set out as to what was the "administrative ground" on which the tender
was rejected during technical evaluation. The explanation offered by the
learned Advocate for the appellant is that it is an auto-generated mail and,
therefore, it has mentioned the reason for rejection as "administrative
ground" nevertheless when the appellant sought for the reasons, the same
has been furnished. In the earlier portion of this judgment and order we
have set out the reasons for rejection. The first among the three reasons is
that fraudulent practices as noticed against the writ petitioner relating to
pilferage of DVC's transported good quality coal and replacement of the
same with some extraneous materials like boulders, mud, stone and etc.
while executing the coal transportation contract of RTPC, DVC. The said
fraudulent practice is stated to have been established/ proved on
01.06.2018 by the officials of DVC in the presence of the contractor's (writ
petitioner's) representative and a letter was issued to the writ petitioner on
02.06.2018 intimating the illegality and FIR was registered on 09.06.2018
and charge sheet has been laid on 24.10.2019. The second reason for
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rejection is that the writ petitioners have repeatedly suppressed the said
charge of pilferage and fraudulent practices. The third reason is that the
appellants have committed a transgression through a violation of Section 3
of the Integrity Pact.
15. The Integrity Pact is a form which is mandatorily required to be
executed by the bidder. Section 2 of the said Pact deals with commitment of
the bidders/ contractors. Clause 1 of Section 2 states that the bidders/
contractors commit themselves to take all measures necessary to prevent
corruption. The bidders/ contractors commit themselves to observe the
principles which have been set out in Clauses (a) to (e) in Sub-section (1) of
Section 2 of the Pact during participation in the tender process and during
the contract execution. Section 3 deals with disqualification from tender
process and exclusion from future contracts which reads as follows:
SECTION-3: DISQUALIFICATION FROM TENDER
PROCESS AND EXCLUSION FROM FUTURE CONTRACTS
If the Bidder(s)/Contractor(s), before award or
during execution has committed a
transgression through a violation of section-II
above, or in any other form such as to put his
reliability or credibility in question, the
Principal is entitled to disqualify such
Bidder(s)/Contractor(s) from the tender
process or to terminate the contract, if already
signed and to take action as per the procedure
or "Banning of business dealings" of the
Principal.
16. Section 5 deals with previous transgression which is quoted
hereunder :
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SECCTION-5: PREVIOUS TRANSGRESSION
(1) The Bidder declares that no previous
transgressions occurred in the last three
years with any other Company in any
country conforming to the anti-corruption
approach or with any Public Sector
Enterprise in India that court justify his
exclusion from the tender process.
(2) If the Bidder makes incorrect statement on
this subject, he can be disqualified from the
tender process or action can be taken as per
the procedure of "Banning of business
dealings" of the Principal.
17. Apart from the Tender Conditions which are enumerated under
different heads described as "Sections", there are other conditions which are
in the nature of policy which also forms part of the Tender Conditions and
the policies are to be read along with the substantive part of the Tender
Conditions. In the case on hand, the Policy for Withholding and Banning of
Business Dealings would be relevant. The said Policy states that the
registration of contractors and their liability to participate in
DVC's procurement is subject to the compliance of Code of Integrity for
public procurement and good performance in contracts. The policy sets out
the contingencies for debarment from bidding, the guidelines on debarment
of firms from bidding, debarment of firms only in DVC. The bidders are
required to sign the declaration for abiding by the Code of Integrity for
public procurement in registrations applications and in bid documents with
a warning that in case of any transgression of the code, their name is not
only liable to be removed from the list of registered contractors but would be
liable for other punitive action such as cancellation of contracts, banning
and blacklisting or action in Competition Commission of India and so on.
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18. In terms of Clause 2 of the policy the procuring authorities as well as
the bidders should observe the highest standards of ethics and should not
indulge in various prohibited practices either directly or indirectly at any
stage during the procurement process or during execution of the resultant
contracts. The prohibited practices have been enumerated in Clause 2.2 of
the policy. Clause 2.3 deals with obligations for pro-active disclosures and
the same is quoted hereunder :
2.3 Obligations for Proactive disclosures:
i) Procuring authorities as well as bidders,
suppliers, contractors and consultants/ service
providers, are obliged under Code of Integrity for
Public Procurement to suo-moto proactively declare
any conflicts of interest (coming under the definition
mentioned above- pr-existing or as and as soon as
these arise at any stage) in any procurement
process or execution of contract. Failure to do so
would amount to violation of this Code of Integrity;
and
ii) Any bidder must declare, whether asked or not
in a bid document, any previous transgressions of
such a Code of Integrity with any entity in any
country during the last three years or of being
debarred by any other Procuring Entity. Failure to
do so would amount to violation of this Code of
Integrity:
iii) To encourage voluntary disclosures, such
declarations would not mean automatic
disqualification for the bidder making such
declarations. The declared conflict of interest may
be evaluated and mitigation steps, if possible, may
be taken y the procuring Entity. Similarly,
voluntary reporting of previous transgressions of
Code of Integrity elsewhere may be evaluated and
barring cases of various grades of debarment, an
alert watch may be kept on the bidders' actions in
the tender and subsequent contract.
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19. On a combined reading of the three sub-clauses in clause 2.3, it is
seen that the disclosure required to be made is voluntarily. Precisely, for
this reason condition has been imposed that the bidders are obliged under
the Code of Integrity for Public Procurement to suo-moto pro-actively declare
any conflict of interest and failure to do so, would amount to violation of the
Code of Integrity. Furthermore, it is stipulated that the bidder must declare,
whether asked or not in the bid document, any previous transgression of
such a Code of Integrity with any entity in any country during the last 3
years or of being debarred by any other procuring entity and failure to do so
would amount to violation of the Code of Integrity. The Clause 2.2(iii) states
that to encourage voluntary disclosure, such declarations would not mean
automatic disqualification for the bidder making such declaration.
20. It is an admitted fact that for certain transgression action was
initiated against the respondent writ petitioner and a criminal case was
registered against its Managing Director. The FIR was investigated and
offence having been made out, charge sheet has been laid. The matter has
not attained finality primarily for the reason that the writ petitioner has
obtained stay of the proceedings by approaching this Court. The question
would be as to whether non-declaration of the adverse information against
the writ petitioner would be a justifiable reason for rejecting the technical
bid of the writ petitioner by the technical evaluation committee. As pointed
out earlier, the learned Writ Court was of the view that alleged transgression
had occurred 3 years prior to the notice inviting the subject tender and
therefore, there was no such embargo on the part of the writ petitioner
requiring to disclose such information. Thus, the question would be whether
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the time limit which is mentioned in Section 5 of the Tender Conditions
could be interpolated in Section 3 of the Tender Conditions. Section 3 of the
Tender Conditions deals with disqualification from tender process and
exclusion from future contracts. Section 3 contains two limbs, the first of
which being, if the bidder before the award or during the execution has
committed a transgression through violation of Section 2, it would result in
disqualification. The second limb is that if the bidder has acted in any other
form such as to put his reliability and credibility in question, that would
also result in disqualification. Section 5 deals with previous transgression.
In terms of Clause (1) of Section 5, it is mandatory for the bidder to declare
that no previous transgression occurred in the last 3 years with any other
company in any country confirming to the anti-corruption approach or with
any public sector enterprises in India that could justify the exclusion from
the tender process. Therefore, Section 5 is a stand alone provision dealing
with previous transgression mandating the bidder to make a self-declaration
of any such previous transgression occurred in the last 3 years with any
other company in the country or with any other public sector enterprises in
India. Therefore, the time limit of 3 years stipulated, is qua the previous
transgression with any other company in the country or any other private
sector enterprises in India in the last 3 years whereas the second limb of
Section 3 empowers the DVC to disqualify a bidder if the action of the bidder
is in a form so as to put his reliability or credibility in question. Admittedly,
criminal case has been registered and charge sheet has been laid. We see no
reason to fault the decision of the appellant in doubting the reliability or
credibility of the respondent writ petitioner at this stage of the matter. This
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is so because the criminal proceedings have not attained finality and the
matter has been stayed in a proceeding initiated by the writ petitioner.
Therefore, unless and until the writ petitioner gets himself absolved of all
the charge, it cannot be stated that DVC were wrong in doubting the
reliability and credibility of the writ petitioner in participating as a bidder in
the subject tenders. Therefore, the time limit prescribed in Section 5 of the
Tender Conditions cannot be interpolated in Section 3 of the Tender
Conditions. With regard to the Policy for Withholding and Banning of
Business Dealings is concerned, though the matter has not travelled upto
the said stage, in terms of Clause 2.3(iii) the time limit of 3 years is with
regard to any other entity in the country or any debarment by any other
procuring entity and this should be mandatorily disclosed by the bidder by
way of a self-declaration. The learned Writ Court was of the view that the
Clause 2.3(iii) has diluted the rigour of the debarment. We are unable to
persuade ourselves to agree with the said conclusion as sub-clause (iii) of
Clause 2.3 gives discretion to the tender inviting authority namely, the
appellant. It has been clarified that such disqualification would not be
meant automatic disqualification, the declared conflict of interest may be
evaluated and mitigating steps, if possible, may be taken by the procuring
entity. Similarly voluntary reporting of previous transgression of Code of
Integrity elsewhere may be evaluated and barring cases of various grades of
debarment, an alert watch may be kept on the bidder's action in the tender
and subsequent contract. We find there is no dilution of the rigour of the
provisions of debarment and all that Sub-clause (iii) of Clause 2.3 gives is a
discretion to the procuring entity to evaluate the mitigating steps or to
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evaluate the voluntary report reporting of previous transgression. Admittedly
the writ petitioner has not voluntarily reported the previous transgression.
Therefore, the stand taken in the writ petition is a clear afterthought and the
writ petitioner seeks to interpret the terms and conditions of tender to suit
its convenience which they are not entitled to do. Above all, the Court
exercising jurisdiction under Article 226 of the Constitution is not the
authority to decide as to who would be best suited to perform the contract.
The Court cannot take a decision sitting in the arm chair of the tender
inviting authority as it is the exclusive domain of the tender inviting
authority to decide upon the tenderer who would be best suitable. The
learned Writ Court was of the view that the decision of the appellant was
arbitrary and unreasonable and if it is so, it was permissible for the Writ
Court to interfere. In the light of the conclusion which we have arrived at
namely, that the time limit prescribed in Section 5 cannot be interpolated in
Section 3, we find no arbitrariness in the decision making process.
Secondly, there can be no unreasonableness in the decision itself. It is not
for the Writ Court to question the decision of the appellant and it is only the
decision making process that that needs to be examined. The transgression
which had been committed is admitted and the writ petitioner seeks to
escape out of the rigour of the terms and conditions of tender by referring to
the time limit prescribed in Section 5 which we have held has no application
to the facts and circumstances of this case. Similarly, the time limit in Sub-
clause (ii) of Clause 2.3 of the Banning Policy would apply to cases where
the bidder makes voluntary declaration of the previous transgression with
any other entity in the country or by any other procuring entity during the
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last 3 years. In the instant case, the transgression is with the procuring
entity itself. One other reason which has been set out in the reasons for
rejection is that repeatedly the writ petitioner has suppressed the
transgression. It is an admitted fact that the writ petitioner had participated
in 14 tenders floated by the appellant organization; however appears to have
been unsuccessful but the fact remains that in the 14 tenders this
transgression has not been disclosed. Therefore, this is one more reason for
the appellant to doubt the reliability and credibility of the writ petitioner.
The learned Writ Court has referred to the stand taken by the appellant to
state that the starting point of the alleged transgression was when the FIR
was registered and not when the charge-sheet was laid. Though, we have
held the said time limit prescribed in Section 5 of the Tender Conditions,
has no application to the case on hand. That apart, the transgression is
continuing and the matter has not attained finality largely attributable to
the writ petitioners themselves as they have obtained stay of those
proceedings. Therefore, the writ petitioner cannot be permitted to probate
and reprobate and take advantage of their own action and to fault the
decision of the appellant in rejecting their technical bid. It was submitted by
the learned Senior Advocate for the respondent writ petitioner that it is the
Director of the company who has been charge-sheeted and the company is
not the accused. To verify the correctness of the said submission we have
perused the charge-sheet which was laid on 24.10.2019 wherein it has been
mentioned that the writ petitioner had violated various provisions of the
Contract and that it has been noticed that the writ petitioner had created a
heap of inferior coal mixed with extraneous material with intent to commit
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fraudulent and corrupt practice. The Managing Director of the company has
been named as the "owner" in the charge-sheet who is said to have
voluntarily surrendered before the Trial Court on 13.02.2019. Therefore, it is
incorrect to state that the company has not been mentioned in the charge-
sheet which has been laid.
21. In the light of the above conclusion, that it may not be necessary for
us to examine as to whether the decision in the respondent's own case in
MAT No. 1932 of 2022 would be a good ground to dismiss the writ petition.
To be noted that during the pendency of the writ petition, there was an
interim order in force from December, 2022, consequently the entire tender
process has been halted. In so far as the tender which is the subject matter
of MAT No. 894 of 2023 is concerned, a reverse re-auction has already been
conducted and the successful bidder has been selected. On account of the
order for stay, the appellants have submitted that great prejudice has been
caused to the thermal power plant which is to function for 24 hours on all 7
days in a week and the fly ash which is generated and taken to the ash pond
in celery form is a continuous process and the ash pond has to be cleared or
otherwise the power plant will have to be shut down. Thus, on account of
the interim order, public interest has definitely suffered and any disruption
to the running of the power plant would undoubtedly be against public
interest. It is not in dispute that there is no mala fides alleged by the writ
petitioner against the appellant and therefore, the challenge to the rejection
of the technical bid cannot be brought under the said head.
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22. Thus, for the above reasons we are of the clear view that the decision
of the appellant in rejecting the technical bid of the respondent writ
petitioner was just and proper and calls for no interference.
23. In the result the appeals are allowed. Consequently, the writ petitions
are dismissed and the appellant is directed to proceed with both the tenders
in accordance with the procedure.
(T.S. SIVAGNANAM, CJ.)
I Agree.
(HIRANMAY BHATTACHARYYA, J.)
(P.A- PRAMITA/SACHIN)
