Karnataka High Court

M/S. Manu Creations vs Military Engineering Services on 5 April, 2023

Bench: M.Nagaprasanna

                           1



       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

           DATED THIS THE 05TH DAY OF APRIL, 2023

                          BEFORE

         THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

         WRIT PETITION No. 21050 OF 2022 (GM-TEN)


BETWEEN:

M/S. MANU CREATIONS
A REGISTERED PARTNERSHIP FIRM
HAVING ITS OFFICE AT:
57/2414 (OLD 28/1820)
5TH CROSS, AMALA NAGAR
AMALABHAVAN ROAD
KADAVANTHARA, KOCHI
KERALA - 682 020.
REPRESENTED BY ITS MANAGING PARTNER,
MR. SOLOMON THOMAS.
                                              ... PETITIONER

(BY SRI NITIN RAMESH, ADVOCATE)

AND:

1 . MILITARY ENGINEERING SERVICES
    REPRESENTED BY ITS
    CHIEF ENGINEER (AF)
    HAVING ITS OFFICE AT:
    NO. 2, DC AREA,
    MES ROAD, YESHWANTHPUR,
    BENGALURU,
    KARNATAKA - 560 022.
                                  2



2 . CHIEF ENGINEER
    SOUTHERN COMMAND HQ MES,
    PUNE,
    MAHARASHTRA - 411 001.
                                                  ... RESPONDENTS

(BY SRI M.N.KUMAR, CGC)

      THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH/SET ASIDE THE
IMPUGNED      NOTICES      DATED     30.08.2022     BEARING
801516/AF/167/E8C AT ANNEXURE-L, 03.09.2022 BEARING
801516/AF/167/E8 AT ANNEXURE-M, 30.09.2022 BEARING
801516/AF/177/E8 AT     ANNEXURE-N    AND    14.10.2022  AT
ANNEXURE-Q BEARING 801516/AF/189/E8 ISSUED BY R1 AND
ETC.,


     THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 29.03.2023, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-

                              ORDER

The Petitioner is before this Court calling in question notices

dated 30-08-2022, 03-09-2022, 30-09-2022 and 14.10.2022 issued

by the 1st respondent whereby the work allotted to the petitioner is

cancelled.

2. Heard Sri Nitin Ramesh, learned counsel appearing for the

petitioner and Sri M.N. Kumar, learned Central Government Counsel

appearing for the respondents.

3. Brief facts that lead the petitioner to this Court in the

subject petition, as borne out from the pleadings, are as follows:-

The petitioner, which is a partnership firm, claims to be a

registered 'B' class contractor of the respondents/Military

Engineering Services ('MES' for short) of the Southern Command of

Defence services and claims to be working for the respondents for

over two decades. It is the further claim of the partnership firm

that it has successfully undertaken specialized works of high

magnitude for the Defence and has narrated those works as

averments in the petition. The 1st respondent in the month of

October, 2021 invites bids for the work 'provision of sewage

treatment plant and addition/alteration to vintage sewage lines at

AF Station Tambaram' for a projected estimated cost of `243 lakhs

for execution of the said work. The petitioner finding itself eligible,

submits its bid pursuant to the aforesaid invitation for the work. On

8-03-2022, the petitioner was called for negotiations and was

directed to furnish 3 sets of design calculations in a design folder

along with 3 sets of drawings with original tracings duly vetted by

some NIT's/IIT's within 45 days or within the extended period of

time. The petitioner claims to have approached NIT/IIT and sought

a tentative timeline by which the drawings could be vetted for

approval. It is the claim of the petitioner that despite its efforts,

the NIT/IIT was unable to vet the design in a time bound manner

owing to various reasons including under-staffing due to COVID-19.

Since the work was being dragged, the petitioner requested the 1st

respondent to relax the requirement of providing approvals from

the hands of NITs/IITs as was done in the other case. The 1st

respondent, for administrative reasons, claims to have sought the

petitioner to extend the validity of its bid until 31-08-2022. Several

correspondences took place between the two and on 30-08-2022,

letter of acceptance given to the petitioner on 08-03-2022 stood

revoked on the ground that the petitioner was disinterested in

executing the work and determined the damages at `3,18,000/-

and also blacklisted the petitioner from participating in any of the

MES tenders. It is these actions that are called in question in the

subject petition.

4. The learned counsel representing the petitioner would

vehemently contend that the respondents themselves had extended

the time up to 31-08-2022 and having so extended, it was not open

to the respondents to have revoked the letter of acceptance even

before the said date could come about. It is his vehement

submission that the petitioner on account of said act of the

respondents has now been blacklisted and barred from participating

in any of MES tenders and he would submit that the order of

blacklisting is contrary to the principles of natural justice, as the

petitioner was never made known of any such blacklisting that

would ensue in terms of the communications exchanged between

the parties.

5. On the other hand, the learned counsel appearing for the

respondents would seek to refute the submissions by contending

that what was extended was only the validity of the tender which

necessitated because the petitioner went on dodging submission of

tracings as was necessary for the work to be performed and since it

was involving the Defence the drawings and tracings were

necessary to be vetted by other NITs/IITs as the case would be.

The petitioner did not submit the drawings even as on the date of

passing of the impugned order, which clearly demonstrated

disinterestedness of the petitioner for performance of work. He

would submit that these are matters of tender/contract and it

should be best left to the discretion of the respondents particularly

when it is Defence. This Court exercising its jurisdiction under

Article 226 of the Constitution of India should not show any

indulgence to such persons/parties who are not interested in

executing the contract. He would submit that no fault can be found

with the respondents in revoking the letter of intent.

6. In reply to the said submission, the learned counsel for the

petitioner taking this Court through the documents appended to the

petition would contend that even today if the respondents are

willing to accept the drawings without the approvals, the drawings

are ready. The approval coming from NIT/IIT will take enormous

time and, therefore, submits that the petition be allowed and the

impugned actions be quashed.

7. The afore-narrated facts are not in dispute, but would

require a little elaboration. A notice inviting tender was issued by

the Military Engineering Services for the work of 'provision of

sewage treatment plant and addition/alteration to vintage

sewage lines at AF Station Tambaram'. Certain clauses of said

notice inviting tender are required to be considered. Schedule-A

depicts stages of consideration of the bid and its acceptance and it

reads as follows:

STAGE I-DOCUMENTS TO BE SUBMITTED ALONG WITH 'T' BID.

2.1.1 All tenderers are required to upload complete details of their proposed scheme, catalogues/pamphlets, giving full details of the equipments and plants offered by them as described here-in-after along with the covering letter in the technical bid in cover-1 along with documents to prove eligibility.

2.1.2 STAGE II-DOCUMENTS TO BE SUBMITTED BY THE LOWEST TENDERER BEFORE "ACCEPTANCE"

(a) Three sets of design calculations in a design folder, along with BOQ & yardstick and three sets of drawings along with original tracings duly vetted by IIT Chennai/IIT Delhi/IIT Bombay/IIT Kanpur / IIT Hyderabad / IIT Gandhinagar/NIT Surathkal / NIT Trichy/NIT Warangal shall be submitted by the lowest tenderer with reference to his design calculations and specifications and other details, within 45 days from the date of receipt of letter from the Accepting Officer, without any extra cost to the government. Vetting shall be got done from Professor of Structural Engineering for Structural design and Professor of Environmental Engg/PHE Engg for PHE/Hydraulic Design of STP. Professor shall sign as authorized signatory of Institute and not in personal capacity. If lowest bidder fails to submit vetted drawings within 45 days or as extended by Accepting Officer, then it will be

presumed that lowest bidder is not interested and has revoked the offer and action as stipulated in instructions on revocation shall be taken. These documents shall become property of the Govt, and tenderer shall have no claim on account of the same. The rate quoted is deemed to include for the above provisions also. The department will then scrutinize design calculations and drawings of lowest tenderer to check compliance of departmental requirements. The drawings, BOQ and yard stick shall form part of Contract Documents.

b) Clarification on the lowest tenderer's proposals, if any, needed shall be sought in writing. Tenderer will also be asked to withdraw conditions, if any, which are not in conformity with the departmental requirements. Upward revision of quotation will not be permitted due to reasons of increase in specifications inclusive of modification to items or any additional items required for completion of work as a whole on account of clarification on drawings/technical scrutiny of drawings sought by the department, and same shall be provided by the tenderer without any extra claim

(c) Discussion with lowest tenderer with regard to the conditions and other technical aspects, by the Accepting Officer or any other Officer on his behalf, if any needed, may be held. Tenderer should make himself available within 48 hours after intimation.

(d) The offer of lowest tenderer after taking into account all the clarifications shall be considered for acceptance if otherwise in order. Discrepancies and adjustment of errors, if any involved, in the amounts/rates quoted shall be corrected in accordance with Condition 6A of IAFW-2249 (General Conditions of Contracts) forming part of tender documents.

(e) Tenderer shall give satisfactory test results of plant to GE which shall be produced by Department to State pollution control authority for getting their consent for discharge of Sewage for proceeding with protection. Representative of tenderer shall accompany GE for discussions to clarify any other relevant inputs / data desired by State pollution control authority. After State

pollution control authority gives aforesaid consent for discharge of Sewage, GE shall issue completion certificate."

(Emphasis added)

In terms of the said conditions of tender, the tenderer had to

submit three sets of design calculations in a design folder and three

sets of drawings and tracings duly vetted by any of the following:

"IIT Chennai/IIT Delhi/IIT Bombay/IIT Kanpur/IIT Hyderabad/IIT Gandhinagar/NIT Surathkal/NIT Trichy/NIT Warangal"

(Emphasis added)

The registered tenderer should submit these design calculations

within 45 days of receipt of the letter from the Accepting Authority.

The condition further indicates that clarification on the lowest

tender's proposals, if any, shall be sought in writing and discussion

with the lowest tenderer with regard to the conditions and other

technical aspects by the Accepting Officer, if any, would be within

48 hours after such intimation. The tenderer has to give satisfactory

replies in terms of the conditions stipulated supra. On scrutiny of

documents submitted by the petitioner, the petitioner was called

upon to perform the contract by issuing the letter of acceptance.

The letter of acceptance reads as follows:

      801515/AF/141/E8                              08 Mar 2022

      M/s. Manu Creations
      28/1820-A, Amalabhavan Road,
      Kadavanthra
      Kochi - 682 020
      e-mail: [email protected]

      PROVISION OF SEWAGE TREATMENT PLANT &

ADDN/ALTN TO VINTAGE SEWAGE LINES AT AF STATION TAMBARAM

Dear Sir(s),

1. Reference your tender for the subject work Tech bid opened on 13 Jan 2022 and BOQ bid opened on 18 Feb 2022.

2 On scrutiny of tender received, it is found that you have submitted lowest bid.

3. In accordance with Note No.2.1.2 of Schedule 'A' on S1 Page No. 11 of tender documents, you are required to submit the following documents duly vetted by any IIT Chennai/IIT Delhi/IIT Bombay/IIT Kanpur/IIT Hyderabada/IIT Gandhinagar/NIT Surathkal/NIT Trichy/NIT Warangal and other details within 45 days of intimation from Accepting Officer without any extra cost to the deptt:-

(a) Three sets of design calculation in a design folder (in soft & hard copy) and three sets of detailed drawings alongwith original tracings

(b) Detailed bills of quantities (BOQ) as per format given at Sch/A Note No: 3134 and yard stick details (01 set soft and hard copy)

Please submit the documents within the stipulated time period for our further action

4. Your specific attention is also invited to Schedule A Note 2.12 on Sl Page No. 11 of tender documents and the same is reproduced as under:-

"If the lowest bidder fails to submit vetted drawings within 45 days or as extended by Accepting Officer, then it will be presumed that lowest bidder is not interested and has revoked the offer and action as stipulated in instructions on revocation shall be taken."

5. This letter and your reply shall form part of tender documents.

Yours faithfully Sd/-

(Sheeba Jacob) Offg Dy Director (Contracts) For Accepting Officer"

(Emphasis added)

The letter of acceptance indicated as was obtaining in the conditions

of tender supra that the petitioner should submit three sets of

design calculations and design folder, both soft and hard copies.

The conditions quoted above were also quoted in the order. It was

indicated that in the event the lowest bidder fails to submit vetted

drawings it would be presumed that he is not interested and the

letter of acceptance would be revoked. Therefore, the petitioner

was very well aware that the condition in the tender was that it has

to submit the documents vetted by IIT Chennai/IIT Delhi/IIT

Bombay/IIT Kanpur/IIT Hyderabad/IIT Gandhinagar/NIT

Surathkal/NIT Trichy/NIT Warangal and if he failed to do so, it

would result in revocation of the letter of acceptance. The validity of

the said tender was coming to an end. At that point in time, the 1st

respondent issues a communication to the petitioner on 26-05-2022

which reads as follows:

      "801516/AF/40/E8C                                26 May 2022

      M/s Manu Creations,
      28/1820-A, Amalabhavan Road,
      Kadavanthra
      Kochi - 682 020
      e-mail: [email protected]

            PROVISION OF SEWAGE TREATMENT PLANT &

ADDN/ALTN TO VINTAGE SEWAGE LINES AT AF STATION TAMBARAM

Dear Sir (s),

1. Reference your letter No. Nil dt 24 May 2022.

2. Due to some administrative reasons, you are requested to extend the validity of your offer for the subject work upto and including 31 Aug 2022. Your consent for extension of validity may be intimated at the earliest.

3. This is without any commitment for acceptance of your tender.

4. This letter alongwith your reply shall form part of tender documents.

Yours faithfully,

Sd/-

(Sheeba Jacob) Offg Dy Director (Contracts) For Accepting Officer"

(Emphasis added)

It was indicated that due to some administrative reasons, the

petitioner was requested to extend the validity of the offer of the

subject work up to 31-08-2022 and the consent for extension was

solicited. Again on 14-06-2022 it was specifically indicated that the

petitioner has to submit the drawings within 20 days as was

necessary in terms of conditions of tender. The communication

dated 14-06-2022 reads as follows:

      "801516/AF/156/E8                               14 Jun 2022

     M/s Manu Creations,
     28/1820-A, Amalabhavan Road,
     Kadavanthra
     Kochi - 682 020
     e-mail: [email protected]

            PROVISION OF SEWAGE TREATMENT PLANT &

ADDN/ALTN TO VINTAGE SEWAGE LINES AT AF STATION TAMBARAM

Dear Sir (s),

1. Reference your letter No. Nil dt 24 May 2022 and 26 May 2022.

2. Approval of the Accepting Officer is hereby conveyed for MoU and to get the design & construction of STP from OEM, M/s Thermax Ltd and for vetting the design/drgs from NIT Suratkal/IIT Chennai as per the request made vide your letters under reference.

3. In view of the above, you are requested to submit the following documents duly vetted by NIT Suratkal / IIT Chennai within 20 days of intimation of this letter without any extra cost to the Dept:-

(a) Three sets of design calculation in a design folder (in soft & hard copy) and three sets of detailed drawings alongwith original tracings

(b) Detailed bills of quantities (BOQ) as per format given at Sch 'A' Note No. 3.13.4 and yard stick details (01 set soft and hard copy).

(c) Please submit the documents within the stipulated time period for our further action.

4. Please note that if you fail to submit the vetted design / drgs within the above said period or as extended by the Accepting Officer, it will be presumed that you are n interested and have revoked the offer and action as stipulated in instructions on revocation shall be taken.

5. This letter and your reply shall form part of tender documents."

(Emphasis added)

Again on 08-07-2022, the following communication is made:

     "801516/AF/161/E8                                    8 Jul 2022

     M/s Manu Creations,
     28/1820-A, Amalabhavan Road,
     Kadavanthra
     Kochi - 682 020
     e-mail: [email protected]




      PROVISION OF SEWAGE TREATMENT PLANT &

ADDN/ALTN TO VINTAGE SEWAGE LINES AT AF STATION TAMBARAM

Dear Sir (s),

1. Reference your letter No. MC/BGLR/1010/64 dated 15 Jun 2022.

2. Approval of the Accepting Officer is hereby conveyed for vetting the design/drgs from NIT Hamirpur as per the request made vide your letter under reference.

3. In view of the above, you are requested to submit the following documents duly vetted by NIT Hamirpur within 20 days of intimation of this letter without any extra cost to the Dept:-

(a) Three sets of design calculation in a design folder (in soft & hard copy) and three sets of detailed drawings alongwith original tracings

(b) Detailed bills of quantities (BOQ) as per format given at Sch 'A' Note No. 3.13.4 and yard stick details (01 set soft and hard copy).

4. Please note that if you fail to submit the vetted design / drgs within the above said period or as extended by the Accepting Officer, it will be presumed that you are not Interested and have revoked the offer and action as stipulated in instructions on revocation shall be taken.

5. This letter and your reply shall for part of tender documents.

Yours falthfully.

Sd/-

(Sheeba Jacob) Offg Dy Director (Contracts) For Accepting Officer"

(Emphasis added)

Both the afore-quoted communications would clearly indicate that

the petitioner had to submit the drawings within the time

stipulated. Again on 30-07-2022, the following communication is

made:

        "801516/AF/SAT/E8                                30 Jul 2022

     M/s Manu Creations,
     28/1820-A, Amalabhavan Road,
     Kadavanthra
     Kochi - 682 020
     e-mail: [email protected]

              PROVISION OF SEWAGE TREATMENT PLANT &

ADDN/ALTN TO VINTAGE SEWAGE LINES AT AF STATION TAMBARAM

Dear Sir (s),

1. Ref this office letter No.801516/AF/161/E8 dt 08 Jul 2022.

2. Design details and drgs asked vide above this office letter are still awaited.

3. You are therefore once again requested to submit the above details / drgs by 8 Aug 2022 positively.

4. Please note that if you fail to submit the vetted design/drgs within the above said period or as extended by the Accepting Officer, it will be presumed that you are not interested and have revoked the offer and action as stipulated in instructions on revocation shall be taken.

5. This letter and your reply shall form part of tender documents.

Yours faithfully.

Sd/-

(Promilla Kaul) AAD (Contracts) For Accepting Officer"

(Emphasis added)

The petitioner was cautioned that in the event it would not submit

the details, it would be presumed that it has no interest and the

offer would be revoked and the said letter dated 30-08-2022 reads

as follows:

"801516/AF/42/E8C 30 Aug 2022

M/s Manu Creations, 28/1820-A, Amalabhavan Road, Kadavanthra Kochi - 682 020 e-mail: [email protected]

REVOCATION OF OFFER IN R/O PROVISION OF SEWAGE TREATMENT PLANT & ADDN/ALTN TO VINTAGE SEWAGE LINES AT AF STATION TAMBARAM

Dear Sir (s),

1. Reference this office letter No. 801516/AF/164/E8 dt 11 Aug 2022.

2. As per Note No. 2.1.2 (a) of Sch 'A' notes on Sl Page No 11 of the subject work, since you have not submitted the design details and drawings duly vetted by 18 Aug 2022 as per this office letter under reference, it is presumed that you are not interested and have Revoked the tender.

3. In view of above please deposit an amount of Rs 3,18,000/- (Rupees three lakh eighteen thousand only) through MRO in terms of Para 13 on Sl Page No 197 of tender document within 15 days from receipt of this letter.

4. Please also note that your firm is deemed suspended for quoting of tender in any MES formation till the aforesaid amount is deposited in Govt Treasury. In addition, your firm is barred from participating in the subject tender in terms of Para 13 on Sl Page No 197 of tender documents. Hence you are advised not to quote for the subject tender.

5. Please ack receipt.

Yours faithfully.

Sd/-

(Promilla Kaul) AAD (Contracts) For Chief Engineer"

(Emphasis added)

Accordingly, the firm of the petitioner was suspended for quoting of

tender in any MES formation till the amount of `3,18,000/- is

deposited in the Government Treasury and petitioner was barred

from participating in the subject tender in terms of para-13 of the

tender conditions. It is this action that drives the petitioner to this

Court in the subject petition. Further, again on 03-09-2022 a

communication is made by the Tender Accepting Officer to the

petitioner which reads as follows:

      "801516/AF/167/E8                                03 Sep 2022




M/s Manu Creations,
28/1820-A, Amalabhavan Road,
Kadavanthra
Kochi - 682 020
e-mail: [email protected]

      PROVISION OF SEWAGE TREATMENT PLANT &

ADDN/ALTN TO VINTAGE SEWAGE LINES AT AF STATION TAMBARAM

Dear Sir (s),

1. Reference this office letter No. 801516/AF/164/E8 dt 11 Aug 2022,801516/AF/42/E8C dt 30 Aug 2022 and your email dt 28 Aug 2022 received on 01 Sep 2022.

2. It is brought out that since there was no response from you on this office letters under reference in which we had mentioned that the documents should be submitted by 18 Aug 2022 it was clear that you are not interested and have revoked the offer all as per Note 2.1.2 (a) of Sch 'A' Notes of the tender documents. Though we had extended the dates various times on your request and even considered the change in OEM's and vetting agency as per your request, you failed to submit the vetted details.

3. The contents of your email under reference are not agreed to since the permission for in OEM, NIT Hamitpur (Hamirpur) was conveyed to you vide this office letter No.801516/161/E8 dt 08 Jul 2022 and now more than one month has lapsed and till date you have not submitted the documents.

4. In view of above you are requested to deposit an amount of Rs 3,18,000/- (Rupees three lakh eighteen thousand only) through MRO in terms of Para 13 on Sl Page No 197 of tender document failing which necessary action will be considered accordingly.

5. Please ack receipt.

Yours faithfully,

Sd/-

(T A Yashoda) Offg Director (Contracts) For Accepting Officer"

(Emphasis added)

All the afore-quoted communications would clearly indicate that the

petitioner was time and again asked to comply with the conditions

of tender but he did not do so.

8. This Court on 21-10-2022 has passed the following order:

"Heard the learned counsel for the petitioner.

Sri M.N.Kumar, learned counsel undertakes to file vakalath on behalf of respondent Nos.1 and 2.

Learned counsel appearing for the petitioner is directed to serve two sets of petition papers upon Sri M.N.Kumar, learned counsel appearing for respondent Nos.1 and 2, forthwith.

An offer was made to the petitioner pursuant to a tender for the purpose of setting up a sewage treatment plant. A communication is made on 26.05.2022, to the petitioner requesting the petitioner to keep the offer open upto 31.08.2022. The consent of the petitioner was sought and the petitioner has also consented to the same. In the teeth of the said communication to the petitioner, an order dated 30.08.2022, comes to be passed indicating that the drawings have not come about even on 18.08.2022 and it is presumed that the petitioner is not interested and revoked the tender. Having kept open the offer upto 31.08.2022, a notice dated 30.08.2022 could not have been passed revoking the tender, as the date 18.08.2022, is nowhere found in the communication.

Therefore, there shall be an interim order of stay of the operation of the notice dated 30.08.2022 and any of the further proceedings taken thereto, till the next date of hearing.

The petitioner shall be permitted to participate in any of the tenders floated by the respondents, which would be subject to the result of the writ petition.

List the matter on 07.11.2022, in the fresh matters list."

The afore-quoted interim order was passed on the submission of

the learned counsel for the petitioner that having extended the time

upto 31-08-2022 the offer could not have been revoked on

30-08-2022 a day prior to it. Later the respondents appeared and

filed an elaborate statement of objections. On 15.11.2022 this

Court passed the following interim order:

"Learned counsel for the petitioner submits that the drawings were ready to be submitted, at that point in time, the interim order of stay comes about.

Since the interim order of stay is granted by this Court, revoking his offer, the petitioner is now permitted to produce the drawings before the respondent and the respondent shall, subject to the result of the writ petition, scrutinise the said drawings.

List the matter on 24.11.2022.

Interim order granted earlier, is extended till the next date of hearing."

(Emphasis supplied)

The petitioner was permitted to produce drawings before the

respondents which would remain subject to the result of the

petition. The petitioner failed to submit the drawings even after the

order dated 15-11-2022. Again on 29-11-2022 this Court passed

the following order:

"Learned counsel appearing for the petitioner submits that, if a day's time is granted, the interim order dated 15.11.2022 will be complied with by submitting drawings to the respondents, who shall scrutinize the same.

List this matter on 02.12.2022.

Interim order granted earlier, is extended till the next date of hearing."

(Emphasis supplied)

The drawings were never submitted and on 23-01-2023 this Court

permitted the respondents to proceed with the tender, but made it

subject to the result of the writ petition. What remains as on date

is, the petitioner has not submitted his drawings which ought to

have been submitted within 45 days of issuance of the letter of

acceptance.

9. The petitioner was cautioned, not once, twice, but thrice

that the offer would be revoked if it would not fulfill the conditions

of tender as indicated. The respondents have appended four

communications to the statement of objections which would

demonstrate that the petitioner was time and again reminded that

it should submit the drawings. They were on 11-04-2022,

19-04-2022, 25-04-2022 and 07-05-2022. These are apart from

what has already been produced by the petitioner as annexures to

the petition. What would unmistakably emerge from all the afore-

quoted communications is that the petitioner was unwilling to

perform the conditions of contract. If a tenderer is unwilling to

perform the conditions of contract, this Court cannot sit as an

Appellate Authority over the Tender Accepting Authority and direct

the respondents to wait till the petitioner submits the drawings.

This cannot be the power that should be exercised by this Court,

under Article 226 of the Constitution of India, as what the Tender

Inviting Authority wants as a condition in tender is best left to the

discretion of experts who are inviting the tender.

10. If the petitioner has not fulfilled the conditions of tender,

it cannot claim equities to contend that extension was granted up to

31-08-2022 and revocation is made a day prior to it. It cannot be

mistaken that 31-08-2022 was the validity of the extension of the

tender, but not the extension of time that is granted to submit the

drawings. The petitioner has thoroughly mistaken it to be an

extension of time to submit the drawings. Even otherwise, there

are plethora of communications made long before 30-08-2022

seeking submission of drawings, which the petitioner blissfully

ignored. Having conducted itself in the manner as narrated

hereinabove, the petitioner cannot invoke the jurisdiction of this

Court to entertain the matter pertaining to tender qua the

conditions of tender or contract.

11. It becomes apposite to refer to the judgments of the Apex

Court which bar interference save in certain circumstances in

matters of contract/tender. The Apex Court right from the judgment

in the case of TATA CELLULAR v. UNION OF INDIA1 has

considered the issue of judicial review in contractual matters. The

Apex Court in the case of TATA CELLULAR has deduced the

principles of interference as follows:

"94. The principles deducible from the above are:

(1994) 6 SCC 651

(1) The modern trend points to judicial restraint in administrative 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 of 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."

(Emphasis supplied)

A three Judge Bench of the Apex Court in the case of TATA

CELLULAR (supra) deviated from the hitherto prevailing principle

and observed the modern trend points to judicial restraint in

administrative action. The Court would not sit as a Court of appeal,

but merely reviews the manner in which the decision was made is

what is emphasized. Therefore, the examination would be the

decision making process. The Apex Court later in the case of

MICHIGAN RUBBER (INDIA) LIMITED v. STATE OF

KARNATAKA AND OTHERS2 has held as follows:

"23. From the above decisions, the following principles emerge:

(a) The basic requirement of Article 14 is fairness in action by the State, and non- arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;

(b) Fixation of a value of the tender is entirely within the purview of the executive and the courts hardly

(2012) 8 SCC 216

have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by courts is very limited;

(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by courts is not warranted;

(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and

(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by court is very restrictive since no person can claim a fundamental right to carry on business with the Government.

24. Therefore, a court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"? and

(ii) Whether the public interest is affected?

If the answers to the above questions are in the negative, then there should be no interference under Article 226."

... .... ...

35. As observed earlier, the Court would not normally interfere with the policy decision and in matters challenging the award of contract by the State or public authorities. In view of the above, the appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable. We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd respondent thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligibility criteria should be permitted to participate in the tender. As noted in various decisions, the Government and their undertakings must have a free hand in setting terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the courts would interfere. The courts cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. In the case on hand, we have already noted that taking into account various aspects including the safety of the passengers and public interest, CMG consisting of experienced persons, revised the tender conditions. We are satisfied that the said Committee had discussed the subject in detail and for specifying these two conditions regarding pre-qualification criteria and the evaluation criteria. On perusal of all the materials, we are satisfied that the impugned conditions do not, in any way, could be classified as arbitrary, discriminatory or mala fide."

(Emphasis supplied)

The Apex Court clearly holds that the basic requirement of Article

14 of the Constitution of India is fairness in action by the State and

non-arbitrariness in essence and substance is the heartbeat of fair

play. It is these that would entitle judicial review in a contractual

matter. The afore-quoted clauses are the parameters that are laid

down by the Apex Court, which are essential ingredients with

regard to judicial review in contractual matters.

12. Later, the Apex Court in the case of SILPPI

CONSTRUCTIONS CONTRACTORS v. UNION OF INDIA AND

ANOTHER3 has held as follows:

"7. In Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651] , it was held that judicial review of government contracts was permissible in order to prevent arbitrariness or favouritism. The principles enunciated in this case are: (SCC pp. 687-88, para 94) "94. ...

(1) The modern trend points to judicial restraint in administrative 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.

(2020) 16 SCC 489

(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 of 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."

(emphasis in original)

8. In Raunaq International Ltd. v. I.V.R. Construction Ltd. [Raunaq International Ltd. v. I.V.R. Construction Ltd., (1999) 1 SCC 492] , this Court held that the superior courts should not interfere in matters of tenders unless substantial public interest was involved or the transaction was mala fide.

9. In Air India Ltd. v. Cochin International Airport Ltd. [Air India Ltd. v. Cochin International Airport Ltd., (2000) 2 SCC 617] , this Court once again stressed the need for overwhelming public interest to justify judicial intervention in contracts involving the State and its instrumentalities. It was held that the courts must proceed with great caution while exercising their discretionary powers and should exercise these powers only in furtherance of public interest and not merely on making out a legal point.

10. In Karnataka SIIDC Ltd. v. Cavalet (India) Ltd. [Karnataka SIIDC Ltd. v. Cavalet (India) Ltd., (2005) 4 SCC 456] it was held that while effective steps must be taken to realise the maximum amount, the High Court exercising its power under Article 226 of the Constitution is not competent to decide the correctness of the sale effected by the Corporation.

11. In Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. [Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138] it was held that while exercising power of judicial review in respect of contracts, the court should concern itself primarily with the question, whether there has been any infirmity in the decision-making process. By way of judicial review, the court cannot examine details of terms of contract which have been entered into by public bodies or the State.

12. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. [B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd., (2006) 11 SCC 548] it was held that it is not always necessary that a contract be awarded to the lowest tenderer and it must be kept in mind that the employer is the best judge therefor; the same ordinarily being within its domain. Therefore, the court's interference in such matters should be minimal. The High Court's jurisdiction in such matters being limited, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the face of the record.

13. In Jagdish Mandal v. State of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] it was held: (SCC p. 531, para 22)

"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."

14. In Michigan Rubber (India) Ltd. v. State of Karnataka [Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216] it was held that if the State or its instrumentalities acted reasonably, fairly and in public interest in awarding contract, interference by court would be very restrictive since no person could claim fundamental right to carry on business with the Government. Therefore, the courts would not normally interfere in policy decisions and in matters challenging award of contract by the State or public authorities.

15. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. [Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818] it was held that 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. The owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.

16. In Montecarlo Ltd. v. NTPC [Montecarlo Ltd. v. NTPC, (2016) 15 SCC 272 : AIR 2016 SC 4946] it was held that where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints.

17. In Municipal Corpn., Ujjain v. BVG (India) Ltd. [Municipal Corpn., Ujjain v. BVG (India) Ltd., (2018) 5 SCC 462 : (2018) 3 SCC (Civ) 291] it was held that the authority concerned is in the best position to find out the best person or the best quotation depending on the work to be entrusted under the contract. The court cannot compel the authority to choose such undeserving person/company to carry out the work. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work.

18. Most recently this Court in Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd. [Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd., (2019) 14 SCC 81] observed that a writ petition under Article 226 of the Constitution was maintainable only in view of government and public sector enterprises venturing into economic activities. This Court observed that there are various checks and balances to ensure fairness in procedure. It was observed that the window has been opened too wide as every small or big tender is challenged as a matter of routine which results in government and public sectors suffering when unnecessary, close scrutiny of minute details is done.

19. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts

should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer.

20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the State instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity.

With this approach in mind we shall deal with the present case."

(Emphasis supplied)

In the afore-quoted judgment of the Apex Court in the case of

SILPPI CONSTRUCTIONS, the Apex Court has considered the

entire spectrum of law with regard to judicial review on contractual

matters right from the judgment in the case of TATA CELLULAR

(supra) and holds that the Court would normally be loathe to

interfere in contractual matters, unless a clear case of arbitrariness,

mala fide, bias or irrationality is made out.

13. On a coalesce of the law as laid down by the Apex Court

in the aforesaid cases, what would unmistakably emerge is, judicial

review in contractual matters is restricted to decision making