L.G. Information & ... vs Mtnl And Another
1999 Latest Caselaw 845 Del

ORDER

C.M. Nayar, J.

1. This petition has been filed for issuance of a writ of certiorari for quashing the Letter of Intent dated June 3, 1999 issued by respondent No. 1 in favour of respondent No. 2 in pursuance to Tender No. MTNL 20-80(235)/98-MM dated 30.6.98 and a further relief is sought in the nature of mandamus commanding and requiring respondent No. 1 award and above said contract in favour of petitioner No. 1.

2. Petitioner No. 1 is stated to be company incorporated in Republic of Korea. It is engaged in the business inter alia of telecommunications and information technology and having an annual turnover of over US $ 2 billion. The company is part of large business multi-national conglomerate known as to L.G. Group with annual world-wide turnover exceeding US $ 100 billion. Petitioner No. 2 is a company stated to be incorporated in India and is part of the Escorts group of companies. Petitioners 1 and 2 have agreement to jointly do business in India in the field of telecommunications, such as, bidding and execution of contract in question. Respondent No. 1 is referred to as Government company having monopoly in the field of telecommunications services in India. It is performing sovereign function which the Government would otherwise do and is a "State" within the meaning of Article 12 of the Constitution of India. The relevant facts are referred to in the following paragraphs of the writ petition which may be reproduced as below :

"1. The respondent No. 1 - MTNL invited bids on turn-key basis for supply etc. of Wireless in Local Loop System (WILL) CDMA, IS-95A Technology. The system was designed to initially cater for 50000 subscribers.

2. The NIT as amended from time to time prescribes certain essential and fundamental eligibility conditions for a bidder, without the compliance whereof his bid would not be responsive and liable to be rejected outright. The essential requirements are as follows :

(i) The bidder must have two years standing as manufacturers supplier of the subject goods.

(ii) The bidder should have supplied at least 100000 lines of WILL of CDMA, 1S-95A Technology. The bidder must furnish as part of his documents proof of complying with the aforesaid eligibility.

(iii) The bidder must enclose with the bid documents certificate of satisfactory performance of the contract from at least three major customers."

3. Copy of the Notice inviting Tender dated 30th June, 1998 is filed as Annexure P/1 to the writ petition and the same reads as follows :

NOTICE INVITING TENDER

(WIRELESS IN LOCAL LOOP)

Tender No. MTNL/20-80(235)/98-MM

Dated 30.6.1998

Sealed global tender bids in two parts. (Techno-commercial and financial) are invited from reputed manufacturers or suppliers of WILL CDMA IS-95-A technology with atleast two years standing and adequate financial strength on turn-key basis to carry out survey, design, supply of equipment, install, test commission and make over the systems to MTNL. Subsequent annual maintenance support shall also come within the scope of this tender. They shall provide credentials in support of their technical capabilities, financial strength and commitment to their customers.

The system shall be designed initially to cater for 50000 (fifty thousand) for Mumbai and capable of expansion. Details of expected lines in the following years are available in the tender document.

1. Date of issue of Tender - 30.6.1998.

2. Sale of Tender Document - From 8.7.1998 to 23.7.1998.

3. Period for request of clarifications - Upto 24.7.1998 at 11:00 hrs.

4. Pre-Bid Conference - On 24.7.1998 at 11:30 hrs.(Vendors Meet) at Conference Hall, 12th Floor, MTNL, Jeevan Bharti Bldg.

5. Date & time for submission of bids - 25.8.1998 by 12:30 hrs.6. Date & time for opening - 25.8.1998 at 13:00 hrs. the bids (Techno-Commercial) Address for purchase & submission of Tender Document Dy. General Manager (MM-II), Mahanagar Telephone Nigam Ltd., Corporate Office, Room No. 1302, Jeevan Bharti Building, Connaught Circus, New Delhi-110001.

7. Cost of bid documents - Rs. 4000/- payable by Demand Draft in favour of MTNL. (Non-refundable).

MTNL reserves the right to reject all/any bid without indicating any reason to the bidder for the same. MTNL has the sole right to select the bidder for awarding the contract in this Tender.

N.B.

1. All timings given above are Indian Standard Time

2. MTNL reserves the right to change the above dates at its discretion.

(D.K. Khanna)

DGM (MM-II)"

The relevant conditions as contained in the above said document are stated in paragraphs 3, 9.2. 13, 24, 25 and 26 which are relevant to consider for the purpose of present controversy may be reproduced as follows :

"3. ELIGIBILITY OF BIDDERS :

(a) Bids are invited from reputed manufacturers & Suppliers of Wireless in Local Loop in CDMA IS-95-A technology equipment with two years standing and adequate financial strength. The bidders should have supplied atleast 100000 lines of WILL of CDMA IS-95 technology. They shall provide credentials in support of their technical capabilities financial strength and commitment to their customers in this regard. Those who do not fulfill the above requirements shall not be considered.

(b) Indian reputed vendors with adequate financial strength and having valid collaboration agreement with vendors meeting the eligibility condition as per 3(a) above may also be eligible to bid in this tender."

"9.2 DOCUMENTS COMPRISING THE BID :

The bid prepared by the bidder shall comprise the following components :

(a) Documentary evidence established in accordance with clause 3 and 13 indicating that the bidder is eligible to bid and is qualified to perform the contract if his bid is accepted.

(b) Bid Security furnished in accordance with clause 15.

(c) A 'clause by clause' compliance of the goods/services offered as per clause 14.

(d) A bid form and price schedule completed in accordance with clauses 10, 11 and 12."

"13. DOCUMENTS ESTABLISHING BIDDER'S ELIGIBILITY AND QUALIFICATIONS :

13.1 Pursuant to Clause 3, the bidder shall furnish, as part of bid documents establishing the bidder's eligibility to bid, and its qualifications to perform the contract of its bid is accepted.

13.2 The documentary evidence of the bidder's qualifications to perform the contract if its bid is accepted, to the purchaser's satisfaction.

13.3 That the bidder has the financial technical and production capability necessary to perform the contract. For this, he shall certify the following criteria :-

(i) The bidder must be a manufacturer and supplier of CDMA IS-95 A equipment with two years standing experience and has supplied atleast 100 K lines (Radio & Switching). The bidder(s) should have a sound financial strength. They may give balance sheets for the last three years for assessing their financial strength. In case of joint venture each of the participant member may give their balance sheet separately for the last three years for this purpose.

(ii) The bidder has a Nodal Centre existing/proposed to be opened, to facilitate the interaction which shall be preferably in Mumbai, which shall form part of contractual commitment. The services shall be available throughout the period of contract.

(iii) The bidder (alongwith their collaborator, if any) should have satisfactory feed-back regarding after-sale, service from their customers. A certificate for performance of the contract from atleast three major customers may be produced."

"24. CLARIFICATION OF BIDS :

To assist in the examination, evaluation and comparison of bids, the Purchaser may, at its discretion ask the bidder for the clarification of its bid. The request for clarification and the response shall be in writing and no change in the price substance of the bid shall be sought, offered or permitted.

25. PRELIMINARY EVALUATION :

25.1 The purchaser shall evaluate the Techno Commercial Unpriced bids to determine whether they are complete, whether any computational errors have been made, whether required bid security has been furnished, whether the documents have been properly signed, and whether the bids are generally in order.

25.2 Bids without proper authorisation from the bidder/manufacturers as per Clause-17 shall be treated as non-responsive.

26. EVALUATION OF TECHNO COMMERCIAL BIDS :

26.1 Criteria for technical and commercial qualification shall be the following :-

1. Capability of the bidding company to undertake the project in terms of its:

(a) Technical expertise

(b) Financial strength

2. Experience of the bidding company in undertakings similar projects in India and/or abroad.

(a) Performance of the networks supplied by the bidding company.

(b) Support given by the bidders company in operation and maintenance of the systems supplied by them.

3. Bidding company's commitment to India.

4. Bidding company's commitment, ability and promptness to support maintenance of the system including supply of spares.

5. Strength of the bidder to give maintenance support on long term basis. (Refer to Technical Specifications).

6. Ability and willingness to train MTNL's personnel to operate the system and perform first line maintenance.

26.2 The details of financial strength and experience of the bidders shall be examined to determine whether the bidders meet the qualification in accordance with the criteria specified in Clause 3 and 13 above.

26.3 During the technical evaluation, MTNL at its discretion may call upon the bidders to give their presentation on their offer, to explain their capability to undertake the project and to respond to any questions from MTNL.

26.4 The bids that do not meet all the qualification requirements will be rejected.

26.5 Prior to detailed evaluation, the purchaser will determine the substantial responsiveness of each bid to the Bidding Documents. A substantially responsive bid is one which conforms to all the terms and conditions of the Bidding Documents without material deviation.

26.6 A bid determined as not substantially responsive will be rejected by the purchaser and may not subsequently be made responsive by the Bidder by correction of the non-conformity.

26.7 Further examination of only such bids determined to be substantially responsive will be taken up and Techno-Commercial clarifications/discussions, if considered necessary obtained/held with such bidders to determine the acceptability of the bids.

26.8 Bidders will be given the opportunity to adjust the Techno-Commercial bid to include modification/changes agreed to by the purchaser during the techno commercial discussions. The bidder may submit supplementary price proposals, if any, due to any modifications/changes in the scope of work of technical specifications made by the purchaser subsequent to the opening of Techno-Commercial Unpriced bids. In such a case, the bidder's supplementary price proposal should only contain the changes in the prices resulting from the specific modifications/change(s) re quired by the purchaser.

26.9 The bid is liable to be rejected if the price changes as per clause 26.8 above are not realistic in the opinion of the purchaser."

The petitioners have contended as follows:

(i) that besides petitioner No.1 number of parties bid for the contract including respondent No. 2 (Fujitsu);

(ii) Fujitsu did not satisfy the essential and fundamental conditions of eligibility as it has not supplied 1,00,000 or above lines of WILL of CDMA, IS-95A Technology and did not enclose satisfactory report from three major customers;

(iii) The bid of Fujitsu, therefore, was defective, ineligible and invalid and ought to have been rejected outright;

(iv) The bids were in two parts i.e. the techno-commercial bid and the price bid. In the first instance the techno-commercial bid was to be opened which was scheduled for October 12,1998 at 13.00 hours. On the opening of the said bid of Fujitsu it became clear to the MTNL that Fujitsu's bid was invalid and ineligible. The Tender Evaluation Committee (TEC) of respondent No. 1 MTNL on consideration of the bid of respondent No. 2 also found it to be ineligible and, therefore, rightly recommended its rejection;

(v) The recommendation of TEC was arbitrarily and unreasonably disregarded and respondent No. 2's financial bid was also opened.

(vi) Fujitsu's bid emerged to be lowest at US Dollar 209.18. The petitioner No.1's bid was second lowest (L2) at US Dollar 211.26.

4. The petitioners after realising that respondent No. 2 was ineligible due to its failure to satisfy the fundamental and essential conditions of contract, a detailed representation in writing by letter dated May 25, 1999 setting out therein the essential conditions of the contract and ex-facie failure of respondent No. 2 to satisfy the same was submitted. The petitioners have contended that respondent No. 2 had wrongly represented to the MTNL that it had supplied 1,00,000 line system to an operator in Myanmar (formerly known as Burma). Petitioner No. 1 verified the same and found that respondent No. 2 had supplied a merely trial system of only 4,000 lines to an operator in that country. This supply did not comply with the eligibility conditions as prescribed by the NIT. The petitioners have also obtained latest information through Internet from the organisation known as CDMA Development Group of supplies made of the said technology to various parts of the world. There is no supply by respondent No. 2 to Myanmar as claimed by Fujitsu in its bid document. A copy of the report is filed as Annexure P/3 to the writ petition.

5. The eligibility condition, it is argued, for providing certificate from three satisfied customers is necessary to satisfy respondent No. 1 that the technology of the bidder has found acceptance in the market and it is time tested and workable. Respondent No. 2 did not satisfy this condition as well and respondent No. 1 arbitrarily accepted the price bid of respondent No. 2 which was not even required to be opened. The action of respondent No. 1 is, therefore, contrary to law and will result in serious miscarriage of justice if the contract is awarded to respondent No. 2 who does not possess the eligibility conditions as prescribed in the Notice Inviting Tender. The main grounds which are taken by the petitioners are stated in Grounds C, D, E, G, & K which read as under :

"C. Because ex facie Fujitsu does not satisfy or comply with the essential and fundamental eligibility requirements for a bidder under the said NIT. Also, Fujitsu has not furnished the essential and mandatory certificate of satisfactory performance from at least three major customers.

D. Because Fujitsu having not satisfied the mandatory standards and norms it was not competent for the MTNL to entertain the tender of the Fujitsu. It is well settled rule of administrative law that an administrative authority must be rigorously held to be standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them. This rule was enunciated by Mr. Justice Frankfurt her in Viteralli Vs. Saton [359 U.S. 535: Law Ex. (Second Series) 1012] where the learned Judge said:

"An executive agency must be rigourously held to the standards by which it professes its action to be judged..... Accordingly,if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed. This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so he that takes the procedural sword shall perish with the sword.":

E. Because the said rule was accepted as valid and applicable in India by the Hon'ble Supreme Court of India in the matter of A.S. Ahluwalia Vs. Punjab and subsequent decision in the case of Sukhdev Vs. Bhagatram .

G. Because the impugned action of the respondents suffers from Wednesbury unreasonableness in that no reasonable person in the present facts and circumstances would have considered the Fujitsu's bid in the face of their ineligibility and failure to satisfy the essential qualifications.

K. Because the eligibility conditions and qualifications being fundamental and essential for the contract, it could not be waived or relaxed for any person much less for Fujitsu. In fact the conditions are in public interest and in the interest of justice and of MTNL too. There was no bona fide cause of reason for disregarding the essential qualifications of the respondent No. 2 to award the contract to respondent No. 2."

6. The learned counsel for the petitioners on the above basis contended that the bid of respondent No. 2 cannot be held responsive as the said respondent has failed to satisfy the conditions and criteria as indicated in Notice Inviting Tender. In this context the petitioners have to be held as lowest bidders and entitled to award of contract.

7. Counter affidavit has been filed by respondent No.1 Mahanagar Telephone Nigam Limited wherein it is reiterated that the petitioners are admittedly not the lowest tenderer and respondent No. 2 is qualified to be awarded the contract. Paragraph 10 of the counter affidavit reads as follows:

"That the whole premise of the writ petition filed by the petitioner is unfounded. The petitioners have repeatedly emphasized in the writ petition that respondent No. 2 M/s. Fujitsu does not satisfy the eligibility condition in that it has not supplied 1,00,000 or above lines of WILL of CDMS IS 95A technology and have not provided certificate from 3 satisfied customers for after sale feed back support. This contention of the petitioner is misconceived and incorrect. Respondent No. 2 has submitted a certificate from Government of Myanmar, Post & Telegraph regarding supply of 1,00,000 lines of WILL of CDMA IS-95A Technology. The bid had to be examined on its own merits in the light of specification condition in tender documents. It is further stated that M/s. Fujitsu has supplied various optical Fibre network systems, microwave communication equipment and switching equipment to the tune of 5,44,000 lines to MTNL and thereafter saleservice has been satisfactory. Since respondent No. 2 satisfied all conditions stipulated in the tender and being satisfied of all mandatory standard and norms and further because of the fact that respondent No. 2 emerged to be the lowest tenderer at US Dollar 209.18 as compared to financial bid of various parties, the contract was awarded to respondent No. 2. The present petition invoking the jurisdiction of this Court in its extraordinary jurisdiction under Article 226 of the Constitution of India is, therefore, not maintainable."

8. With regard to the contention that the Tender Evaluation Committee (TEC) rejected the bid of respondent No. 2, respondent No. 1 MTNL has taken the following stand in paragraph 12:

"That the contention of the petitioner that Tender Evaluation Committee (TEC) of the respondent on consideration of the bid of respondent No. 2 found the same to be ineligible and invalid and rightly recommended its rejection is misconceived and untenable. The TEC is only a recommendatory body and not a decision-making body. However, the competent authority while exercising its power as per clause 24 given below asked the bidder to clarify its stand and to submit the relevant document since M/s Fujitsu, respondent No. 2 has given as 'complied' against this clause. The respondent No. 2 submitted the Certificate regarding supply of 1,00,000 lines of CDMA IS-95A equipment and its bid was duly accepted after due consideration. M/s. Fujitsu, respondent No. 2 satisfied the basic eligibility condition. Hence, the petitioner No.1's contention that it was the lowest valid bid is totally wrong and misfounded. Since respondent No. 2 was considered eligible, its financial bid was opened. The replying respondent was fully within its right to entertain the Tender of M/s.

Fujitsu."

9. Reference is made on Clause 33 of the Tender conditions wherein it is stated that the purchaser reserves the right to accept or reject any bid, and to annual the bidding process and reject all bids, at any time prior to award of contract without assigning any reasons whatsoever and without thereby incurring any liability to the affected bidder or bidders on the grounds for the purchaser's action. Clause 33 reads as under :-

33. "PURCHASER'S RIGHT TO ACCEPT ANY BID AND

TO REJECT ANY OR ALL BIDS:

33.1 The purchaser reserves the right to accept or reject any bid, and to annul the bidding process and reject all bids, at any time prior to award of contract without assigning any reasons whatsoever and without thereby incurring any liability to the affected bidder or bidders on the grounds for the purchaser's action.

33.2 Purchaser reserves the right to disqualify such bidder/bidders who have the past record of not meeting the contractual obligations against earlier contracts entered into with the purchaser."

10. Counter affidavit has also been filed by respondent No. 2 the affected party who is the beneficiary of the contract wherein it is stated that the writ petition filed by the petitioners is an abuse of process of Court and has been filed with ulterior motive and for the benefit of the people who have vested interest and are competitors of MTNL in Mumbai for the WILL network. The whole intention of the petitioners is to delay the execution of the contract work so that the competitors of MTNL in Mumbai for WILL enjoy a monopoly and establish themselves prior to the MTNL's network coming into operation. Reliance is also placed in clause 24 of the Tender Conditions to reiterate that MTNL was well within its right to seek any clarification or explanation from the bidder to satisfy itself of the competence and capability of the bidders. Paragraphs 2 and 10 of the reply read as under:

"2. Para 2 of the writ petition is denied. It is denied that the essential requirements were as stated by the petitioner. The correct requirements have been set out in para 3 of the petition. It is respectfully submitted that the answering respondent met all the requirements under the tender and had furnished all the necessary documents to the MTNL at the time of submissions of their bid and subsequently at the asking of MTNL, including the documents relating to supplies made to various customers including a certificate from the Ministry of Communication, Post & Telegraphic, Government of Union of Myanmar.

Para 10 of the petition is denied. It is denied for want of knowledge that the Tender Evaluation Committee on the considera- tion of Fujitsu's bid found to be ineligible and invalid and had recommended its rejection, as alleged. In this regard, it is respectfully submitted that after opening of the Technical Commercial Bid, the petitioner received a letter dated April 5, 1999 from MTNL asking them to produce certain documents in support of the bid which the answering respondent complied, vide their letter dated April 12,1999. Copies of letters dated April 5, 1999 and April 12,1999 respectively are annexed hereto and marked as Annexures R-II and R-III respectively. It is only after satisfying themselves of the technical capability of the answering respondent that they were invited for opening of the financial bid by MTNL vide their letter dated April 21, 1999."

11. Respondent No. 2 on the above basis has contended that it had supplied a system of 1,00,000 lines to Myanmar and MTNL sought a clarification from them to prove their credentials on the basis of documents submitted by them vide their letter dated April 5, 1999 on the basis of which a certificate dated October 11, 1998 was filed. It is, however, not in dispute that the certificate could not be filed with the bid as the same has been received by respondent No. 2 after the date of submission of the bid and thereafter there was no occasion to file the same as clause 37 of the Tender Conditions do not permit this course of action. The certificate dated October 11, 1998 reads as follows:

"GOVERNMENT OF THE UNION OF MYANMAR MINISTRY OF COMMUNICATIONS, POSTS AND TELEGRAPHS

MYANMAR POSTS AND TELECOMMUNICATIONS

FUJITSU LIMITED 1-1 Kamikodanaka 4-chome, Nakahara-Ku, Kawasaki-shi Kanagawa-Ken 211.8588 Japan

Tel:+81-41-777-1111 October 11,1998

CERTIFICATE

Dear Sirs,

This is to cetify the M/s. FUJITSU LIMITED has supplied CDMA system IS-95/IS-95A technology of 1,00,000 lines capacity in Myanmar under the condition that commissioning for the system shall be done progressively.

Yours Truly,

Sd/-

Chief Engineer Long Distance."

12. The eligibility of the bidders is determined on the basis of clause 3 of the Tender documents which will establish that: (a) the bidder should have supplied at least 1,00,000 lines of WILL of CDMA IS-95 Technology; (b) they shall provide credentials in support of their technical capabilities, financial strength and commitment to their customers in this regard. Clause 3(a) reads as follows:

"3(a) Bids are invited from reputed manufactures suppliers of Wireless in Local Loop of CDMA IS-95A Technology equipment with two years standing and adequate financial strength. The bidders should have supplied at least 1,00,000 lines of WILL of CDMA IS-95 Technology. They shall provide credentials in support of their technical capabilities, financial strength and commitment to their customers in this regard. Those who do not fulfill the above requirements shall not be considered."

13. Certain documents have to be furnished as per clause 13 to establish bidder's eligibility and qualifications. This clause has already been reproduced in the earlier part of the judgment.

14. The bid of respondent No. 2 was stated to be not responsive as it failed to supply documents as required by the Conditions as incorporated in Tender Notice. The certificate with regard to the supply of lines was furnished admittedly by respondent No. 2 at a later stage and it is argued that respondent No. 2 was ineligible and not qualified to bid for the contract and the same is liable to be set aside. Reliance is placed on the judgments reported as Ramana Dayaram Shetty Vs. International Airport Authority of India and others ; Harminder Singh Arora Vs. Union of India and others ;

M/s. Eupharma Laboratories Vs. Union of India and others 1993 IV AD(Delhi) 626; VXL Engineers Ltd. Vs. Deptt. of Telecommunications :

S.M. Creative Electronics Ltd. Vs. Department of Telecommunications and others LPA Nos.125 and 126/1997 decided on November 24, 1998 and Tata Cellular Vs. Union of India .

15. The above judgments will establish that the Government or its instrumentality may enter into contract with any person but in so doing they cannot act arbitrarily. If the Authority or the State chooses to invite tenders then it must abide by the conditions laid down in the Tender Notice and the result of the tender. If the tender form submitted by any party is not in accordance with the conditions of the Tender Notice the same should not have been accepted. Similarly, the well known case of Ramana Dayaram Shetty (supra) has prescribed that in a Government contract where tenders are invited standard of eligibility laid down in the notice for tenders cannot be departed from arbitrarily as such departure will amount to a denial of equality of opportunity for those who felt bound by the standard of eligibility and, therefore, did not submit their tenders. The tender of each party must be considered on the basis of the conditions as specified in the Tender Notice and no departure unless permitted by any clause of the conditions can be entertained.

16. The case of Tata Cellular (supra) clearly summarises the entire law on the subject and lays down the criteria which is to be followed in such matters. Paragraphs 70, 77 and 94 may be reproduced as under:

"70. It cannot be denied that the principles of judicial review would apply to 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 to 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 whether a particular policy or particular decision taken in the fulfillment 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 of 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. Secretary 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."

94. The principles deducible from the above are:

(1) The modern trend points to judicial restraint in administra tive action.

(2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle or reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

Based on these principles we will examine the facts of this case since they commend to us as the correct principles."

17. Techno-commercial Evaluation report dated February 9, 1999 refers to the tenders as submitted by various bidders. Paragraph E may be reproduced as follows:

"(E) Vendors Vs. Different signalling Quotes: On evaluation it was found that some of the vendors were not readily offering V.5.2. solutions. However they were offering R2MF solutions readily. Hence two lists (1) Vendors providing V.5.2. solutions, and (2) Vendors providing R2MF solutions have been drawn out. As per clarification to the NIT conditions MTNL at its discretion shall open financial bids of either V.5.2, or R2 MF or both.

Venders offering V5.2 solutions Remarks 1. FUJITSU Against clause 3(a), Section-II, Page 6 of NIT, Vol.-I, Vendor has mentioned Compliance, however no support document is made available.

2. HTL

3. HFCL-HYUNDAI

4. ITI-QUALCOM

5. LGIC

6. MOTOROLA

7. NORTEL Not offering readily.

8. PCL-SAMUNG

9. TATA- LUCENT Please refer page No. 4, 5, 6, 7, and 8 for details.

Vendors offering R2MF solutions Remarks

1. FUJITSU Against clause 3(a), Section-II, page 6 of NIT, Vol-I, Vendor has mentioned compliance, however no support document is made available.

2. HTL

3. HFCL-HYUNDAI

4. ITI-QUALCOMM

5. LGIC

6. MOTOROLA

7. NORTEL

8. PCL-SAMSUNG

9. TATA-LUCENT"

18. Techno-commercial Evaluation Report dated March 6, 1999 also dealt with the matter. The comments of Tender Evaluation Committee (TEC) on the bids of various vendors may be reproduced as follows:

"Comments of TEC on the bids of various vendors:

1. M/s. Fujitsu:

M/s. Fujitsu has offered bids for R2 MF and V 5.2 M/s. Fujitsu has not provided any supportive document of supply of WILL equipment in compliance to clause No. 3(a) Section II which states that "Bids are invited from reputed manufacturers and suppliers of Wireless in Local Loop of CDMA IS-95A Technology Equipment with two years standing and adequate Financial strength. The bidders should have supplied at least one lakh lines of CDMA IS-

95/IS 95A Technology. They shall provide credentials in support of their technical capability, financial strength and commitment to the customers in this regard. Those who do not fulfill above requirements shall not be considered" although they have mentioned "complied" against the clause. Since no supportive document has been given, the bid of M/s. Fujitsu is considered not substantially responsive and hence is not recommended for financial opening for both R2MF and V5.2, although they are getting more than 90% marks for both R2MF and V5.2.

2. M/s. HTL:

M/s. HTL has offered bids for R2MF and V5.2. As per grading, the bid is 97.5% responsive for R2MF & 98.2% for V5.2.

Thus the bid is techno-commercial responsive for R2MF & V5.2.

3. M/s. HFCL-HYUNDAI:

M/s. HFCL-HYUNDAI has offered bids for R2MF and V5.2. As per grading the bid is 99.59% responsive for R2MF & 99.59% for V5.2.

Thus the bid is techno-commercial responsive for R2MF and V5.2.

4. M/s. ITI:

M/s. ITI has offered bids for R2MF and V5.2. As per grading the bid is 96.78% responsive for R2MF & 96.78% for V5.2.

Thus the bid is techno commercial responsive for R2MF & V5.2.

5. M/s. LGIC:

M/s LGIC has offered bids for R2MF and V5.2. As per grading the bid is 99.88% responsive for R2MF and 99.88% responsive for V5.2.

The bid is techno-commercial responsive for R2MF and V5.2.

6. M/s. Motorola:

M/s. Motorola has offered bids for R2MF & V5.2. As per grading the bid is 97.5% responsive for R2MF and 98.2% responsive for V5.2.

The bid is techno-commercial responsive for R2MF and V5.2.

7. M/s. Nortel:

M/s. Nortel has offered bid for R2MF. As per grading the bid is 96.68% responsive for R2MF.

The bid is techno-commercial responsive for R2MF.

V5.2 solution, with 95.74% marks, is expected to be supplied by 2nd quarter of 2000. Hence bid is not responsive for V5.2.

8. M/s. PCL:

M/s. PCL has submitted bid for R2MF & V5.2. As per grading the bid is 98.94% responsive for R2MF and 98.94% responsive for V5.2.

The bid is techno-commercial responsive for R2 MF & V5.2.

9. M/s. Tata-Lucent:

M/s. Tata-Lucent has submitted bid for R2MF & V5.2. As per grading the bid is 91.25% responsive for R2MF and 88.57% responsive for V5.2.

The bid is techno-commercial responsive for R2MF.

The bid is not techno-commercial responsive for V5.2 as it does not fulfill the minimum marks criteria of 90% as stipulated in the tender document."

19. The offer of respondent No. 2 was, therefore, on the above basis was held to be non-responsive and it was not recommended for financial opening since no supportive document was given. Deepika Khosla, DGM (MM-II) submitted the papers to GM(MM) with a detailed note for taking a decision with regard to exclusion of M/s. Fujitsu by Competent Authority on that basis. The relevant paragraph of this Note with regard to Respondent No. 2 reads as under :

"The third important point is the exclusion of M/s. Fujitsu on the basis of the eligibility Clause-3(a), Section-II page-6 of this tender document. In this eligibility criteria, it was desired that the bidder should submit the credentials (supporting documents) with regard to the requirement of having supplied One lac line of CDMA IS-95 equipment. M/s. Fujitsu has not supplied the credentials in this regard while the others who have been made eligible on the basis of this criteria have supplied supporting documents which have been ratified by the Tender Evaluation Committee. In respect of financial strength and commitment to subscriber, M/s. Fujitsu may not be considered lacking vis-avis other suppliers who are being considered compliant on the basis of this clause. A decision is to be taken whether financial bids, of M/s. Fujitsu need to be opened on the basis of this lacuna of not having supplied the documentary evidence for being eligible as per Clause - 3(a), Section-II of the tender document."

20. The Director (Technical) referred the matter on March 31,1999 to CMD who dealt with dis-qualification of M/s. Fujitsu in the following manner :

"4. Disqualification of Fujitsu:

It is recommended that their bid be rejected since they have not complied with the eligibility condition clause 3(a) section 11 page 6 because the Company has not produced documentary evidence of their technical capabilities, financial strength and commitment to the customer in this regard. The Company has however written 'Complied'. This clause in the tender states that those who do not fulfill above requirement shall not be considered.

Coming to the evaluation of the bids, I find that this Company has been given full 5 marks under Part C. System requirements Cl.1. Which states as under :

"The bidder should provide a complete list of Administor Private operators to whom the system quoted has been supplied along with dates of commencing operation". To me this looks a bid odd. I consider the eligibility condition 3(a) is essentially to find out 'provenness' of the Company and its product. We reject the company as per 3(a) but we have given the Company full 5 marks for 'provenness". I think in this case in view of rejection of the Company as per 3(a), we should have given 0 marks at CL. 1. I also find that this Company has scored 97.89% for both V5.2 and R2 MF compliance. Here is a situation which needs a clarification from the bidder to assist us in the evaluation and comparison of bids. As such, we can ask in writing the Company a clarification under clause 24 asking them to prove their credentials as per 3(a). We can give one week time for their response. If they do not provide satisfactory credentials, their bids may be rejected, at the same time marks given at CL.1 may be made Zero. If they provide, they may be qualified and their bids for both R2 MF and V5.2 may be opened.

Sd/-

(S. Rajagopalan) 5.4.99"

21. As a consequence of the above, a Communication dated April 5, 1999 was sent by Deputy General Manager (MM-II) to M/s. Fujitsu which may also be reproduced as under:

"MAHANAGAR TELEPHONE NIGAM LIMITED (A GOVERNMENT OF INDIA ENTERPRISE) MTNL/20-80(235) /98-MM/CDMA April 5, 1999

To,

M/s. Fujitsu, India Ltd., Ist floor, Mercantile House, 15, K.G. Marg, New Delhi-110001.

Dear Sir,

Please refer to Clause No. 3(a), Section-II page 6 of the tender document which concerns with the provenness of the bidder and its product. You are requested to kindly produce the documentary evidence of your technical capabilities and provenness along with letters with complete list of administration/private operators to whom the system quoted has been supplied and the date of commencement of commercial operations. The reply should reach this office latest by 5.00 O'clock on 12.4.99. In case no reply is received by that date, it will be presumed that you are not complying according to the tender document and your bid will be considered as non-responsive.

Sd/-

Deepika Khosla Dy. G.M. (MM-II)"

22. Respondent No. 2 replied to the above said letter by Communication dated April 12, 1999 which reads as under:

"Ref: BC/MTNL/WLL/Mumbai/010

Date: 12th April, 1999.

Dy. General Manager (MM-II), Mahanagar Telephone Nigam Limited, Jeevan Bharti, Connaught Circus,

New Delhi-110001.

Kind Attn. Ms. Deepika Khosla

Certificate of supply

Dear Madam,

Reference is invited to your letter No. MTNL/20-80/(235)/98- MM/CDMA dated April 5th, 1999 regarding the captioned subject.

Enclosed please find the Certificate of having supplied the offered equipment from Mynamar Posts and Communications, Ministry of Communications, Mynamar towards provenness of the offered product as per Clause No. 3(a), Section-II, page 6 of the tender document. Further, we wish to confirm that documentary evidence of our technical capability has been included in Section-VI of our Unpriced Technical & Commercial bid.

We regret the inconvenience caused to you on this account. Should you, however, desire any further clarifications, we would be pleased to furnish the same.

Thanking you, Your faithfully

for JV of FUJITSU

Sd/-

(M. Tejima) Authorized signatory"

The certificate dated October 11, 1998 was as a consequence included with the above reply.

23. The reading of the entire correspondence will show that the Tender Evaluation Committee did not find the bid of respondent No. 2 as responsive as it had failed to comply with clause 3(a) of the bid documents for failure to supply supporting documents. The said objection was over-ruled by the CMD and he gave another opportunity to M/s. Fujitsu Limited to submit the documents.

24. The basic stand which is taken by on behalf of respondent No. 2 is that the said respondent was duly qualified to bid and it fulfillled all the conditions in terms of the bid documents. The necessary certificate dated October 11, 1998 was furnished subsequently on a query being raised by MTNL, respondent No.1 herein and was not required to be filed along with the tender papers and it is next argued that MTNL was well within its rights to seek clarification under Clause 24 of the tender conditions. Such clarification was sought and respondent No. 2 was held eligible for award of contract as it was also the lowest tenderer. The admitted position, however, is that the necessary documents were not supplied when respondent No. 2 put in its bid papers and no supporting evidence was submitted in this regard. It was imperative on the part of all the bidders to submit all documents establishing their eligibility and qualifications, such as, is evident from reading of clause 13 of the tender conditions which require the following criteria to be fulfillled:

"13. DOCUMENTS ESTABLISHING BIDDER'S ELIGIBILITY AND QUALIFICATIONS:

13.1 Pursuant to Clause 3, the bidder shall furnish, as part of bid documents establishing the bidder's eligibility to bid, and its qualifications to perform the contract of its bid is accepted.

13.2 The documentary evidence of the bidder's qualifications to perform the contract if its bid is accepted, to the purchaser's satisfaction.

13.3 That the bidder has the financial, technical and production capability necessary to perform the contract. For this, he shall certify the following criteria:-

(i) The bidder must be a manufacturer and supplier of CDMA IS-95 A equipment with two years standing experience and has supplied atleast 100 K lines (Radio & Switching). The bidder(s) should have a sound financial strength. They may give balance sheets for the last three years for assessing their financial strength. In case of joint venture each of the participant member may give their balance sheet separately for the last three years for this purpose.

(ii) The bidder has a Nodal Centre existing/proposed to be opened, to facilitate the interaction which shall be preferably in Mumbai, which shall form part of contractual commitment. The services shall be available throughout the period of contract.

(iii) The bidder (alongwith their collaborator, if any) should have satisfactory feed-back regarding after-sale service from their customers. A certificate for satisfactory performance of the contract from atleast three major customers may be produced."

25. The other condition is laid down in clause 3 wherein it is clearly stated that the bidders should have supplied atleast 1,00,000 lines of WILL of CDMA IS-95 Technology. They shall provide credentials in support of their technical capabilities, financial strength and commitment to their customers in this regard. Those who did not fulfill the above requirements were not required to be considered. The Tender Evaluation Committee on the above basis quite correctly stated that the requisites as required by the tender conditions have not been fulfillled and held the bid of respondent No. 2 as not responsive. Clause 24 which deals with clarification of bids does not imply that in case the bidder has not submitted all the relevant documents, he will be granted another opportunity to submit the same at a subsequent stage particularly when the last date for submission of bids has expired. The clarification as envisaged by Clause 24 will only imply that if there is any doubt which will be necessary for examination, evaluation and comparison of bids the purchaser may ask for clarification of its bid otherwise the sanctity of submission of application till a certain date and opening of bids on particular date will be entirely lost.

26. In view of the above reasons, the award of contract in favour of respondent No. 2 is set aside.

27. The question now arises as to whether the tender of the petitioners can be accepted and they may be granted the contract. The petitioner No.1 is not the lowest tenderer and in view of the facts and circumstances of the case particularly when there is difference of opinion between the findings of the Tender Evaluation Committee and CMD, it will be appropriate that respondent No.1 is granted liberty to take fresh steps in accordance with law for award of contract as may be deemed fit and proper. The present petition is allowed to the extent as indicated above. There will be no order as to costs.