Vxl Engineers Ltd. vs Department Of ...
1997 Latest Caselaw 498 Del

JUDGMENT

C.M. Nayar, J.

(1) This Judgment will dispose of two writ petitions being C.W.P.No.l706/96 (VXL Engineers Ltd. v. Department of Telecommunications and others) and Cwp No.3013/96 (P.S.Measuremeats and Controls and another v.Deptt. of Telecommunications and others) as these petitions raise common questions. The Petitioners in Cwp No.3013/96 earlier approached the Karnataka High Court but the petition was permitted to be allowed to withdrawn with liberty to approach an appropriate Court having jurisdiction. Therefore, this petition was filed in this Court.

(2) The petitioner company (C.W. 1706/96) is a company registered under the Companies Act, 1956 and is engaged in the manufacture and sale of Tele Communication Equipments and is alleged to be a major supplier of the said products to respondent No. I as also to the defense Services. Petitioner No. 1 in C.W.P.3013/96 is a proprietory concern and. petitioner No. 2 is a private limited company and the petition is filed by one of its shareholders. The said petitioners are manufacturers of Telecom equipments. The petitioners are challenging the acts of respondents 1 and 2 in awarding to respondents 3 to 7 90 per cent of the contract for supply of transmission instruments viz. Digital Transmission Analyzers (DTA)34 Mb/s and 140-MB/s without Jitter against tender No. 14-14/94-MMT (OF) and placing advance purchase orders on the said respondents in preference to the petitioners who are equally qualified in all respects and were duly certified as such to supply the said equipments and at rates substantially lower to the rates quoted by respondent Nos. 3 to 7. Respondent No. 1 had called for two tenders each bearing No. 14-11/94-MMT (L) and 14-14/94-MMT(OF). Both these tenders were invited for supply of transmission instruments viz Dta 140- Mb/s without Jitter & Dta 34-MB/S- without Jitter. The following factual averments as made in paragraphs 4 and 5 of Cwp No. 1706/96 may be reproduced as follows:

"4.Against Tender No. 14-14/94-MMT(OF), for supply Optical Fibre Test Instruments, the petitioner vide its letter dated April 28, 1995, offered to supply to respondent No. 1, the following instruments manufactured by the petitioner.

A)Digital Transmission Analyzer Model VE8306 for 704 Kb/s, 2,8 &34 Mb/s without Jitter.

B)Digital Transmission Analyser Model VEB303-34 for 2,8 & 34 Mb/s without Jitter.

C)Digital Transmission Analyser Model Ve 8307 for 2, 8,34 & 140 Mb/s without Jitter.

. '

D)Digital Transmission Analyser Model VE8303-140 for 2,8,34 &'140.Mb/s without Jitter.

E)Distal Transmission Analyser Model VE8300 for 704 Kb/s, 2 & 8 Mb/s without Jitter.

With its said letter dated 28th April 1995, the petitioner enclosed its supply records, so as to draw the attention of respondent. No: 1 to the fact that even against previous orders, the petitioner had supplied all the instruments much before the delivery period.

Respondent No. 1 was informed that the petitioner's infrastructure assessment for various Testing Instruments including the DTA's was Completed by Telecom Engineering Centre, New Delhi, vide their Infrastructure Assessment No. 41-23/92-TEC dated 25th September, 1992. Moreover, the instruments mentioned under serial Nos. 2 and 4 of the Bid documents were Type Approved by the Telecommunication Engineering Centre, New Delhi, against various Dot supply orders and the petitioner had supplied large quantities of the said models to respondent No. l, well within the original delivery period.

Respondent No. 1 was further informed of the material fact that since the Infrastructure Assessment of the petitioner had been completed and the petitioner had supplied large quantities of Test Instruments including DTA's were enough documentary evidence of the fact that the petitioner has the financial, technical and production capability necessary to perform the contract.

With its said letter dated 28th April 1995, the petitioner submitted the Bid Form, Bank Guarantee and various other documents and information required to be furnished to respondent No. 1.

5. On 8th May 1995, the petitioner applied to the Deputy Director General (NRC), Telecom Engineering Centre for Type Approval of the DTA's offered to be supplied, by the petitioner, against the tender and which was granted to the petitioner on 31st October, 1995. Type Approval is given by Telecommunication Engineering Centre of respondent No. 1 to confirm that the product fully meets technical requirements and is a validated product fit for use in the telecom network."

The petitioners participated in these tenders and Filed their respective applications as per the requirements as indicated in the Tender Notice. The necessary documentary proof was also submitted. The bids were opened on January 3,1995 and May 9, 1995 respectively. Apart from the petitioners there were 20 other bidders who had. participated in these tenders. All the applications of the bidders for tender No. 14.14/94-MMT(OF) were submitted to a Tender Evaluation Committee (for short TEC) to evaluate the bids. The Tec submitted its report on September 11,1995 and it is alleged that without taking into consideration the documentary proof produced by the petitioners along with the applications it failed to consider their bids. The necessary representations were Filed as it was alleged that the Tec proceeded to hold that petitioners were not responsive under a mistaken impression despite their producing the documentary evidence in support of the technical requirements. The Hon'ble Minister accepted their representations and referred the matter to the Tender Evaluation Committee to have a fresh look. The representation was submitted on September 13, 1995 and the order of the Minister as made on October 27, 1995 reads as follows:

"M/S Measurements & Controls vide their letter placed on the file. have represented against evaluation done by T.E.C. regarding Package No. 1 and Iii in which they are stated to have been declared non-responsive. According to them their products have got type approval and the Dot would be saving nearly 20 crores of rupees if their products which are type approved are considered for placing Order

I would like the case to be re-examined vis-a-vis the representation of M/s Measurements and Controls so far Package No. 1 and Iii are concerned. The case may please be put up within a weeks time.

As regards Package No. Xi, I find that the firms at L-6, L-7 and L-8 have got type approval and as such they should be given benefit of having type approval especially in view of the position explained at side portion marked 'Q' at page 9/N. I have been informed by DDG(TX) that M/s Optel who is L-l has also obtained type approval. In order to ensure timely delivery, we may reserve a sizeable quantity say 70% to the four type approved firms out of which 30% may be given to M/s Optel and the balance may be equally distributed amongst the remaining three type approved firms. The balance 30% may be distributed equally amongst the remaining non-type approved firms subject to their getting type approval before 31st December, 1995. In case, they fail to obtain the same, their share may be distributed amongst other type approved bidders equally.

Action on the remaining packages may be taken, as proposed.

There reconsidered the case of the petitioners along with others and it was held that the petitioners were technically as well as financially more suitable for placing the orders.

The members of the Tec consisting of Chairman, Telecom Authority, Member Finance, Member Production, Adviser Production and DDG(MM-I) cleared the report. They all held that the petitioners should be awarded the contract between 30 to 50 per cent of the .tendered quantity and rest of the four bidders should be distributed the balance of the tendered quantity in inverse ratio of their bids. It was noticed that this will save the Central Government a sum of Rs. 13.3 crores. The Tec report dated 17th November, 1996 reads as under:

"1.0 Tec comprising of following members was constituted to evaluate the abovetender.

1) Shri S.KJain, DDG(TX), Tchq .......... Chairman

2) Shri B.B.Singh, Director (FA-III)...... Member

3) Shri SaviturPrakash, Director (MMT)... Member

1.1 Tec Report had been. submitted, however, vide U.O. No. 26-10/95- Mmc dated 24.11.1995, the Tec has been again asked to re-examine Package-I and Package-III as some of the bidders have received type approval who had been found technically non-responsive in the Tec Report submitted earlier.

2.0 On re-examination the names of the bidders who have got type approval have also been considered as technically responsive even though the type approval was received post tender.

2.1 Following is the Tec report on re-examination for Package I and III.

3.0 140 MB/S Dta Without Jitter Package I Subsequent review vide U.O.No. 26-10/95-MMC dated 24.11.95

3.1 The total requirement is for 1137 Nos.

3.2 The following 23 bidders have quoted for this package.

BIDDERSNAME

1. W & G

2. Ws TELE

3. Hcl LTD

4. Meas & CONTROL

5. P.S. Meas & CONTROL

6. ITI

7. VIKAS

8. SURANA

9. SINCLAIRE

10. S.M.CREATIVE

11. HP

12. HFCL

13. Rv ASSOCIATE

14. HTL

15. ARM

16. Advance COMMUNICATION

17. PUNWIRE

18. VXL

19. CIMMCO

20. TRINITY

21. MEKASTER

22. Seven HILL

23. Jai Maa SANTOSHI

3.3 The following 9 bidders were found tech. non responsive as per tech evaluation report placed at ANNEX.A. of earlier Tec report.

1. Ws TELE

2. HCLLTD

3. Meas & CONTROL

4. P.S.MEAS & CONTROL

5. ITI

6. VIKAS(VHEL).

7. PUNWIRE

8. TRINITY

9. SEVENHILL

However, vide telecom Engineering Centre, letter No.TBRC/CORR-GENL/95- Tec dated 28th November, 95 it has been informed that the following ladders with the model no.have got type approval on the dates given below:

1) Measurement & Control MAC-390 24.11.95 2) Ps Measurement & Control Ps Mac 490 15.11.95 3) Vxl Engineer VE. 8307 31.10.95

Though the above type approvals have been received much after the submission of earlier Tec report, however, based on the type approval the above three bids have now been considered tech responsive and included for financial evalutation.

M/SMEKASTER and M/s Cimmco have also bid for Model No.VE 8307 but have not got type approval and hence still considered as tech. non responsive as per tech report at Annexure 'A' of earlier Tec report.

M/SITI and M/s Vhel have also bid for Model No.MAC 390 but have not got type approval and hence still considered as tech. non responsive as per tech report at Annexure A of earlier Tec report.

3.4 The following .16 tech. responsive bids have been further financially evaluated.

1. W&G

2. SURANA

3. SINCLAIRE

4. S.M.CREATIVE

5. HP

6. HFCL

7. Rv ASSOCIATE

8. Him TEL

9. ARM

10. Advance COMMUNICATION

11. VXL

12. CIMMCO

13. MEKASTER

14. JAIMAASANTOSHI

15. Measurement And CONTROL

16. Ps Measurement And CONTROL

4.0 As per Financial, evaluation at Annexure B following is the ranking with package price for each bidder.

S.No. Bidder Rank Package cost (all inci) (in thousand Rs.) 1. Measurement & . control L.I 116805.000 2. Pas Mac L.2 116906.000 3 Vxl L.3 136576.000 4. Arm L.4 209881.504 5. S.M.CREATIVE L.5 209908.787 6. Surana L.6 209936.081 7. Sinclaire L.7 209963.364 8. Advance comm. L.8 209997.324 9. Hp L.9 233227.000 10. Hfcl L.10 233240:000 11. Him. Tele L.11 233253.000 12. R.V.Associated L.12 233267.000 13. Jai Maa Santoshi L.13 233280.000 14. W&G L.14 252972.000 15. Mekaster L.15 261511.000 16. Cimmeo L.16 261576.000

5.0 Tec RECOMMENDATION:

5.1 The special conditions of the tender document vide section Iv Clause 6 says that the total quantity will be ordered on technically and commercially responsive bidders in inverse proportion and whose bids have been determined as L.I to L.V during evaluation.

5.2 Accordingly as per financial evaluation Tec recommends the following models to be ordered on L.I to L.V biddbrs with L.I being given 40% of the total quantity and rest of the bidders being given orders in inverse ratio of their bids.

SI.No. Bidder Model No.: 1. Measurement & control Mac 390 + Internal Printer 2. Psmac Ps Mac 490 + Internal Printer 3. Vxl Ve 8307 + External Printer + Frame GEN. 4. Arm Mp - 1520 + OPT. 1(FREQ. Offset + OPT. 7 (Ext.clock input) 5. S.M.CREATIVE -DO-

5.3 The unit ordering rate (ALL INCLUSIVE) as per lowest bid offered by M/s Measurement & Control is as given below.

140MB/s Dta without Jitter alongwith accessories. Operation and repair Manual Rs. 102731.2

OPTIONALItem: Price taken from bid of M/& Ps Mac which is lower than that bid by M/s Meas & Control Internal/external printer Rs. 4600.2

6.0 34MB/S Dta Without JITTER

PACKAGE3

SUBSEQUENT review vide U.O.No.26-10/95/MMC dated 24.11.95

6.1 The total requirement is for 528 nos.

6.2 The following 24 bidders have quoted for this package.

BIDDERSNAME

1. W&G

2. Ws TELE

3. Hcl LTD

4. Meas & CONTROL

5. P.S. Meas & CONTROL

6. ITI

7. VIKAS

8. SURANA

9. SINCLAIRE

10. S.M.CREATIVE

11. HP

12. HFCL

13. Rv ASSOCIATE

14. HTL

15. ARM

16. Advance COMMUNICATION

17. PUNWIRE

18. VXL

19. CIMMCO

20. TRINITY

21. MEKASTER

22. Seven HILL

23. JAIMAASANTOSHI

24. SUBEX

6.3 The following 10 bidders were found tech. non responsive as per tech evaluation report placed at ANNEX.A. of earlier Tec report

1. WSTELE

2. HCLLTD

3. Meas & CONTROL

4. P.S.MEAS & CONTROL

5. ITI

6. Vikas (VHEL)

7. Pun WIRE

8. TRINITY

9. Seven HILL

10. SUBEX

However, vide Telecom Engineering Centre letter No.TBRC/CORR-GENL/95-TEC dated 28th November, 95 it has been informed that the following bidders with the Model No. have got type approval on the dates given below:

1) Measurement &Control MAC-390A 15.11.95 2) Ps Measurement & Control Ps Mac 490A 24.11.95 3) Vxl Engineer VE.8306 31.10.95

Though the above type approvals have been received much after the submission of earlier Tec report, however, based on the type approval the above three bids have now been considered tech responsive and included for financial evaluation.

M/SMEKASTER and M/s Cimmco have also bid for Model No.VE 8306 but have not got type approval and hence still considered as tech. non responsive as per tech report at Annexure A of earlier Tec report. M/s Iti and M/s Vhel have also bid for Model No.MAC 390A but have not got type approval and hence still considered as tech. non responsive as per tech report at Annexure A of earlier Tec report.

6.4The following 16 Tech. responsive bids have been further financially evaluated.

1. W&G

2. SURANA

3. SINCLAIRE

4. S.M.CREATIVE

5. HP

6. HFCL

7. Rv ASSOCIATE

8. Him TEL

9. ARM

10. Advance COMMUNICATION

11. VXL

12. CIMMCO

13. MEKASTER

14. Jai Maa SANTOSHI

15. Measurement And CONTROL

16. Ps Measurement And CONTROL

7.0 As per financial evaluation at Annexure B following is the ranking with package price for each bidder.

SI.No. Bidder Rank Package cost (all incl) (in thousand Rs.) 1. VXI. L.l 47718.50 2. Ps Mac L.2 48234.50 3. Meas.&conirol L.3 48322.60 4. Arm L.4 87743.14 5. Surana L.5 87755.17 6. Advance Comm L.6 87767.30 7. Sinclaire L.7 87779.43 8. S.M.Creativc L.8 87791.47 9. Hp L.9 108305.90 10. Hfcl L.10 108312.00 11. Him.Tetc L.11 108318.20 12. R.V.As.sociaied L.12 108324.30 13. Jai MaaSantoshi L.13 108330.40 14. Mekaster L.14 108755.96 15. Cimmco L.15 108786.16 16. W&G . L.16 117475.00

8.0 Tec recommendation;

8.1 The special conditions of the tender document vide section Iv Clause 6 says that the total quantity will be ordered on technically and commercially responsive bidders in inverse proportion and whose bids have been determined as L.I to L.V during evaluation.

8.2 Accordingly as per Financial evaluation Tec recommends the following models to be ordered on L.I to L.V bidders with L.I being given 40% of the total quantity and rest of the bidders being given orders in inverse ratio of their bids.

S.No. Bidder Model No.: 1. Vxl VE8306+EXTERNALPRINTER+FRAME GEN. 2. Psmac Ps Mac 490+INTERNAL Printer 3. Measurement & control Mac 390+INTERNAL Printer 4. Arm MP-1450A+OPT.1(FREQ. OFFSET)+OPT.7(Ext.clock input) 5. Surana -DO-

8.4 The unit-ordering rate (ALL INCLUSIVE) as per lowest bid offered by M/s Vxl is as given below.

34MB/SDTA without Jitter alongwith accessories, Operation and repair ManuaIRs. 90376.00

Optional item taken from bid of M/s Meas & Control who has quoted lower than bid by M/s Vxl Internal/External PrinterRs. 4576.00 Rs. 94952.00"

The reading of the above will indicate that the bids of the petitioners in both the petitions were held to be responsive. It is next alleged that respondent No. 2 ignored the Tec report as well as the recommendations of various Authorities and without adhering to the terms and conditions in the Tender proceeded to issue advance purchase orders in respect of Tender Nos. 14-14/94-MMT(OF) to respondents 3 to 7. These respondents were directed to produce Bank Guarantees as well as to comply with other requirements. The advance purchase orders placed with the said respondents are, accordingly. impugned in these writ petitions. The non-acceptance of the subsequent Tec report was due to the order passed by the Hon'ble Minister on March 12, 1996.

The relevant provisions of the bid documents may now be referred to as below:-

"2. Eligible BIDDERS:

This invitation for bids is open to all Indian companies registered to manufacture/supply telecom equipment/telecom. Material and having obtained clearance from Reserve Bank of India, wherever applicable. The proof of such registration in India shall form the part of the bid.

24. Award Of CONTRACT:

24.1 The Purchaser shall consider placement of orders for commercial supplies on those bidders whose offers have been found technically, commercially and financially acceptable and whose goods have been Type Approved/Validated by the purchaser.

24.2 The procurement against the tender Ls for two years requirement and the terms and conditions of this tender shall be operative for the two years from date of issue of First Advance Purchase Order.

27. Issue Of Advance Purchase ORDER:

27.1 The issue of an Advance Purchase Order shall constitute the intention the Purchaser to enter into the contract with the bidder. Purchase orders will be issued over the period of 2 years for the requirements of the Purchaser.

27.2 The bidder shall within 30 days of issue of the Advance Purchase Order, give his acceptance along with performance security in conformity with section Ix provided with the bid documents."

Respondents and 2 Filed their counter affidavit wherein it pleaded that The Dot has not violated any of the norms prescribed for the Government contracts. The evaluation of the lender and placement of Advance Purchase Orders (APOs)have been done as per the outlined procedure in the tendered documents. A decision has been taken after taking into consideration all relevant facts. No allegation of mala Fide has been levied by the petitioners against Tender Evaluation Committee (TEC) or the Department of Telecommunications. It is submitted that the limits for judicial review in some of the relevant cases have been laid down as cited below:

I)Hindustan Development Corporation v. Union of India, .

II)New Horizon Ltd. y. Union of India 1995(1) SCC479.

III)Tata Cellular v: Union of India .

The petitioners were not considered for placement of orders as they were found technically non-responsive by the Tender Evaluation Committee.

During the tendency of these matters this Court on February 6, 1997 confirmed the interim order of stay which reads as follows:

"Interim order to continue during the tendency of the writ petition. This will, however, not debar the Government to take fresh look at the matter and submit its decision, if any, before the Court on the next date."

The respondents have now chosen to revise their earlier decision and an additional affidavit dated 25th April, 1997 has been filed.

The learned counsel for respondents 3 to 7 have, however, contended that they are not bound by the subsequent decision which is now taken by respondents 1 and 2 and they, therefore, contest the same as illegal, discriminatory and arbitrary. The award of contract in favour of respondents 3 to 7 was granted on the basis of the report of the First Tender Evaluation Committee and the later report does not take into consideration the technical viability of the instruments and, therefore, it is liable to be rejected.

The petitioners in C.W.3103/96 have filed a brief chart containing the status of each party as well as the offered and accepted prices which makes the interesting reading. The operative part of the chart indicating the prices offered by each party and the orders placed reads as follows:

BRIEF Status Of Dot Tender N0.14-14/94-MMT9(OF)OPENED On 9.5-1995 For PACKAGE-1 and PACKAGE-111 _________________________________________________________________________________ Sl. Tendered Qty Mm Branch Apo details Model No. Qty. Price No. instrument in recommend-issued based on offerred in in Apo tdr. decision of Mos Apo based on revised Tec (C) report Qty Price (Rs) _____________________________________________________________________________________ 01 DTA34Mb/s 528 - *M/s MP1450 190 166,180 ARM.Hyderabad dt 14.3.96 - *M/s MP1450 71 ACD.Hyderabad 166,180 dt. l4.3.96 - *M/s Sinclaire, MP1450 71 166,180 Hyderabad dt. 14.3.96 *M/s. Surana, MP1450 72 166,180 Hyderabad dt. - 14.3.96 *M/s. Sm Creative.MP1450 71 166,180 - Gurgaon dtd. 14.3.96 *M/s Mac MAC390A 18 94,744 - dtd.l4.3.96 78 91520 M/s Psmac Psmac 490A 17 94,744. dt. 14.3.96 211 91520 M/sVXLdt.l4.3.96 VE8306 17 94,744 80 91520 M/s. Mekaster(**) 80 91520 M/s Cimmco(**) 79 91520 M/sVHEL(**) 02 Dta 140Mb/s1137 - *M/&. Arm, MP1520K 410 184592 without jitter Hyderabad dt.14.3.96 - *ACD, Hyderabad dt.l4.3.96 MP1520 153 K -M/s Sinclaire, MP1520K 153 184592 Hyderabad dt-14.3.96 -M/s MP1520K 153 184592 Surana,Hyderabad dt.l4.3.1996 M/s Sm Creative, MP1520K 154 184592 Gurgaon, dt-14.3.96 452 102731 M/s MAC dt.l4.3.96MAC390 38 107099 177 102731 M/s PSMAC PSMAC490 38 107099 dt.l4.3.96 152 102731 M/s Vxl dt. VE8307 38 107099 l4.3.96 176 102731 M/s ITI(**) 177 102731 M/s VHEL(**) ________________________________________________________________________________________________

NOTE:"**" in the "APO details" column is to indicate that Apo was not issued to those bidders, whose products did not have Tec Type-Approval.

"*"in the "APO details" column is to indicate that these APOs were placed on the instructions of the then MOS(C), over-ruling departmental recommendations.

The reading of the above will clearly show that respondents 3 to 7 have got orders for the bulk supply whereas the petitioners have been only given a small supply though the prices quoted by the respondents are quite high.

The learned counsel for the respondents have vehemently argued that it will not be open for this Court to exercise powers of judicial review as the decision is based on technical evaluation of the products of the respondents and the lower prices cannot formulate the criteria to award contract. The .prices offered by the petitioners may be low but their bids have not been held responsive and respondents 3 to 7 have better products to offer.

Reference may be made to the judgments as reported in Fertilizer Corporation Kamgar Union (REGD), Sindri and Other's v. Union of India and others ; 0m Prakash Poplai and Rajesh Kumar Maheshwan v. Delhi Stock Exchange Association Ltd. and others Union of India and others ; Tata Cellular v. Union of India , Delhi Science Forum and others v. Union of India and another and Uttam Kumar Bone and another v. Union of India and others 1995 (3) Delhi Lawyer 288.

INFcrtili7.er Corporation Kamgar Union (REGD), Sindri and others (supra) the scope of judicial review has been discussed in paragraph 35 which reads as follows:

"35.A pragmatic approach to social justice compels us to interpret constitutional provisions, including those like Articles 32 and 226, with a view to see that effective policing of the corridors of power is carried out by the Court until other ombudsman arrangements- a problem with which Parliament has been wrestling for too long - emerges. I have dwelt at a little length on this policy aspect and the Court process because the learned Attorney-General challenged the petitioner's locus standi either qua worker or qua citizen to question in Court the wrongdoings of the public sector although he maintained that what. had been done by the Corporation was both bona fide and correct We certainty agree that Judicial interference with the administration cannot be meticulous in our Montesquien system of separation of powers. The Court cannot usurp or abdicate, and the parameters of judicial review must be clearly defined and never exceeded. If the Directorate of a Government Company has acted fairly, even if it has faltered in its wisdom, the Court cannot, as a super-auditor, take the Board of Directors to task. This function is limited to testing whether the administrative action has been fair and free from the taint of unreasonableness and has substantially complied with the norms of procedure set for it by rules of public administration."

In Om Prakash Poplai and Rajesh Kumar Maheshwari (supra) the Court held that the selection made by the Expert Committee cannot be interfered with and the Court cannot function as an Appellate Authority in such matters. The material must be placed to establish bias and arbitrariness. This case related to the selection of membership by Delhi Stock Exchange by the Expert Selection Committee and it will not be necessary to refer to the same any further.

The often quoted case of Tata Cellular (supra) was next strongly relied upon and various passages were read to reiterate that the scope of jurisdiction of this Court in exercise of powers of judicial review is extremely limited and cannot be used when .there is no proof of arbitrariness and discrimination in decision of an Expert Committee. The duly of the Court is referred to in paragraphs 70 and 77 which may be reproduced as follows:

"70.It cannot be denied that the principles of judicial review would apply lo the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. government is the guardian of the finances of the State. It is expected lo protect the financial interest of the State. The right to refuse the lowest or any other 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 accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries, to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.

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 tether a particular policy or particular decision taken in the fulfilllment 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. As a matter of fact, in R.V.Sectretary of State for the Home Department, ex Brind, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the Court should, "consider whether something has gone wrong of a nature and degree which requires its intervention."

SIMILAR reference is made to the judgment of the Supreme Court as reported in Delhi Science Forum and others (supra). The relevant portion from paragraph 13 will ead as follows which deals with the powers of the Central Government to grant licence:

"EVEN in the absence of rules the power to grant licence on such conditions and for such considerations can be exercised by the Central Government but then such power should be exercised on well-settled principles and norms which can satisfy the test of Article 14 of the Constitution. If necessary for the purpose of satisfying as to whether the grant of the licence has been made strictly in terms of the proviso complying and fulfillling the conditions prescribed, which can be held not only reasonable, rational, but also in the public interest can be examined by Courts. It need not be impressed that an authority which has been empowered to attach such conditions, as it thinks fit, must have regard to the relevant considerations and has to disregard 378 the irrelevant ones. The authority has to genuinely examine the applications on their individual merit and not to promote a purpose alien to the spirit of the. Act. In this background, the Courts have applied the test of a reasonable man i.e. the decision should not be taken or discretion should not be exercised in a manner, as no reasonable man could have ever exercised. Many administrative decisions including decisions relating to awarding of contracts are vested in a statutory authority or a body constituted under an administrative order. Any decision taken by such authority or a body can be questioned primarily on the grounds: (i) decision has been taken in bad faith; (ii) decision is based on irrational or irrelevant considerations; (iii) decision has been taken without following the prescribed procedure which is imperative in nature. While exercising the power of judicial review even in respect of contracts entered on behalf of the Government or authority, which can be held to be State within meaning of Article 12 of the Constitution, Courts have to address while examining the grievance of any petitioner as to whether the decision has been vitiated on the ground or the other, It is well-settled that the onus to demonstrate that such decision has been vitiated because of adopting a procedure not sanctioned by law, or because of bad faith or taking into consideration factors which are irrelevant, is on the person who questions the validity thereof. This onus is not discharged only by raising a doubt in the mind of the Court, but by satisfying the Court that the authority or the body which had been vested with the power to taken decision has adopted a procedure which does not satisfy the test of Article 14 of the Constitution or which is against the provisions of the statute in question or has acted with oblique motive or has failed in its function to examine each claim on its own merit on relevant considerations. Under the changed scenarios and circumstances prevailing in the society, Courts are not following the rule of judicial self-restraint. But at the same time all decisions which are to be taken by an authority vested with such power cannot be tested and examined by the Court. The situation is all the more difficult so far as the commercial contracts are concerned. Parliament has adopted and resolved a national policy towards liberalisation and opening of the national gates for foreign investors. The question of awarding licences and contracts does not depend merely on the competitive rates offered; several factors have to be taken into consideration by an expert body which is more familiar with the intricacies of that particular trade. While granting licences a statutory authority or the body so constituted should have latitude to select the best offers on terms and conditions to be prescribed taking into account the economic and social interest of the nation. Unless any party aggrieved satisfies the Court that the ultimate decision in respect of the selection has been vitiated, normally Courts should be reluctant to interfere with the same."

THE Division Bench judgment of this Court in Uttam Kumar Bose and another (supra) restated the law on the subject and paragraph 8 of this judgment reads as follows:

"8. We have heard at length the parties in support of their versions. The law with respect to the judicial review in exercise of contractual power by Governmental bodies is well settled. We need not refer to any of the decisions except making reference to the broad principles laid down in Ramana Dayaram Shetty v. International Airport Authority of India , M/s Kasturi Lal Lakshmi Reddy, represented by its partner Shri Kasturi Lal, Ward No. 4, Palace Bar, Poonch, Jamma and others v. State of Jammu and Kashmir and another ; Union of India and others v. Hindustan Development Corporation and others and New Horizons Limited and another v. Union of India that in the matter of entering into a contract the State does not stand on the same footing as a private person who is free to enter into a contract with any person he likes. The State in exercise of its various functions is governed by the mandate of Article 14 of the Constitution, which excludes arbitrariness in State action and requires the State to act fairly and reasonably. Its action must be in conformity with the standards or norms which are not arbitrary, irrational or irrelevant. The facets of irrationality as were noticed and laid down by the Supreme Court in Tata Cellular v. Union of India were duly considered by a Division Bench of this Court in Larson & Toubro Ltd. and another v. Union of India and others of which one of us (Dr.M.K.Sharma,J.) was a party. In view of the principles laid down it is open to the Court to review the decision maker's evaluation of the facts but the Court will intervene only where the facts taken as a whole could not logically warrant the conclusion of the decision makers. If the weight of the facts pertaining to one course of action is overwhelming than a decision the other way cannot be upheld The decision would also be recorded as unreasonable if it is partial and unequal in its operation as between the same class. It is in the light of this decision in law that the decision of the Board of Directors is required to be examined."

THERE is no dispute that the propositions of law as enunciated in the above paragraphs clearly establish that the principles of judicial review will certainly apply to the exercise of contractual powers by the Government Organisations to prevent arbitrariness and favouritism. Nobody can complain if the government tries to get the best person or the best quotation but it cannot exercise that power arbitrarily and the decision must not be illegal, irrational and violative of the principles of natural justice. It is well settled that the lowest evaluated tender will not always imply the lowest price as offered by the parties. It is often seen that higher prices are accepted when the quality of goods and other related factors will justify the same. This evaluation can also be not based on arbitrary exercise of power and the prices which are offered by the parties have to be co-related to the products they offer and other factors as specified in the bid documents. Sometimes the parties who offer lower prices may also offer the best products. From this background, it has now to be evaluated as to whether the respondent Authority has exceeded its powers, committed an error of law of abused its powers making the entire exercise as illegal and improper.

IN view of the above background the records of the proceedings were summoned and have been carefully perused. Firstly, the reading of the same will indicate that till July 16, 1993, the award of tenders for supply of equipments and materials were handled by the Telecom Commission. The Minister by his order dated July 16, 1993 designated himself as the ultimate authority as he has been receiving complaints from the Field officers that the supply of equipment and materials to the field is delayed which hampers the development of Telecom Facilities. There is a tendency to procure the equipments and materials towards the end of the financial year with the result that the bulk of developmental activities were concentrated to the last two months of the year. This practice was got to be arrested and efforts were made to see that the supply of equipment and materials are spread uniformly over the year so that the developmental activities can also be uniformly distributed. He further stated that in view of the importance of the subject for the fast growth of the network he would like to monitor and scrutinise the process of procurement and take suitable action to ensure that the delays were reduced to a minimum. The following action was directed to be taken;

"(A) A list of tenders pending with us for more than 3 months along with reasons for the delay may be submitted to me within a fortnight.

(B) The Commission may examine the various methods by which a smooth flow of equipment can be ensured during the year including the proposals for placing orders and LOIs for 2 years. This may be examined in detail and a comprehensive paper put up to me within two weeks.

(C) After the finalisation of every tender and before the issue of purchase orders, every case may be put up to me with a note from the Chairman (TC) giving summary of the history of the case and explaining the delays in time taken for finalisation of the tender."

THE reading of the above will indicate that for final award of the contract the decision was taken by the Hon'ble Minister with effect from the date as stated. To recapitulate the facts of the present case it may now be noticed that the First Tender Evaluation Committee in its report dated September 8, 1995 found respondents 3 to 7 as technically and commercially responsive bidders and made recommendations for placement of bulk orders with them though these respondents quoted much higher prices. The representation was submitted to the Minister who vide order dated October 27, 1995 directed re-examination of the matter and for consideration of the representation of the petitioners.- The Second Tender Evaluation Committee amended the First report and changed the proportion of the orders to be placed with each company. The extensive portion of the report has been produced in the earlier part of the judgment. The same was put up for approval of the Minister who passed the following order on March 12, 1996:

"As pointed out by DDG(Tx), DTA's are most important measuring instruments for maintenance of long distance transmission network. It is seen that till date these instruments have been almost wholly imported ones but firms on whom orders are proposed on 34N, apparently intend to manufacture these items indigenously for the first time and they do not even appear to have any technical tie-up for such manufacture. Additionally, the products of these Firms have been technically rejected based on evaluation of their original offers and consideration of their offers involves considerations of post-tender developments. Thus, since these equipments are required urgently for commissioning and maintenance of Microwave and Optical links we should place bulk orders only on established bidders whose equipments are tiled-proven, at the lowest rates quoted among them, as per the original Tec report and recommendations of Telecom Commission on 12N and 13N. These rates would result in a saving of around Rs. 15 crores to Dot compared to the last tender rates. In addition, to encourage indigenous manufacture, a total quantity of 10% of the tender packages I and Iii should be distributed among the type-approved new entrants at their quoted rates, while ensuring adequate tests and checks to safeguard the required quality."

THE petitioners have assailed the above Order and have argued that the award of contract in favour of respondents 3 to 7 who have quoted higher prices in each item in comparison to the petitioners is clearly arbitrary, discriminatory and based on extraneous considerations. The rejection of the claim of the petitioners and similarly situated bidders is based on the following facts:

(I) That the Firms like the petitioners only intend to manufacture the items indigenously for the first time and they do not appear to have any technical tie up for such manufacture;

(II) The products of these firms have been technically rejected based on evaluation of their offers and subsequent type approval involves considerations of post-tender developments;

(III) Since the equipments are required urgently for commissioning and maintenance of Microwave and Optical links the bulk orders should be placed only on established bidders whose equipments are Field-proven, at the lowest rates quoted among them as per the original Tec report. These rates would result in saving of around Rs. 15 crores to Dot compared to the last tender rate;

(IV) In addition to encourage indigenous manufacture, a total quantity of 10% of the tender of Packages I & Iii should be distributed among the type-approved new entrants at their quoted rates while ensuring adequate tests and checks to safeguard the required quality.

THE above Order has to be tested on the basis of law as settled by various judgments of the Supreme Court. The case of Tata Cellular (supra) which has already been referred, lays down the broad propositions for interference in exercise of writ jurisdiction of this Court. The decision can be struts down on the grounds that (i) the decision making authority exceeded its powers; (ii) committed an error of law; (iii) committed breach of rules of natural justice (iv) reached a decision which no reasonable Tribunal would have reached or (v) abused its powers.

THE decision maker must understand correctly the law that regulates his decision making power otherwise he will be committing illegality. Irrationality has been defined as (a) the Court will interfere where the facts taken as a whole could not logically warrant the conclusion of the decision-maker; (b) the decision would be recorded as unreasonable if it is impartial and unequal in its operation as between different classes.

THE reading of the facts as enumerated would established the following:

(A) the First Tender Evaluation Committee was superseded and the Second Tender Evaluation Committee did not approve of the earlier Findings as some errors were discovered in the initial consideration;

(B) the Hon'ble Minister discarded the Findings of the second Committee which he himself appointed on representation of the petitioners on the grounds as illustrated in his order dated March 12, 1996;

(C) the contentions of the petitioners and of the similarly situated tenderers were rejected on the ground that their projects were not Field-proven and the Government had to place orders with the Firms who had a proper technical tie up with foreign manufacturers. There was no requirement that the bids of only those parties would be evaluated who had foreign tie up. The definition of 'eligible bidders' would indicate that the invitation for bids was open to all Indian companies registered to manufacture/supply telecom equipments/telecom materials and having obtained clearance from Rbi wherever applicable. The proof of such registration in India shall form part of the bid. Therefore, it was not necessary for any bidder to have a foreign tie up.

(D) The decision of the Minister actually has coincided with the alleged opinion of M/s Advance Radio Masts Ltd., respondent No, 3 herein as it is so referred in the Tender File which reads as follows:

"4. M/s Arm vide their letter at 181/C addressed to Hon'ble MOS(C) have stated that tender did not stipulate type approval at the time of the participation and the bid of M/s Measurement and Control was rejected on technical grounds and as such no revision is needed on account of the type approval. M/s Arm have also stated that bid of Measurement and Control may be rejected as they do not have any technical tie up for manufacture of these items. As per remarks of Hon'ble MOS(C) on the letter the case is to be examined and put up to g.m."

THE above said opinion could not be acted upon by the Government as M/s Advance Radio Masts Ltd. was one of the interested parties and had no jurisdiction to advise in this regard. Therefore, the ultimate decision in favour of the respondents is based on extraneous considerations on this count.

(E) It is conceded at the Bar that the respondents in whose favour the contracts were awarded were not having foreign tie up for manufacturing process. They merely were acting as agents of foreign suppliers. The Government could have, therefore, placed orders with such suppliers directly and there was no need to accept lenders of the said parties who were mere agents and middlemen and did not have a foreign tie up for the purpose of manufacture of instruments.

(F) There was no basis to say that the acceptance of higher rates will result in saving of Rs. 15 crores to Dot compared to the last tender rates. This" averment is not borne out from the record and no explanation is offered. On the contrary, the acceptance of prices of respondents 3 to 7 in comparison to the prices as offered by the petitioners would have caused huge losses to the State exchequer.

RESPONDENTSI and 2 in view of the facts as stated above, therefore, realised' that the purchase orders issued in favour of respondents 3 to 7 would not stand the test of scrutiny in the present proceedings. Reviewing the same was considered an appropriate remedy. The following additional affidavit has been filed on behalf of respondent No. 1.:

"IS. Nayak working as Assistant Director General (MT) in the Ministry of Telecommunications do hereby solemnly affirm and state as under:

THAT I am well conversant with the facts and circumstances of this case and am competent and authorised to swear this affidavit.

THAT as per the order dated 6.2.1997 passed by the Hon'ble High Courts, the deposing respondents were directed to take a fresh look at the matter and submit its decision, if any, before the Hon'ble Court.

THAT in pursuance of the said order, the issues in dispute were referred to the Telecom Commission which is the authority competent to decide these issues.

THAT after a thorough consideration of the matter, the issues were finally decided by the competent authority on 23.4.97 and that as per the decision the action to be taken is as follows:

A) The ratio of distribution i.e. 90:10 in respect of the established suppliers and the new entrants will be adhered to.

B) In respect of the suppliers who have failed to furnish the bank guarantees as of now, the orders placed against them will be cancelled.

C) The orders placed for the remaining suppliers may be kept intact.

D) A uniform price i.e. Rs. 1.07 lakhs and Rs. 94,744.00 for package I & Iii respectively will be given to all the suppliers.

THAT this department has initiated the process of implementing the aforesaid decision.

IT is, therefore, submitted that the Hon'ble Court may consider the submission made above and may be pleased to decide/dismiss the writ petition in the light of the above.

SD/-Deponent

VERIFICATION Verified at New Delhi on this 25th day of April, 1997 that the contents of this additional affidavit are true and correct to my knowledge and information and that nothing relevant has been concealed therefrom. sd/- Deponent."

THE learned counsel for the respondents has impugned the said decision of the Government and have reiterated that the placement of orders in favour of respondents 3 to 7 on the basis of the First Tec report could not be set aside in this manner and the decision is based on illegal and arbitrary considerations. This challenge though cannot he taken up in the present petitions has been permitted to be raised so that the litigation between the parties can come to an end. In view of the facts and law as stated above, I am of the opinion that the Government has acted wisely by scrapping the placement of the orders on the prices as indicated by respondents 3 to 7 which are extremely high vis a vis the prices offered by the petitioners and other similarly situated parties. There is, however, one error in the decision as stated in the Additional affidavit filed on behalf of respondents I and 2. The placement of orders will have to be worked out on the basis of Special Conditions of Contract (Section IV). Clauses 6, 7 and 8 read as follows:

"6. For all packages the purchaser reserves the right to order 30% to 50% of the ordered quantity on the technically and commercially responsive bidder and whose bid has been determined lowest evaluated bid. The rest of the quantity will be ordered on technical and commercially responsive bidder in inverse proportion and whose bids have been determined as L2, L3, L4 and L5 during evaluation.

7. The tender is on Indian Rupees terms.

8. The commercially supplies can start only after the goods have been Type Approved by the purchaser. The Type Approval should be taken within two months from the Purchaser on placement of Purchaser Order and supplies shall be completed within 4 months there after."'

THE above provisions will, therefore, have to be followed. This method was also recommended by the second Technical Evaluation Committee. It will, however, be open for the Government to satisfy itself fully to the quality and technical viability of the products before any further steps are taken for placement of Orders.

THE writ petitions are allowed in the above terms. There will be no order as to costs.