Delhi High Court
Manmeet Singh vs South Delhi Municipal ... on 21 July, 2020
* IN THE HIGH COURT OF DELHI AT NEW DELHI
W.P.(C) 3811/2020 and CM APPL. 13652/2020
Date of decision: 21st July, 2020
IN THE MATTER OF:
MANMEET SINGH ..... Petitioner
Through: Mr. A.S. Chandhiok, Senior
Advocate with Mr. Soayib Qureshi,
Mr. Ritesh Kumar, Mr. Tejasvi Chaudhry
and Ms. Simran Kohli, Advocates
versus
SOUTH DELHI MUNICIPAL CORPORATION .....Respondent
Through: Mr. Sanjay Poddar, Senior
Advocate with Ms. Aakanksha Kaul,
Mr. Govind Kumar, Mr. Tushar Yadav and
Mr. Manek Singh, Advocates and Mr. P.S.
Jha, DC, RP Cell.
AND
W.P.(C) 4020/2020 and CM APPL. 14417-19/2020
RAJESH KUMAR SINGH ..... Petitioner
Through: Ms. Manmeet Arora, Mr. Pratap
Singh Parmar and Mr. Tarang, Advocates
versus
SOUTH DELHI MUNICIPAL CORPORATION ....Respondent
Through: Mr. Sanjay Poddar, Senior
Advocate with Ms. Aakanksha Kaul,
Mr. Govind Kumar, Mr. Tushar Yadav and
Mr. Manek Singh, Advocates and Mr. P.S.
Jha, DC, RP Cell.
CORAM:
HON'BLE MS. JUSTICE HIMA KOHLI
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
HIMA KOHLI, J
1. Both the petitioners are aggrieved by the communications dated
19.06.2020, issued by the respondent/South Delhi Municipal Corporation (in
short, 'SDMC'), informing them that the Competent Authority had decided to
recall the entire e-auction tendering process in respect of NIT No.1176 dated
16.03.2020, for e-auctioning six multilevel parking sites within the SDMC
jurisdiction. As a result thereof, the offers communicated to the petitioners
on 15.05.2020, declaring them as H1 bidders in respect of two multilevel
parking sites each, were withdrawn and the advance monthly licence fee and
security deposit/performance guarantee deposited by them were directed to
be returned.
2. As the factual matrix in both the cases is almost similar, for the sake of
convenience, we shall be referring to the facts narrated in W.P.(C)
3811/2020.
3. On 16.03.2020, the respondent/SDMC took steps to invite bids from
eligible bidders for regular allotment of six authorized multilevel parking
sites in its jurisdiction. In response to the NIT, the petitioner submitted his
bids and on 28.04.2020, he was declared as the successful bidder in respect
of two multilevel parking sites namely, Hauz Khas (with surrounding surface
parking) multilevel underground parking and Kalkaji multilevel parking. On
15.05.2020, the respondent/SDMC issued Offer letters to the petitioner
informing him that the Tender Evaluation Committee had found him to be
the H1 bidder, eligible to be offered the aforesaid sites for a period of five
years (3 years + 2 years) and that he was required to submit the documents
mentioned in the said letter alongwith the requisite fee. Vide email dated
18.05.2020, the petitioner accepted the terms of the Offer letters and
proceeded to make requisite compliances, as directed. On 29.05.2020, the
petitioner also furnished bank guarantees to the respondent/SDMC in respect
of both the sites.
4. Upon failing to hear from the respondent/SDMC thereafter, the
petitioner submitted a representation dated 22.06.2020 to the
respondent/SDMC, requesting that possession of the parking sites be handed
over to him. However, on the very same day, at 11:30 PM, the petitioner
received two emails from the respondent/SDMC informing him that it had
decided to withdraw the communications dated 15.05.2020 and refund the
licence fees and security deposits. For purposes of ready reference, the
content of one of the communications dated 19.06.2020 is reproduced
hereinbelow:-
"This has reference to the bid process bearing NIT No. 1176
dated 16.03.2020 regarding e-auction of parking sites at
Kalkaji Multilevel underground parking. In terms of clause 12
of tender document, the Competent Authority has decided to
recall the entire e-auction tendering process by cancellation of
the above-mentioned bid process.
In view of above, the offer communicated vide this office letter
No.AC/RP Cell/SDMC/2020/D-29 dated 15.05.2020 is hereby
withdrawn & the advance MLF amounting to Rs.9,03,681/- &
the Security deposit/performance guarantee equal to Rs.25
Lakh are returned herewith.
Please acknowledge the same.
This issues with the prior approval of the Competent
Authority."
5. It is not in dispute that though the aforesaid communication bears the
date of 19.06.2020, the same was received by the petitioner as an enclosure
to the email dated 22.06.2020, timed as 11:30 PM, addressed by the Assistant
Commissioner, (RP Cell), SDMC. Aggrieved by the impugned cancellation
letters issued in respect of both the parking sites, the petitioner has
approached this court, seeking directions to the respondent/SDMC to hand
over possession of the two parking sites in respect whereof he was declared
as H1 in terms of the Offer letter dated 18.5.2020.
6. Mr. Chandhiok, learned Senior Advocate appearing for the petitioner
commenced his submissions by narrating the following sequence of events.
Seven bids were received by the respondent/SDMC in terms of the NIT
issued on 16.03.2020. On 12.05.2020, on opening the technical bids, four
bidders were disqualified, thus leaving three bidders (out of whom, two have
filed the subject writ petitions). On the very next day, i.e., on 13.05.2020, the
e-auction had taken place, wherein the petitioner was successful in respect of
two bids relating to the Kalkaji and Hauz Khas multilevel parking sites. We
may note that the petitioner in W.P.(C) 4020/2020 was declared as H1 in
respect of the New Friends Colony (two floors) parking and the Munirka
multilevel parking. On 15.05.2020, two letters of offer were issued to the
petitioner in respect of the two parking sites, which were unceremoniously
cancelled on 19.06.2020, intimation whereof was received by the petitioner
in the late hours of 22.06.2020.
7. Learned Senior Advocate contended that once the petitioner had
complied with the terms and conditions laid down in the Offer letter dated
15.05.2020, the said document ceased to remain an offer letter and ought to
be treated as a concluded contract. To substantiate the said submission,
reference was made to the contents of the Offer letter dated 15.05.2020,
which concluded by stating that the same had been issued with the prior
approval of the Competent Authority. It was submitted that as a matter of
fact, the communication dated 15.05.2020, though described as an "Offer
letter", was an acceptance letter inasmuch as the respondent/SDMC had
accepted the petitioner as the H1 bidder, eligible for allotment of two parking
sites for a period of five years and all that was left to be done on the part of
the petitioner was to furnish the relevant documents and the fee prescribed by
the respondent/SDMC, which he had duly complied with. This included
acceptance by the petitioner of the Offer letter within seven working days,
submission of the security deposit/performance guarantee, deposit of
advance licence fee for three months, payment of the auction processing
charges to the service provider, submission of the print of the contract
agreement on a non-judicial stamp paper of Rs.100/-. Thus, it was canvassed
that the petitioner having discharged his obligations, the contract was
complete in all respect and all that was left to be done on the part of the
respondent/SDMC was to hand over the parking sites to him, which it has
arbitrarily, failed to do.
8. The next submission made by Mr. Chandhiok, learned Senior
Advocate was in the context of Clause 12 of the tender documents , which is
reproduced hereinbelow for ready reference :-
"12. Allotment Letter:
The bid (including negotiations, if· any) submitted by the
agency shall be subject to acceptance by the Commissioner,
SOMC or any other officer/authority authorized under DMC
Act. The offer once accepted, shall be final and binding upon
the parking contractor/agency. The agency shall be liable to
complete all the requisite formalities (including but not limited
to deposition of security deposit/performance guarantee,
advance MLF as mentioned in Annexure-9), as specified in
working letter, within seven working days of issue of the same
and thereafter a formal allotment letter shall be issued to the
H-1 parking contractor/agency. Any offer/permission granted
by the competent authority 'may/can' be withdrawn, any time
without assigning any reason thereof."
9. The argument advanced was that the aforesaid clause clearly states that
"the offer once accepted, shall be final and binding upon the parking
contractor/agency" and once the respondent/SDMC had accepted the offer of
the petitioner, the said clause would apply with equal force to the SDMC
which was under an obligation to complete the remaining formality by
handing over possession of the two parking sites to the petitioner and
issuance of the "formal allotment letter" referred to in Clause 12, was a mere
procedural formality. Learned Senior Advocate argued that in any event, the
respondent/SDMC could not have resorted to Clause 12 of the tender
documents to cancel the bid process inasmuch as the said clause only
contemplates that "any offer/permission granted by the competent authority
may/can be withdrawn, any time without binding assigning any reason
thereof" and the respondent/SDMC hasn't withdrawn the Offer letters dated
15.05.2020, in terms of the said clause. Instead, the entire tender process has
been scraped by the respondent/SDMC under the garb of invoking Clause 12.
Thus, the impugned cancellation letters dated 19.06.2020 issued by the
respondent/SDMC are not in terms of Clause 12 of the tender documents and
are liable to be quashed. It was submitted that once reference to Clause 12
of the tender documents is held to be arbitrary, then the natural inference
would be that the Offer letters dated 15.05.2020, could not have been
withdrawn and the contract between the parties would continue to subsist and
have a binding effect on the respondent/SDMC. It was also submitted that
without bothering to serve the cancellation letters dated 19.06.2020 on the
petitioner, the respondent/SDMC has arbitrarily proceeded to issue a fresh
tender notice on 22.06.2020, which is impermissible.
10. To substantiate the submission that the impugned letters of
cancellation do not offer any reason for the extreme steps taken by the
respondent/SDMC of scrapping the tender and any explanation for the same
sought to be offered by the respondent/SDMC in its counter affidavit, cannot
be read into the cancellation letters for converting them into a speaking
order, learned counsel for the petitioner cited Mohinder Singh Gill and Anr.
vs. The Chief Election Commissioner, New Delhi and Ors. reported as
(1978) 1 SCC 405 reiterated by a co-ordinate Bench of this Court in a recent
judgment dated 03.03.2020 in W.P.(C) 952/2017 entitled Reebok India
Limited vs. Union of India and Anr.
11. Ms. Manmeet Arora, learned counsel for the petitioner in W.P.(C)
4020/2020 has supplemented the arguments advanced by Mr. A.S.
Chandhiok, learned Senior Advocate and contended that once the petitioners
had taken steps to deposit the requisite licence fee and security deposit in
terms of Clauses 2 and 3, submit a non-judicial stamp paper worth Rs.100/-
in terms of Clause 4 and deposit the e-auction fee, which could only have
been deposited by a successful bidder in terms of Clause 5 of the Offer letter
dated 15.5.2020, a concluded contract had come into force and any breach
thereof would attract the provisions of Section 73 of the Indian Contract Act,
1872 which entitles the petitioners to claim compensation for losses/damages
caused to them on account of the breach of the contract by the
respondent/SDMC.
12. Learned counsel also alluded to Clause 8 of the Instructions to the
Bidders that forms a part of the tender documents and stipulates that the
successful bidder shall have the exclusive right for implementation of the
project for the award period, i.e., for five years (3 years + 2 years), to urge
that this clause ought to be treated as a negative covenant in favour of the
petitioner in terms of Section 41(e) of the Specific Relief Act, 1963 that
contemplates that no injunction can be granted to prevent the breach of a
contract, performance whereof would not be specifically enforced.
13. Ms. Arora, learned counsel also adverted to sub-clause (b) of Clause
10 of the tender documents that deals with acceptance of auction/bid and
prescribes that the offer/bid made by the bidder shall be subject to acceptance
by the Competent Authority or an authorized officer of the SDMC and
Clause 12 that deals with issuance of the Allotment letter, to contend that the
language used in the aforesaid clauses make it clear that the 'offer' has to be
made by the bidder and not the SDMC and therefore, the communication
dated 15.05.2020, issued by the respondent/SDMC and termed as an "Offer
letter", is nothing but an acceptance letter in response to the offer made by
the petitioners, which could not have been cancelled by the
respondent/SDMC unilaterally. Lastly, it was submitted that in any event, the
second para of the Offer letter dated 15.05.2020 records that the Tender
Evaluation Committee had found the petitioners as the eligible H1 bidders
and this goes to show that an independent satisfaction had been arrived at
before issuing the said document.
14. Mr. Sanjay Poddar, learned Senior Advocate appearing for the
respondent/SDMC countered all the submissions made by the other side and
asserted that the petitioners were only made an offer to run the multilevel
parking sites for a specific period but no allotment letters had been issued in
their favour in terms of the NIT and therefore, the contract had not matured
much less, concluded. He sought to explain that certain subsequent
developments had taken place after 15.05.2020 that left no option with the
respondent/SDMC but to cancel the entire tender process and issue a fresh
NIT, which are as follows:-
(a) 28.05.2020 - A complaint in respect of the subject tender made by the
Chairman, Standing Committee, SDMC was received by the SDMC
on 29.5.2020.
(b) 10.06.2020 - Members the Standing Committee, SDMC addressed a
joint letter to the Commissioner, SDMC requesting him to examine a
complaint received by them from a party alleging mismanagement of
the subject tender.
(c) 16.06.2020 - Commissioner, SDMC constituted a 9 Member
Committee headed by the Additional Commissioner, SDMC to
examine the entire tender process in the light of the complaints
received/forwarded to him.
(d) 17.06.2020 - The Committee submitted its report to the
Commissioner, SDMC stating inter alia that there was a possibility of
cartel formation among the three successful bidders, who had
participated in the online e-auction process. The Committee
recommended that the tender process be recalled, e-tender process be
adopted instead of the online e-auction mode, the tender conditions be
revisited and the reserve price offered in respect of each of the six
multilevel parking sites be raised.
(e) 17.06.2020 - Recommendations of the Committee were duly accepted
by the Commissioner, SDMC.
(f) 19.06.2020 - SDMC prepared letters for cancellation of the tender
process.
(g) 22.06.2020 -NIT documents were redrafted and sent by the R.P. Cell
to the IT Department for issuing fresh advertisements.
- On the same day, the said NIT was uploaded on the website of the
SDMC.
- the petitioners received the cancellation letters dated 19.06.2020,
through e-mail on 22.06.2020 at 11.30 PM.
(h) 23.06.2020 - Fresh NIT issued by the respondent/SDMC was
published in several newspapers.
15. Mr.Sanjay Poddar, learned Senior Advocate thus explained that the
recommendations made by the Committee constituted by the Commissioner,
SDMC to examine the tender process clearly notes in para 10 that a cartel
had been formed by the bidders, who elected to participate in the auction
activity on 13.05.2020, at the fag-end of the day, though the window for
conducting the e-auction was open from 11.00 AM to 5.35 PM. A flurry of
activity took place only in the last 15-20 minutes and the result was that each
of the three bidders managed to bag two bids each by depressing their bids
and accommodating each other.
16. To rebut the contention of the other side that since the impugned
communication dated 19.06.2020, is a non-speaking one and does not furnish
reasons for withdrawing the Offer letters issued to the petitioners it ought to
be quashed, learned counsel cited the decision in Ghanshyam Das Aggarwal
v. Delhi Development Authority reported as 1996 (37) DRJ (DB) and
submitted that the terms and conditions of the tender document did not
contemplate that any reasons be given for rejection of the highest bid and in
any case, the reasons for cancelling the entire tender have now been placed
before this Court for its perusal.
17. On the scope of judicial review in matters relating to tenders, learned
counsel cited a recent decision of the Supreme Court in Municipal Council
Neemuch v. Mahadeo Real Estate and Ors. reported as 2019 (10) SC 738 and
contended that the respondent/SDMC cannot be faulted for directing re-
tendering as the object is to obtain the best price available for operating the
multilevel parking sites, constructed at the cost of the SDMC. He vehemently
disputed the plea taken by the other side that once the Offer letter had been
issued by the respondent/SDMC, the contract stood concluded in all respects.
He submitted that no letter of allotment has been issued in favour of the
petitioners and nor has the physical possession of the parking sites been
handed over to them and therefore, there was no concluded contract. The
decision of the Supreme Court in Rishi Kiran Logistics P. Ltd. v. Board of
Trust of Kandla Port, reported as 2015 (13) SCC 233, was also cited to urge
that if the petitioners have a grievance against the respondent/SDMC of
having breached the terms of the contract then, they are free to exercise the
civil remedies that may be available to them.
18. In response to the submissions made on behalf of the petitioners that
adequate publicity was given to the NIT as it was uploaded by the SDMC on
a private website, www.tenderswizard.mcd.com and intimation of any tender
uploaded on the said website is conveyed to over 2,000 registered
contractors, learned counsel for the respondent/SDMC clarified that though
the subject NIT had been notified on the official website of the SDMC,
www.mcdonline.gov.in, it was not specifically uploaded on the eAuctions
webpage. Instead, information regarding the NIT was given on the "News
and Events" webpage of the official website, which gets automatically
replaced after every 10 days. As a result, the information relating to the
subject NIT was displayed on the official website of the respondent/SDMC
for a period of 10 days from 17.03.2020 and it got automatically deleted on
09.04.2020, whereas the last date for receiving the bids was 22.04.2020. In
this background, it was submitted that there was insufficient dissemination of
information in the public regarding the said tender and the response that was
received, was from lesser number of bidders.
19. As for the Corrigendum uploaded on the eAuctions webpage on the
website of the respondent/SDMC, alluded to by the other side to urge that the
NIT did find mention there, Mr. Poddar, learned Senior Advocate again
clarified that the main tender documents were uploaded on the "News and
Event" webpage on the official website of the SDMC and on the portal of a
private website, www.tenderswizard.mcd.com, but not on the eAuctions
webpage thus, depriving interested parties of an opportunity to submit their
bids and participate in the e-auction.
20. In their rejoinder arguments, both Mr. Chandhiok, learned Senior
Advocate appearing for the petitioner in W.P.(C) 3811/2020 and Ms.Arora,
learned counsel for the petitioner in W.P.(C) 4020/2020 stated that the mala
fides on the part of the respondent/SDMC in issuing a fresh NIT is apparent
from the fact that the Department has considerably diluted the terms and
conditions only to ensure that those bidders, who were unable to submit their
bids on the last occasion or could not meet the stipulated qualifications,
manage to get an opportunity to participate this time. They referred to the
order dated 12.05.2020 passed in W.P.(C) No.3108/2020 entitled
M/s.Paschatya Entertainment Pvt. Ltd. vs. SDMC and the order dated
18.05.2020 in W.P.(C) No.3164/2020 entitled Lakhvinder Singh v. SDMC
relating to the very same NIT and submitted that contrary to the stand now
sought to be taken by the respondent/SDMC that a cartel was created by the
four bidders during the e-auction process, the SDMC had categorically stated
before a co-ordinate Bench that there have been occasions when even one
bidder has shown interest in respect of a particular parking site and
ordinarily, the respondent/SDMC receives seven odd bids in response to such
an NIT. Reference was also made to para 11 of the order passed in
Lakhvinder Singh (supra), wherein counsel for the respondent/SDMC had
stated before the court that the technical bid of the petitioner therein had to
be rejected because he did not upload the correct documents. It was thus
stated that many of the terms and conditions of the previous NIT, which
formed the basis of disqualifying some of the bidders in respect of the
subject tender, have been deliberately watered down by the
respondent/SDMC in the fresh NIT to ensure that those bidders, who stood
disqualified earlier, manage to gain an easy entry this time.
21. Learned counsel for the petitioners thus argued that there was no
occasion to cancel the NIT dated 16.03.2020 and advertise a fresh NIT when
it is not the case of the respondent/SDMC that they had received any
representation from a third party stating that it was interested in applying but
did not gain knowledge about the NIT and had thus, missed the bus. The
conclusion of the Committee about any cartelization was hotly contested on
the ground that it is not backed by any material and the burst of activity in
the last half an hour on 13.05.2020, cannot be treated as unusual as it is in
routine that bidders get activated only in the last one hour and participate in
the online e-auction. The decisions cited by learned counsel for the
respondent/SDMC were also sought to be distinguishable on facts.
22. We have given our careful consideration to the arguments advanced by
learned counsel for the parties, perused the pleadings and examined the file
of the Department, that was requisitioned by us.
23. It may be stated at the outset that in exercise of the powers of judicial
review, the scope of interference by courts in administrative actions
particularly relating to tender matters, is fairly narrow. It has been held in a
catena of decisions of the Supreme Court and several High Courts that
interference by the court would be warranted if the decision taken by the
State is found to be so arbitrary, unreasonable and capricious that it cannot
withstand judicial scrutiny or if the court arrives at the conclusion that the
decision taken by the respondent/State is tainted on account of any mala fides
in the transaction or with the idea of favouring a particular party or is
otherwise perverse. In Tata Cellular Vs. Union of India, reported as (1994) 6
SCC 651, the Supreme Court has extensively discussed the scope of judicial
review of administrative action in tender matters and observed thus:-
"70. It cannot be denied that the principles of judicial review would
apply to the exe rcise 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.
XXX XXX XXX
74. Judicial review is concerned with reviewing not the merits of
the decision in support of which the application for judicial review
is made, but the decision-making process itself.
XXX XXX XXX
77. The duty of the court is to confine itself to the question of
legality. Its concern should be:
1. Whether a decision-making authority exceeded its powers?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal would have
reached or,
5. abused its powers.
Therefore, it is not for the court to determine whether a particular
policy or particular decision taken in the fulfilment of that policy is
fair. It is only concerned with the manner in which those decisions
have been taken. The extent of the duty to act fairly will vary from
case to case. Shortly put, the grounds upon which an administrative
action is subject to control by judicial review can be classified as
under:
(i) Illegality : This means the decision-maker must understand
correctly the law that regulates his decision-making power and must
give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out
addition of further grounds in course of time. As a matter of fact,
in R. v. Secretary of State for the Home Department, ex
Brind [(1991) 1 AC 696], 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".
XXX XXX XXX
81. Two other facets of irrationality may be mentioned.
(1) It is open to the court to review the decision-maker's evaluation
of the facts. The court will intervene where the facts taken as a
whole could not logically warrant the conclusion of the decision-
maker. If the weight of facts pointing to one course of action is
overwhelming, then a decision the other way, cannot be upheld.
Thus, in Emma Hotels Ltd. v. Secretary of State for
Environment [(1980) 41 P & CR 255], the Secretary of State
referred to a number of factors which led him to the conclusion that
a non-resident's bar in a hotel was operated in such a way that the
bar was not an incident of the hotel use for planning purposes, but
constituted a separate use. The Divisional Court analysed the
factors which led the Secretary of State to that conclusion and,
having done so, set it aside. Donaldson, L.J. said that he could not
see on what basis the Secretary of State had reached his conclusion.
(2) A decision would be regarded as unreasonable if it is impartial
and unequal in its operation as between different classes. On this
basis in R. v. Barnet London Borough Council, ex p
Johnson [(1989) 88 LGR 73] the condition imposed by a local
authority prohibiting participation by those affiliated with political
parties at events to be held in the authority's parks was struck
down." (emphasis added)
24. In Tejas Constructions and Infrastructure Pvt. Ltd. vs. Municipal
Corporation Sendhwa and Anr., reported as (2012) 6 SCC 464, where the
eligibility of the second respondent in the writ petition was challenged on the
plea that he did not meet the requirements of the NIT for awarding the
contract, the Supreme Court held as follows:-
"17. In Raunaq International Ltd. v. I.V.R. Construction
Ltd. [(1999) 1 SCC 492] this Court reiterated the principle
governing the process of judicial review and held that the writ
court would not be justified in interfering with commercial
transactions in which the State is one of the parties to the same
except where there is substantial public interest involved and in
cases where the transaction is mala fide."
25. In Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation
Limited and Anr., reported as (2016) 16 SCC 818, the Supreme Court had
held as follows:-
"11. Recently, in Central Coalfields Ltd. v. SLL-SML (Joint
Venture Consortium), (2016) 8 SCC 622, it was held by this
Court, relying on a host of decisions that the decision-making
process of the employer or owner of the project in accepting
or rejecting the bid of a tenderer should not be interfered
with. Interference is permissible only if the decision-making
process is mala fide or is intended to favour someone.
Similarly, the decision should not be interfered with unless the
decision is so arbitrary or irrational that the Court could say
that the decision is one which no responsible authority acting
reasonably and in accordance with law could have reached. In
other words, the decision-making process or the decision
should be perverse and not merely faulty or incorrect or
erroneous. No such extreme case was made out by GYT-TPL
JV in the High Court or before us.
12. In Dwarkadas Marfatia and Sons v. Port of Bombay,
(1989) 3 SCC 293, it was held that the constitutional courts are
concerned with the decision making process. Tata Cellular v.
Union of India, (1994) 6 SCC 651 went a step further and held
that a decision if challenged (the decision having been arrived
at through a valid process), the constitutional courts can
interfere if the decision is perverse. However, the
constitutional courts are expected to exercise restraint in
interfering with the administrative decision and ought not to
substitute its view for that of the administrative authority. This
was confirmed in Jagdish Mandal v. State of Orissa, (2007) 14
SCC 517 as mentioned in Central Coalfields Ltd. v. SLL-SML
(Joint Venture Consortium), (2016) 8 SCC 622.
13. In other words, a mere disagreement with the decision-
making process or the decision of the administrative authority
is no reason for a constitutional court to interfere. The
threshold of mala fides, intention to favour someone or
arbitrariness, irrationality or perversity must be met before the
constitutional court interferes with the decision-making
process or the decision." (emphasis added)
26. In West Bengal Central School Services Commission vs. Abdul Halim
reported as (2019) 18 SCC 39, the Supreme Court was called upon to
examine the scope of interference in an administrative action on the part of
the High Court under Article 226 of the Constitution of India and it was held
thus:-
"31. In exercise of its power of judicial review, the Court is to
see whether the decision impugned is vitiated by an apparent
error of law. The test to determine whether a decision is vitiated
by error apparent on the face of the record is whether the error
is self-evident on the face of the record or whether the error
requires examination or argument to establish it. If an error
has to be established by a process of reasoning, on points
where there may reasonably be two opinions, it cannot be said
to be an error on the face of the record, as held by this Court
in Satyanarayan Laxminarayan Hegde v. Millikarjun
Bhavanappa Tirumale, AIR 1960 SC 137. If the provision of a
statutory rule is reasonably capable of two or more
constructions and one construction has been adopted, the
decision would not be open to interference by the writ court. It
is only an obvious misinterpretation of a relevant statutory
provision, or ignorance or disregard thereof, or a decision
founded on reasons which are clearly wrong in law, which can
be corrected by the writ court by issuance of writ of certiorari.
32. The sweep of power under Article 226 may be wide enough
to quash unreasonable orders. If a decision is so arbitrary and
capricious that no reasonable person could have ever arrived
at it, the same is liable to be struck down by a writ court. If the
decision cannot rationally be supported by the materials on
record, the same may be regarded as perverse.
33. However, the power of the Court to examine the
reasonableness of an order of the authorities does not enable
the Court to look into the sufficiency of the grounds in support
of a decision to examine the merits of the decision, sitting as if
in appeal over the decision. The test is not what the Court
considers reasonable or unreasonable but a decision which the
Court thinks that no reasonable person could have taken,
which has led to manifest injustice. The writ court does not
interfere, because a decision is not perfect." (emphasis added)
27. In Municipal Council, Neemuch Vs. Mahadeo Real Estate & Ors.,
reported as (2019) 10 SCC 738, following the law laid down in Tata Cellular
(supra) and West Bengal Central School Services Commission (supra), the
Supreme Court made the following the pertinent observations:-
"14. It could thus be seen that the scope of judicial review of an
administrative action is very limited. Unless the Court comes to
a conclusion that the decision-maker has not understood the law
correctly that regulates his decision-making power or when it is
found that the decision of the decision-maker is vitiated by
irrationality and that too on the principle of "Wednesbury
unreasonableness" or unless it is found that there has been a
procedural impropriety in the decision-making process, it would
not be permissible for the High Court to interfere in the
decision-making process. It is also equally well settled that it is
not permissible for the Court to examine the validity of the
decision but this Court can examine only the correctness of
the decision-making process.
XXX XXX XXX
16. It could thus be seen that an interference by the High
Court would be warranted only when the decision impugned is
vitiated by an apparent error of law i.e. when the error is
apparent on the face of the record and is self-evident. The
High Court would be empowered to exercise the powers when
it finds that the decision impugned is so arbitrary and
capricious that no reasonable person would have ever arrived
at. It has been reiterated that the test is not what the Court
considers reasonable or unreasonable but a decision which the
Court thinks that no reasonable person could have taken. Not
only this but such a decision must have led to manifest
injustice." (emphasis added)
28. A glance at the above decisions shows that in exercise of the
jurisdiction vested in the court under Article 226 of the Constitution of India,
the scope of judicial review in respect of administrative actions taken by the
State, is quite limited. In matters of tender, the court is primarily concerned
with the method adopted by the State for disposal of public property and it
can examine whether the same has been fair and transparent and sufficient
opportunity has been provided to all the stake holders to participate in the
tender process. It is the decision making process that the court is expected to
examine and not the ultimate decision arrived at by the State. Courts can
however interfere if the tender process adopted or the decision taken by the
respondent/authority is found to be arbitrary, irrational, unreasonable or mala
fide.
29. Coming back to the instant case, there is no dispute on facts. It is not
in dispute that the petitioners were found to be the H1 bidders in respect of
two multilevel parking sites each, subject matter of the NIT dated 16.3.2020,
advertised by the respondent/SDMC. It is also not in dispute that Offer
letters dated 15.5.2020 were communicated to the petitioners declaring them
as H1 bidders in respect of the subject multilevel parking sites and in
response thereto, they had fulfilled all the requisite formalities mentioned in
the Offer letters, within the stipulated time. However, before the formal
Letters of Allotment could be issued and the parking sites handed over, the
impugned communications dated 19.6.2020 were issued by the
respondent/SDMC informing the petitioners that the Competent Authority
had decided to recall the entire e-auction tendering process in respect of the
NIT dated 16.3.2020.
30. We have perused the file of the department that was requisitioned to
examine the reasons that have weighed with the respondent/SDMC for
deciding to scrap the entire tender process. The records reveal that a letter
dated 28.5.2020 was issued by the Chairman, Standing Committee, SDMC,
complaining about the manner in which the subject tender had been
processed. This was followed by a letter dated 10.6.2020, jointly signed by
five members of the Standing Committee, SDMC addressed to the
Commissioner, SDMC, requesting him to examine a complaint received by
them from a private party and enclosed with the said letter, regarding
mishandling of the tender process. On receiving the letters dated 28.5.2020
and 10.6.2020, the Commissioner, SDMC decided to constitute a nine-
member Committee, headed by the Additional Commissioner, SDMC to go
into the complaints and submit its report in respect of the multilevel parking
tender process.
31. The said Committee deliberated over the entire issue, examined the
facts stated in the complaints and after going through the records relating to
the tender process, submitted a report. Since the decision of the
respondent/SDMC to withdraw the NIT is based on the recommendations of
the Committee, the said Report is extracted hereinbelow for ready reference:-
"......Detailed examination of record made available to the
Committee and deliberation on issues related to the tender has
brought out following:
1. Contents of complaint and the allegations levelled in the said
complaint are general in nature yet keeping in view totality of
the facts and circumstances and so as to arrive at rightful
conclusion, it was necessary to look into the entire e-tender
process adopted in the instant case.
2. The e-tender notice was published on 17.03.2020, in the
newspaper by the office of R.P. Cell through P&I department
(Annex-A). As per this notice, the bid was invited from
multilevel car parking for a period of 3 years (extendable up to
2 years). Further it was mandatorily required by the bidder to
furnish the entire documents after signing each page and
submitting the same online. The said notice also stipulated that
all relevant tender documents which are to be downloaded for
bid participation are available on the website:
www.mcdonline.gov.in or www.tenderwizard.mcd.com/
southdmc.
3. On further scrutiny of the e-tender process, report from
IT department of SDMC, placed at Annexure-B, it was found
that the main tender document was never sent to IT
department by RP Cell for uploading and so it was never
uploaded on www.mcdonline.gov.in. Thus, the same was not
available to the prospective bidders.
4. It is worth mentioning that only the working contractor of
the department or the contractor registered on tender wizard
site would be aware of the tender notice. New persons/firms
desirable of participating in the tender, perhaps, evidently,
would not be aware of the tender. Thus, there is no doubt that
that equal opportunity was not made available to all, resulting
only 7 participants availed the opportunity to participate for
six parking sites. Thus, it goes to show that there was no wider
participation for healthy competition.
5. The e-tender notice was published in the newspapers on
TOI, Amar Ujala etc. This notice stipulates tender period for
3 years (extendable up to 2 years). On the other hand the
approved tender document available for prospective bidders
offered the contract period for 5 years without indicating the
break up period as mentioned in the newspaper. This error
may have created confusion in the mind of the prospective
bidders regarding the actual contract period and its revenue
potential. Further, this error was never clarified at any stage
of the tender process.
6. The prospective bidders were also asked to furnish and
upload all documents after stamping and signing it physically.
Under e-tender process this condition is not required, as the
authenticity of the documents is established and taken up
through digital signature.
7. The tender documents mentioned date of pre bid meeting.
However, record does not reflect holding any pre-bid meeting
in this behalf. It is an important event in any tender to
understand the problems of the prospective bidders, clarify
their doubts and to take corrective steps. However, no pre-bid
meeting was held. So departments could not get the insight of
the prospective bidders. The report of not having a pre-bid
meeting was also not submitted to the competent authority.
8. Tenders for surface parkings do not have the clause of "2
years of experiences in parking domain" therefore it is not
desirable to have this clause in future tenders.
9. Because of certain conditions in the tender document like
a) Uploading of signed and stamped in the tender
document.
b) Notarisation of affidavits.
c) No dues certificate from AC/RP Cell.
have led to cancellation of few bids. Therefore, it is not
compatible to have above clauses in future e-tenders. Instead of
no dues certificate from AC/RP Cell prospective bidders shall
submit an undertaking that "there is no outstanding dues
against them in SDMC".
10. Reports regarding transaction during the auction period for
each of the multi level parking sites (Annexure - C, 12 pages),
which took place on 13.05.2020 has been downloaded from e-
auction portal, which indicates that the window for the auction
was opened from 11 am to 5.35 pm, but the actual auction
activity started at around 5.17 pm and concluded at staggered
manner up to 5.38 pm. This reveals that the actual auction
activity occurred for merely around 15-20 minutes and all the
three successful bidders won two sites each. This short burst of
auction activity does not rule out the possibility of cartel
formation, jeopardizing the basic spirit of e-auction process.
Based on this experience, the Committee thus recommends for
e-tender procedure for future biddings of parking sites instead
of e-auction.
11. Considering the above facts and circumstances, the
Committee is of the view that there was lack of active and
healthy participation in the present bid. Committee is also of
the view that there is possibility of cartel formation among
three successful bidders. Thus, the Committee after detailed
deliberation recommends that in terms of provisions contained
in clause 12 of the tender document, the offer/permission
granted to all the Multi level parking sites offered to three
successful bidders may be withdrawn. The Performance
Security and advanced MLF so taken may be returned to the
bidders.
12. The Committee further recommends for annulment of the
instant tender process and recall of tender after revising the
tender conditions for getting wider participation and healthy
competition in larger public interest.
13. Further on tender file and record, reveals that the
department had fixed the MLF on lump sum basis as no base
was available with the department. However, after the receipt
of the offer to the department, base rate for the different sites
may be considered accordingly. Thus, the Committee also
recommends that following new reserve price for fresh tender
may be considered.
S.No. Name of multi level parking site Recommended
MLF
1. Hauz Khas Rs. 1,25,000/-
2. Munirka Rs. 1,15,000/-
3. Kalkaji Rs. 3,05,000/-
4. Rajouri Garden Rs. 1,20,000/-
5. Subash Nagar Rs. 1,30,000/-
6. New Friends Colony Rs. 1,30,000/-
The above recommendations may be placed before competent
authority for consideration." (emphasis added)
32. On receiving and examining the aforesaid recommendations made by
the Committee, the Commissioner, SDMC took a decision to scrap the entire
tender process and called for a fresh tender. Vide letter dated 19.6.2020, the
petitioners were informed that the entire e-auction tendering process had
been recalled and the bidding process stood cancelled. Resultantly, the Offer
letters dated 15.5.2020 were also withdrawn and the advance monthly license
fees and security deposit deposited by the petitioners were returned to them.
33. The contention of the learned counsel for the petitioners that the
communication dated 19.6.2020, issued by the respondent/SDMC is a non-
speaking order and not sustainable in view of the decisions in Mohinder
Singh Gill (supra) and Reebok India Ltd. (supra) and that the explanation
now sought to be offered by the respondent/SDMC in its counter affidavit,
cannot be read into the cancellation letters to make good the default, is
unmerited. The communication dated 19.6.2020 cannot be treated as a
judicial order passed by the respondent/SDMC on the administrative side. It
is only an intimation to the petitioners of the decision taken by the
respondent/SDMC to recall the e-auction tendering process and withdraw the
Offer letters dated 15.5.2020.
34. In the above context, we may usefully refer to the decision of a
Division Bench of this court in Ghanshyam Das Aggarwal (supra) authored
by His Lordship, Justice R.C. Lahoti, as he then was, wherein, the court was
called upon to examine the action of the respondent/DDA of refusing to
accept the bids of the highest bidders in respect of industrial plots put on a
public auction. Relying on the decision in CWP No.250/1995 entitled Dr.
Bosechandani & Ors. Vs. DDA, Kumari Shrilekha Vidyarthi & Anr. Vs.
State of U.P., reported as AIR 1991 SC 37 and Kusum Lata Khajanchi &
Ors. Vs. DDA & Ors., reported as 1995 (35) DRJ 480, the court rejected the
plea of the petitioner therein that there were any mala fides involved or that
he had been singled out for being excluded for allotment on the ground of
hostile discrimination. It was held that the terms and conditions of the public
auction did not contemplate that reasons for rejecting the highest bid be
communicated to the concerned bidders and in the absence of any rule or
terms and conditions in the tender document, reasons need not be assigned in
the sense of being communication to a party. We may usefully extract below,
para 15 of the captioned decision:-
"15. The observation made by the Supreme Court is binding on
us, but we do not think it is going to make any difference in the
case at hand. Firstly, the Rules and the Terms and Conditions
of the Public Auction did not contemplate reasons for rejection
of highest bid being communicated to the concerned bidders.
There is a distinction between existence of reasons and
assigning of reasons (see Shrilekha Vidyarthi AIR 1991 SC
537 Pr. 13 and Liberty Oil Mills AIR 1984 SC 1271) The
former is a requirement of natural justice, the latter is a dictate
of law. Reasons need not be assigned in the sense of being
communicated to a party unless required to be so done by any
Rule having force of law. Secondly, the reasons could have
been made available if asked for. Thirdly, the reasons for
rejection though not communicated and though not asked for
by the petitioners before filing the petitions have been made
available in the Court in response to the show cause notice
issued and it would serve no useful purpose if we may dispose
of the petitions merely by directing the respondents-DDA to
communicate the reasons to the petitioner. The reasons now
having been made known to the petitioners, they have been
heard thereon. Whatever they had to say on such reasons they
have said and we have also tested the validity of the reasons
and have found nothing unreasonable therewith. That is an end
of the matter." (emphasis added)
35. Again, in a recent decision in Silppi Constructions Contractors vs.
UOI and Anr. reported as 2019 SCC OnLine SC 1133, where the Supreme
Court was seized of a tender matter, on the aspect of not furnishing of
reasons for rejecting the technical bids of the petitioner therein, it was
observed as follows:-
"25. That brings us to the most contentious issue as to whether
the learned single judge of the High Court was right in holding
that the appellate orders were bad since they were without
reasons. We must remember that we are dealing with purely
administrative decisions. These are in the realm of contract.
While rejecting the tender the person or authority inviting the
tenders is not required to give reasons even if it be a state
within the meaning of Article 12 of the Constitution. These
decisions are neither judicial nor quasi-judicial. If reasons
are to be given at every stage, then the commercial activities
of the State would come to a grinding halt. The State must be
given sufficient leeway in this regard. The Respondent nos. 1
and 2 were entitled to give reasons in the counter to the writ
petition which they have done." (emphasis added)
36. Even in the instant case, no rule or terms and conditions in the tender
documents have been pointed that casts an obligation on the
respondent/SDMC to furnish reasons for recalling the entire e-auction
tendering process, nor have the petitioners approached the respondent/SDMC
seeking any reasons for rejection of their bids. Instead, they have filed the
present petitions with a grievance against the communication dated
19.6.2020. The reasons for recalling the NIT have been elaborated in the
counter affidavit of the respondent/SDMC and a copy of the Report of the
Committee, constituted by the Commissioner, SDMC has also been placed
on record (Annexure R/3). Once the reasons for cancelling the tender
process have been brought to light and we have considered the arguments
advanced on behalf of the petitioners, questioning the validity of the said
reasons, the grievance of the petitioners in this regard does not survive. It is
now for this court to examine the reasons that persuaded the
respondent/SDMC to scrap the tender.
37. We thus proceed to examine the validity of the reasons that have
propelled the respondent/SDMC to recall the entire tender process. On
distilling the report of the Committee, following were the prominent reasons
offered for recommending annulment of the tender process and revision of
the terms and conditions of the new NIT that have found favour with the
Commissioner, SDMC:-
a. While the approved tender document stated that the contract was
for a period five years without mentioning any breakup of the
period, the NIT advertised in the newspapers, mentioned that the
tender was to be awarded for a period for three years, extendable up
to two years. This would have created confusion in the mind of the
prospective bidders regarding the actual contract period and its
potential of revenue generation.
b. Though the tender documents mentioned a date for conducting the
pre-bid meeting, no pre-meeting had taken place which would have
afforded an opportunity to the Department to get an insight into the
problems of the prospective bidders, clarify any doubts and take
remedial steps.
c. The short burst of the online auction activity at the fag end of
13.05.2020, between 05:17 pm to 05:38 pm indicated a serious
possibility of cartel formation by the bidders which was detrimental
to the e-auction process. The Committee concluded that this
showed that there was a lack of healthy participation in the bidding
process.
38. Besides the aforesaid observations, the Committee also recommended
that on the next occasion, certain conditions forming a part of the cancelled
tender documents, be appropriately modified/altered. To prevent bidders
from forming a cartel and depressing their bids thereby causing loss of
revenue to the Department, it was suggested that instead of adopting the e-
auction process for future bidding of parking sites, the e-tender procedure be
adopted. It was suggested that conditions relating to uploading of signed and
stamped tender documents, notarisation of affidavits and obtaining No Due
Certificates from the AC/RP cell be done away with and instead, the
prospective bidders may submit an undertaking to the effect that there were
no outstanding dues against them in the SDMC. Another recommendation
made was to dispense with the requirement of furnishing and uploading of all
documents after stamping and signing them physically, as under the e-tender
process, the said condition would become irrelevant for the reason that once
a digital signature is endorsed on the document, its authenticity is
automatically established. Learned counsel for the respondent/SDMC has
submitted that all the aforesaid recommendations made by the Committee
have been accepted by the department and incorporated in the fresh NIT.
39. We do not find any force in the objection taken by learned counsel for
the petitioners that the amendments made in the fresh NIT are only to
accommodate those bidders who had participated in the previous NIT, but
were disqualified on account of technical reasons. The Committee
constituted to examine the tendering process has made some pithy
observations in relation to the anomalies and errors that had crept in the
earlier tender documents and the bidding process adopted and have sought to
rectify them by shifting from the e-auction mode to the e-tender procedure,
dispensing with extraneous documents and the requirement of signing and
stamping of documents under the e-tender process with the sole object of
streamlining the process, ensuring wider participation, healthy competition in
the bidding process and for maximizing revenue generation from the public
properties. In fact, the Committee's recommendations of enhancing the
reserve price for all the six multilevel parking sites in the fresh tender have
also been readily accepted by the respondent/SDMC with the idea of
generating more revenue through public auction. Once a level playing field
has been offered to all the bidders including the petitioners herein to
participate in the tender process, there can be no grievance against the terms
of the tender documents.
40. One must not lose sight of the fact that this the first time that the
respondent/SDMC has decided to award contracts in favour of private parties
for operating the multilevel parking sites owned by it. Earlier hereto, the
parking sites were being operated by the SDMC through a Government
agency, namely, DIMTS. Therefore, there was no past experience to fall
back on for working out the terms of such a tender and the process for
tendering multilevel parking sites. In these circumstances, the scope of
bonafide errors and oversight cannot be ruled out. Moreover, on examining
the manner in which the bidding took place on the day of the auction i.e., on
13.6.2020, it is revealed that though the window for participating the e-
auction was open from 11 AM to 5.30 PM, the actual activity by all the four
bidders had commenced only at the fag-end of the day, at around 5.17 PM
and had lasted for 15-20 minutes. At the end of the day, each of the three
successful bidders including the two petitioners herein, were able to bag two
parking sites without any conflict of interest. The Committee smelt a rat and
opined that the possibility of cartelization in the entire bidding process could
not be ruled out and thus recommended cancellation of the tender as also a
change in the mode of the future bidding process by moving over from the e-
auction platform to the e-tender procedure. We do not see any
unreasonableness, arbitrariness or perversity in the aforesaid decision making
process for this court to interfere more so, when the entire objective of the
respondent/SDMC appears to be directed towards ensuring wider
participation and generating more revenue from a public property.
41. As for the submission made by learned counsel for the petitioners that
there was nothing out of place in the tender process and the
respondent/SDMC had itself stated before a coordinate Bench in two
proceedings arising from the very same NIT that ordinarily, 7 bids are
received for parking sites and even if one bid is found good enough, the same
could be accepted, we may fruitfully refer to a decision in Meerut
Development Authority Vs. Association of Management Studies reported as
(2009) 6 SCC 171 wherein, the Supreme Court was dealing with the aspect
of disposal of public property by an instrumentality of the State and held
thus:-
"26. A tender is an offer. It is something which invites and is
communicated to notify acceptance. Broadly stated it must be
unconditional; must be in the proper form, the person by whom
tender is made must be able to and willing to perform his
obligations. The terms of the invitation to tender cannot be
open to judicial scrutiny because the invitation to tender is in
the realm of contract. However, a limited judicial review may
be available in cases where it is established that the terms of
the invitation to tender were so tailor-made to suit the
convenience of any particular person with a view to eliminate
all others from participating in the bidding process.
27. The bidders participating in the tender process have no
other right except the right to equality and fair treatment in
the matter of evaluation of competitive bids offered by
interested persons in response to notice inviting tenders in a
transparent manner and free from hidden agenda. One cannot
challenge the terms and conditions of the tender except on the
abovestated ground, the reason being the terms of the invitation
to tender are in the realm of the contract. No bidder is entitled
as a matter of right to insist the authority inviting tenders to
enter into further negotiations unless the terms and conditions
of notice so provided for such negotiations.
28. It is so well settled in law and needs no restatement at our
hands that disposal of the public property by the State or its
instrumentalities partakes the character of a trust. The methods
to be adopted for disposal of public property must be fair and
transparent providing an opportunity to all the interested
persons to participate in the process.
29. The Authority has the right not to accept the highest bid
and even to prefer a tender other than the highest bidder, if
there exist good and sufficient reasons, such as, the highest
bid not representing the market price but there cannot be any
doubt that the Authority's action in accepting or refusing the
bid must be free from arbitrariness or favouritism." (emphasis
added)
42. In the present case too, the petitioners cannot insist that since they
were declared as H1 bidders, a vested right had accrued in their favour and
the respondent/SDMC had no option but to issue Allotment Letters and hand
over possession of the parking sites in question in their favour. The
respondent/SDMC was well within its right to pause and re-examine the
entire tender process, which it did on receiving complaints from some
quarters. The Committee constituted by the Commissioner, SDMC has
looked into the matter in depth and recommended the tender to be withdrawn
for plausible reasons. The court cannot delve into the sufficiency of the
reasons that prevailed with the respondent/SDMC for taking such a step.
The material placed on records justifies the rationality of the decision taken
by the respondent/SDMC to scrap the tender process.
43. Another argument advanced by learned counsel for the petitioners was
that once the petitioners had complied with all the terms and conditions
stipulated in the Offer letters dated 15.5.2020 issued by the
respondent/SDMC, the contract between the parties stood concluded and
issuance of the allotment letters in terms of Clause 12 of the tender
documents and handing over possession of parking sites in question were
mere formalities, which submission learned counsel for the
respondent/SDMC has vehemently disputed and cited the very same Clause
12 to urge that it clearly stipulates that a formal allotment letter will be issued
to the H1 parking contractor and in the instant case, admittedly, no such
letters were issued to the petitioners and nor was the physical possession of
the parking sites handed over to them. Instead, the entire tender process was
cancelled.
44. On the aspect as to whether the contract between the parties stood
concluded or not, we may profitably refer to the observations made by the
Supreme Court in Rishi Kiran Logistics Pvt. Ltd. (supra). In the said case,
taking note of an earlier decision in Kisan Sahkari Chini Mills Ltd. Vs.
Vardan Linkers & Ors., reported as (2008) 12 SCC 500, the Supreme Court
held that enforcement of a contract entered into between the parties would
fall in the realm of 'law of contract' and cannot be made the subject matter of
adjudication in a petition filed under Article 226 of Constitution of India and
observed as below:-
"37. The questions before the Supreme Court in Kisan Sahkari
Chini Mills Ltd. case [(2008) 12 SCC 500] were: (i) Whether
the High Court was right in concluding/assuming that there
was a valid contract? and (ii) Whether the High Court was
justified in quashing the order of the Secretary (Sugar)? This
Court answered the aforesaid questions in the negative and set
aside the judgment of the High Court holding that:
"Ordinarily, the remedy available for a party
complaining of breach of contract lies for seeking
damages. He would be entitled to the relief of specific
performance, if the contract was capable of being
specifically enforced in law. The remedies for a breach of
contract being purely in the realm of contract are dealt
with by civil courts. The public law remedy, by way of a
writ petition under Article 226 of the Constitution, is not
available to seek damages for breach of contract or
specific performance of contract. However, where the
contractual dispute has a public law element, the power
of judicial review under Article 226 may be invoked."
It is clear that the aforesaid case is closest to the facts of the
present case.
38. It thus stands crystallised that by way of writ petition
under Article 226 of the Constitution, only public law remedy
can be invoked. As far as contractual dispute is concerned
that is outside the power of judicial review under Article 226
with the sole exception in those cases where such a
contractual dispute has a public law element.
XXX XXX XXX
40. Insofar as the issue regarding concluded contract in the
present case is concerned, this falls squarely in the realm of
the contract law, without any hue or shade of any public law.
In fact, that is not even pleaded or argued. At the same time,
whether there was a concluded contract or not is seriously
disputed by the respondents and, therefore, in the first
instance it was not even necessary for the High Court to go
into this issue and could have relegated the appellant to
ordinary civil remedy. We are conscious of the position that
merely because one of the authorities raises a dispute in regard
to the facts, it may not be always necessary to relegate the
parties to a suit. This was so stated in ABL International
Ltd. v. Export Credit Guarantee Corpn. of India Ltd. [(2004) 3
SCC 553] in the following manner:
"37. In our opinion, this limited area of dispute can be
settled by looking into the terms of the contract of
insurance as well as the export contract, and the same
does not require consideration of any oral evidence or
any other documentary evidence other than what is
already on record. The claim of the contesting parties
will stand or fall on the terms of the contracts,
interpretation of which, as stated above, does not require
any external aid."
41. At the same time, as already noted in Kisan
Sahkari [(2008) 12 SCC 500] this Court had taken a view that
where the question whether there was a contract or not is
seriously disputed, the court is not to assume that there was a
valid contract and on that basis examine the validity of the
administrative action. Therefore, keeping in view the aforesaid
understanding of the law, a very limited inquiry on this aspect
is permissible." (emphasis added)
45. Again, in an earlier decision in Jagdish Mandal v. State of Orissa
reported as (2007) 14 SCC 517, the Supreme Court has emphasized that the
power of judicial review ought not be invoked to extend protection to private
interest at the cost of public interest in the following words:-
"22. Judicial review of administrative action is intended to
prevent arbitrariness, irrationality, unreasonableness, bias
and mala fides. Its purpose is to check whether choice or
decision is made "lawfully" and not to check whether choice
or decision is "sound". When the power of judicial review is
invoked in matters relating to tenders or award of contracts,
certain special features should be borne in mind. A contract is
a commercial transaction. Evaluating tenders and awarding
contracts are essentially commercial functions. Principles of
equity and natural justice stay at a distance. If the decision
relating to award of contract is bona fide and is in public
interest, courts will not, in exercise of power of judicial
review, interfere even if a procedural aberration or error in
assessment or prejudice to a tenderer, is made out. The power
of judicial review will not be permitted to be invoked to protect
private interest at the cost of public interest, or to decide
contractual disputes. The tenderer or contractor with a
grievance can always seek damages in a civil court. Attempts
by unsuccessful tenderers with imaginary grievances, wounded
pride and business rivalry, to make mountains out of molehills
of some technical/procedural violation or some prejudice to
self, and persuade courts to interfere by exercising power of
judicial review, should be resisted. Such interferences, either
interim or final, may hold up public works for years, or delay
relief and succour to thousands and millions and may increase
the project cost manifold........" (emphasis added)
46. Taking a cue from the aforesaid decisions, we do not propose to
examine as to whether the contract between the parties before us was
complete in all respects or not and nor are we inclined to split hair over the
interpretation of Clauses 10 and 12 of the tender documents. If the
petitioners have a grievance in this regard, they are at liberty to seek damages
against the respondent/SDMC in appropriate civil proceedings. However,
that will not be a ground for this court to interfere. As long as there are
adequate checks and balances incorporated in the tender document to ensure
fairness in the procedure, courts are loath to interfere. At the end of the day,
we must leave it to the respondent/SDMC to determine its own requirements
and evaluate the financial viability of the NIT. For that, it must be allowed a
free play in the joints to entrust the contract to the highest bidder on the
terms and conditions found to be viable.
47. To conclude, on examining the decision making process adopted by
the respondent/SDMC for recalling the earlier NIT and advertising a fresh
NIT, we do not find any infirmity therein; nor do we propose to examine
with a tooth comb, the fresh terms incorporated in the NIT subsequently
advertised by the respondent/SDMC. Evaluating the terms and conditions of
the tender and awarding the contract are purely commercial functions left
best to the wisdom of the respondent/SDMC. We are satisfied that the
respondent/ SDMC has recalled the previous tender for just and valid
reasons. A scrutiny of the records bears out the submission made on behalf
of the respondent/SDMC that the decision taken in this regard is not tainted
with arbitrariness, perversity, irrationality, malafides or any bias. Merely
because the petitioners claim that they would suffer financial losses on
account of losing the tender, is not sufficient ground for this court to exercise
powers of judicial review in their favour.
48. In view of the aforesaid discussion, both the petitions are dismissed as
meritless alongwith the pending applications with no orders as to costs.
HIMA KOHLI, J
SUBRAMONIUM PRASAD, J
JULY 21, 2020
rkb/sk/ap/a
