Madras High Court
M/S.Trigyn Technologies Limited ... vs The Commissioner on 29 January, 2021
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on :23.2.2021
Delivered on : 24.3.2021
CORAM
THE HON'BLE MR.JUSTICE B.PUGALENDHI
W.P.No.3447 of 2021
and
W.M.P.Nos.3949 and 4998 of 2021
M/s.Trigyn Technologies Limited 27,
rep. by its Company Secretary,
Mukesh Tank,
SDF-I, SEEPZ-SEZ,
Andheri East,
Mumbai 400 096. Petitioner
vs.
1. The Commissioner,
Erode City Municipal Corporation,
894 Brough Road, Erode 638 001.
2. The Chief Engineer,
Erode City Municipal Corporation,
894 Brough Road, Erode 638 001.
3. Assistant Executive Engineer,
Erode City Municipal Corporation,
Zone-2, 894 Brough Road,
Erode 638 001.
4. City Engineer,
Erode City Municipal Corporation,
894 Brough Road, Erode 638 001.
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5. Erode Smart City Limited,
Registered office: Erode Corporation Building,
246, Meenachi Sundaranar Salai,
Erode 638 001.
6. M/s.Bharat Electronics Ltd.,
Kotdwara 246 149.
Uttarkhand.
7. M/s.SS Tech Commercials (P) Ltd.,
14, Arulmigu Sugavenswara
Kovil Complex, Cherry Road,
Salem 636 001.
8. M/s.Lantra Soft Pvt. Ltd.,
998, J.M.Building,
Avanashi Road,
Coimbatore 641 018.
9. M/s.Lookman Electroplast Industries,
15, Old No.9, First Floor,
II Street Extension,
III Main Road, CIT Nagar,
Nandanam, Chennai 600 035. Respondents
Writ Petition filed under Article 226 of the Constitution of India
seeking issuance of a writ of certiorarified mandamus calling for the
records relating to the impugned Minutes of the meeting held on
29.1.2021 at 3.30 pm on Conference Hall of the Erode City Municipal
Corporation rejecting the petitioner's bid as non responsive and not
eligible for further evaluation, digitally signed by the third respondent
on behalf of the first respondent, Tender Inviting and Tender Accepting
Authority, quash the same as illegal, incompetent and unconstitutional
and further pass an order directing the respondents to restart the
tender process.
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For Petitioner : Mr.Kumarpal Chopra
For R1 to R5 : Mr.S.R.Rajagopal,
Additional Advocate General assisted by
Mr.Raja Mathivanan, Standing Counsel
ORDER
This petition has been filed challenging the impugned Minutes of
the Meeting of the respondent Corporation dated 29.1.2021 rejecting
the petitioner's bid as non responsive and not eligible for evaluation.
2. The Erode City has been selected as one of the cities under
the Government of India Smart City Mission 2015. As a part of Smart
City Initiative, the respondent Corporation intended to set up an
Integrated Command Control Centre to bring all necessary data under
one roof. For the said purpose, the respondent Corporation invited
tenders from System Integrators to design, supply, Operate and
manage the said Integrated Command Control Centre in Erode City.
3. The petitioner, a Public Limited Company submitted its Tender
in consortium with M/s.Kerala State Electronics Development
Corporation Limited. the petitioner has also enclosed Earnest Money
Deposit amount in the form of a Demand Draft for a sum of
Rs.10,25,000/-. The technical bids were opened on 29.1.2021 and the
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Technical Evaluation Committee disqualified the petitioner company
that they failed to meet the qualification criteria for technical bid on
two counts that the Power of Attorney of the lead bidder (Trigyn)
signed by the Consortium Member (KELTRON) does not contain the
date or signature of the Lead bidder and as per the Tender condition
No.4, the documentary proof of consortium agreement on the roles
and responsibilities of each Member, the responsibility of the lead
bidder and the maximum stake held by the lead bidder were not
mentioned in the Agreement and therefore, the petitioner’s bid was
rejected as not satisfactory. The said Minutes of the Meeting of the
Technical Evaluation Committee dated 29.1.2021 is under challenge in
this writ petition.
4. Mr.Kumarpal Chopra, learned counsel appearing for the
petitioner submits that the defects which have been pointed out by
the Technical Evaluation Committee are small clerical errors that were
crept in due to inadvertence which can easily be rectified and they
cannot be treated as technical errors for rejection of the bid itself and
defining the role and responsibilities for the lead and consumption
partner in consortium agreement is not a term of instructions to the
bidders and it is not an essential condition. He would further submit
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that the condition No.2 of the Tender document requires a submission
of a letter of authorization authorizing the tender signatory and such a
condition is only an ancillary condition and it is not an essential
condition and the respondent has disqualified the petitioner's bid in a
partisan manner where as another bidder, who has not complied with
the same condition on the mentioning of the stake of the lead bidder in
the consortium agreement has been qualified and therefore, the
rejection of the petitioner's bid has been made intentionally to
eliminate the petitioner and it is a pure act of bias when they have
taken a stand otherwise in respect of M/s.SS Tech Commercials (P) Ltd
on the same mistake. According to the learned counsel for the
petitioner, the reasoning given for rejecting the petitioner's bid is a
hostile discrimination and unfavorable treatment and it is unjust and
unfair and therefore the entire tender process raises a serious doubt
on the evaluation and rejection and therefore, it warrants interference
of this court.
5. The learned counsel for the petitioner has also relied upon the
following judgments in support of his contentions:-
(i) Poddar Steel Corporation v. Ganesh Engineering Works
and Others [( 1991) 3 SCC 273]
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(ii) Bakshi Security and Personnel Services Pvt. Ltd. v.
Devkishan Computed Pvt. Ltd. and Ors., (2016) 8 SCC 446
(iii) 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]
(iv) Om Prakash Sharma vs Ramesh Chand Prashar & Ors
(Civil Appeal No.5101 of 2016 dated 13.5.2016)
(v) Kanhaiyalal Agarwal v. Union of India & Ors. [(2002)
6 SCC 315
(vi) W.B. State Electricity Board vs. Patel Engineering Co.
(2001 (2) SCC 451)
(vii) G.J. Fernandez v. State of Karnataka and Others
[(1990) 2 SCC 488]
(viii) lvrcl Infrastructures & Projects vs NHAI in WP (C)
No.235 of 2011
(ix) Ramunia Fabricators SDN BHD & Ors. Vs. Oil and
Natural Gas Corpn. Ltd. & Ors., 150 (2008) DLT 1
(x) Kapsch Metro JV Vs. Union of India & Anr., 140 (2007)
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DLT 378.
6. Mr S.R.Rajagopal, learned Additional Advocate General
assisted by Mr.Rajamathivanan, learned Standing Counsel appearing
for Respondents 1 to 5 would submit that the Technical Evaluation
Committee has made their evaluation as per class 3.2 of and 3.5 of the
Request For Proposal (RFP) and the verification of document is part of
the work assigned to the Technical Evaluation Committee and the
selection process for bidders is mentioned in clause 3 of the Tender
document as processing of Earnest Money Deposit (EMD), Technical
Bid and (c) Commercial Bid. The Technical Evaluation Committee is
expected to examine the bids by determining whether they are
complete, whether the documents are properly signed and whether
the bids are in order. As per clause 3.2, the petitioner's Tender
document was submitted without the letter of authorization (Power of
Attorney). The bidders can participate either as a sole bidder or by
consortium. If it is a consortium bid, the lead bidder shall be a
registered entity and they must enclose a documentary proof such as
Incorporation Certificate and the Consortium Agreement and must
state (i) Roles and responsibilities of each member. (ii) The Lead
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Bidder shall have maximum Stake in the consortium. (iii) The Lead
Bidder shall be responsible and jointly & severally liable under this
RfP.
7. The petitioner has filed with the power of attorney unsigned
and without any attestation on each page. The petitioner has also
admitted the same as a clerical error inadvertently made. Similarly,
the petitioner has not furnished the details as to the roles and
responsibilities of the members of consortium and the maximum stake
held by the lead bidder as per class 3.5 of the Tender document and
therefore the Technical Evaluation Committee has rightly rejected the
petitioner’s bid. The learned Additional Advocate General would
further submit that in fact another Company by name S.S.Tech, Salem
which also applied on consortium did not mention the stake of the
lead bidder in the tender document, however it was annexed along
with the bid document though it was not mentioned in the agreement
and therefore, the bid document of S.S. Tech, Salem was treated as
satisfactory on its evaluation, but the bid was not allotted to the said
S.S.Tech, Salem. According to the learned Additional Advocate
General, the work was awarded in favor of the 8th respondent
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M/s.Lantra Soft Pvt. Ltd. and the letter of acceptance has been issued
to the 8th respondent in Roc.E1/3945/2020 dated 16.2.2021 and the
work order has also been issued on 17.2.2021. It is further submitted
that the 8th respondent has also commenced the execution of the
work.
8. The learned Additional Advocate General submits that the
Rules and procedures contemplated under the Tamil Nadu
Transparency in Tenders Acts and Rules were strictly adhered to and
there is no violation of the Acts and Rules and the petitioner has not
pointed out any procedural lapse in his pleadings. Further, no mala fide
is pleaded by the petitioner as against the respondent. The letter of
authorisation and consortium agreement are essential conditions and
the petitioner has not stated the roles and responsibilities of each
Member and that of the lead bidder. The petitioner cannot interpret
that it is not an essential condition and if any relaxation is provided to
the petitioner, then it would amount to bias and favouritism. He would
further submit that the delay in execution of the work would cause
great prejudice to the general public and it would be against the public
interest and requested to dismiss the writ petition.
9. The learned Additional Advocate General has also relied upon
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the following decisions in support of his contention:-
(i) Jagadish Mandal v. State of Orissa (2007 (14) SCC 517
(ii) Silppi Constructions Contractors v. Union of India,
(2019 SCC OnLine SC 1133)
(iii) Michigan Rubber India Limited v. State of Karnataka
and others (2012 (8) SCC 216)
(iv) Afcons Infastructure Limited v. Nagpur Metro Rail
Corporation Limited and another (2016 (16) SCC 818)
(v) Municipal Corpn, Ujjain v. BVG India Ltd., (2018) 5 SCC
462].
10. This court paid its anxious consideration to the rival
submissions made and also perused the materials placed on record.
11. The respondent Corporation invited tenders for selection of
System Integrators to design, supply, implement, operate and manage
the Integrated Command and Control Centre in Erode City under the
Erode Smart City Scheme. The Tender Notification was published in
newspapers both in vernacular and also in the State Tender Bulletin
dated 3.12.2020. Along with the petitioner, five other companies have
submitted their Request For Proposal (RFP). The petitioner Company
M/s.Trigyn Technologies Limited submitted its bid in consortium with
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M/s.Kerala State Electronics Development Corporation Limited. The
selection process is of verification of EMD, Technical Bid and
Commercial Bid. The technical bids were opened in the presence of all
the representatives of the petitioners by the Technical Evaluation
Committee on 22.12.2020. The Technical Evaluation Committee
declared the petitioners bid as non responsive since the petitioner did
not satisfy class 3.2 of the RFP and for non furnishing of the required
data as per clause 3.5 of RFP.
12. Clause 3.2 of the RFP is extracted hereunder:-
"3.2 Preliminary Examination of Bids
ERODE CITY CORPORATION/ ERODE SMART CITY
LIMITED shall examine the bids to determine
whether they are complete, whether the documents
have been properly signed and whether the bids are
generally in order. Any bids found to be
nonresponsive for any reason or not meeting any
criteria specified in the RfP, shall be rejected by
ERODE CITY CORPORATION/ ERODE SMART CITY
LIMITED and shall not be included for further
consideration.
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Initial Bid scrutiny shall be held and bids will
be treated as non-responsive, it bids are:
a. Not submitted in format as specified in the RfP
document.
b. Received without the Letter of Authorization
(Power of Attorney).
c. With incomplete information, subjective,
conditional offers and partial otters submitted.
d. Submitted without the documents requested.
e. Non-compliant to any of the clauses mentioned in
the RfP.
f. With lesser validity period
g. Signature of Authorized personnel on all pages
both on Hard & Copy of the bid."
13. As per the terms of RFP, the initial bid scrutiny shall be made
as per clause 3.2 and if any bid is found to be incomplete not properly
signed and not in order be treated as non responsive and will be
rejected as per the said clause. The letter of authorization (power of
attorney) is one of the clauses mentioned as requirement as per clause
3.2.
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14. In this case, the petitioner is said to have submitted a letter
of authorization (power of attorney) whereas it has been signed by the
consortium member and not by the lead bidder. Further, in the
consortium agreement the roles and responsibilities of the lead bidder
and consortium member was not mentioned and the maximum stake
held by the lead bidder was also not mentioned.
15. The petitioner has not denied the same and in fact he has
mentioned that it is only a clerical error inadvertently made which can
be easily rectifiable and according to the petitioner, it is not an
essential condition and it is a curable one.
16. In clause 3.5, the eligibility criteria is mentioned in the case
of consortium bid as under:-
"For Consortium bids :
Consortium Agreement clearly stating the
i. Roles and responsibilities of each member.
ii. The Lead Bidder shall have maximum Stake in
the consortium.
iii. The Lead Bidder shall be responsible and jointly
& severally liable under this RfP."
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17. Therefore, on the basis of the conditions of RFP, the
Technical Evaluation Committee, in its Minutes of meeting dated
29.1.2021, declared the petitioner's bid as non responsive.
18. The relevant portions of the decisions relied upon by the
learned counsel appearing for the petitioner are extracted hereunder:-
(i) In Poddar Steel Corporation v. Ganesh Engineering
Works and Others [( 1991) 3 SCC 273] it was held thus:
"6. It is true that in submitting its tender accompanied
by a cheque of the Union Bank of India and not of the
State Bank clause 6 of the tender notice was not
obeyed literally, but the question is as to whether the
said non-compliance deprived the Diesel Locomotive
Works of the authority to accept the bid. As a matter
of general proposition, it cannot be held that an
authority inviting tenders is bound to give effect to
every term mentioned in the notice in meticulous
detail, and is not entitled to waive even a technical
irregularity of little or no significance; The
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requirements in a tender notice can be classified into
two categories those which lay down the essential
conditions of eligibility and the others which are
merely ancillary or subsidiary with the main object to
be achieved by the condition. In the erst case the
authority issuing the tender may be required to
enforce them rigidly. In the other cases it must be
open to the authority to deviate from and not to insist
upon the strict literal compliance of the condition in
appropriate cases."
(ii) In Bakshi Security and Personnel Services Pvt. Ltd. v.
Devkishan Computed Pvt. Ltd. and Ors., (2016) 8 SCC 446, this
Court held:
“14. The law is settled that an essential condition of a
tender has to be strictly complied with. In Poddar
Steel Corpn. v Ganesh Engg. Works (1991) 3 SCC
273] this Court held as under: (SCC p. 276, para 6)
“6. ... The requirements in a tender notice
can be classified into two categories-those
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which lay down the essential conditions of
eligibility and the others which are merely
ancillary or subsidiary with the main object
to be achieved by the condition. In the first
case the authority issuing the tender may
be required to enforce them rigidly. In the
other cases it must be open to the authority
to deviate from and not to insist upon the
strict literal compliance of the condition in
appropriate cases.
.... .... ....
16. We also agree with the contention of
Shri.Raval that the writ jurisdiction cannot be utilised
to make a fresh bargain between parties.”
(iii) 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] this Court held as under: (SCC pp. 571-72, para 66)
“(i) if there are essential conditions, the same must
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be adhered to;
(ii) if there is no power of general relaxation,
ordinarily the same shall not be exercised and the
principle of strict compliance would be applied where
it is possible for all the parties to comply with all such
conditions fully;
(iii) if, however, a deviation is made in relation to all
the parties in regard to any of such conditions,
ordinarily again a power of relaxation may be held to
be existing;
(iv) the parties who have taken the benefit of such
relaxation should not ordinarily be allowed to take a
different stand in relation to compliance with another
part of tender contract, particularly when he was also
not in a position to comply with all the conditions of
tender fully, unless the court otherwise finds
relaxation of a condition which being essential in
nature could not be relaxed and thus the same was
wholly illegal and without jurisdiction;
(v) when a decision is taken by the appropriate
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authority upon due consideration of the tender
document submitted by all the tenderers on their own
merits and if it is ultimately found that successful
bidders had in fact substantially complied with the
purport and object for which essential conditions were
laid down, the same may not ordinarily be interfered
with;...”
(iv) The Apex Court in Om Prakash Sharma vs Ramesh
Chand Prashar & Ors (Civil Appeal No.5101 of 2016 dated
13.5.2016) reiterating Poddar Steel Corpn. v Ganesh Engg. Work
held thus
“In the Present case the site in question was to be
sold on outright sale basis. The advertisement or the
stipulations therein did not contemplate creation and
or continuation of any relationship between the
parties calling for continued existence of any
particular level of financial parameters on part of the
bidder except the ability to Pay the price as per his
bid. The Condition was not an essential Condition at
all but was merely ancillary to achieve the main
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object that was to ensure that the bid amount was
paid Promptly. The advertisement contemplated
payment of bid amount whereafter the Sale Deed
would be executed and not a relationship which would
have continued for considerable period warranting an
assurance of continued ability on part of the bidder to
fulfil his obligations under the arrangement. Nor was
this condition aimed at ensuring a particular level of
financial ability on part of the bidder, for example in
cases where the benefit is designed to be given to a
person coming from a particular financial segment, in
which case the condition could well be termed
essential. The idea was pure and clear sale
simplicitor. As a matter of fact, the appellant did pay
the entire bid amount within the prescribed period
and the Sale Deed was also executed in his favor. In
the circumstances the relevant condition in the
advertisement would not fall in the first category of
cases as dealt with by this Court in Poddar Steel
Corporation (supra). The authorities could therefore
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validly deviate from and not insist upon strict literal
compliance. The discretion so exercised by the
authorities could not have therefore been faulted.
Thus, the assessment made by the High Court that
the condition in question was an essential condition
for non-compliance of which, the bid furnished by the
appellant was required to be rejected, in our view was
not correct."
(v) The Apex Court once again in the case of Kanhaiyalal
Agarwal v. Union of India & Ors. [(2002) 6 SCC 315 held that if
the bid submitted by the bidder substantially complies with the purport
and object for which the essential conditions were laid down in the
tender document, such bid should not be rejected or disqualified for
non-compliance/ a deviation with regard to a non-essential and / or
ancillary condition.
(vi) In W.B. State Electricity Board vs. Patel Engineering
Co. (2001 (2) SCC 451) it has been held as under:-
”23. The mistakes/errors in question, it is stated,
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are unintentional and occurred due to the fault of
computer termed as "a repetitive systematic
computer typographical transmission failure". It is
difficult to accept this contention. A mistake may
be unilateral or mutual but it is always
unintentional. If it is intentional it ceases to be a
mistake. Here the mistakes may be unintentional
but it was not beyond the control of respondents 1
to 4 to correct the same before submission of the
bid. Had they been vigilant in checking the bid
documents before their submission, the mistakes
would have been avoided. Further correction of
such mistakes after one-and-a-half months of
opening of the bids will also be violative of clauses
24.1, 24.3 and 29.1 of the ITB."
(vii) This aspect was examined by this Court in G.J. Fernandez
v. State of Karnataka a case dealing with tenders. Although not in
an entirely identical situation as the present one, the observations in
the judgment support our view. In G.J. Fernandez v. State of
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Karnataka and Others [(1990) 2 SCC 488] wherein this Court
observed :
"15. Thirdly, the conditions and stipulations in a
tender notice like this have two types of
consequences, The first is that the party issuing
the tender has the right to punctiliously and
rigidly enforce them. Thus, if a party does not
strictly comply with the requirements of para III,
V or VI of the NIT, it is open to the KPC to decline
to consider the party for the contract and if a
party comes to court saying that the KPC should
be stopped from doing so, the court will decline
relief. The second consequence, indicated by this
Court in earlier decisions, is not that the KPC
cannot deviate from these guidelines at all in any
situation but that any deviation, if made, should
not result in arbitrariness or discrimination. It
comes in for application where the nonconformity
with, or relaxation from, the prescribed standards
results in some substantial prejudice or injustice
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to any of the parties involved or to public interest
in general. For example, in this very case, the
KPC made some changes in the time frame
originally prescribed. These changes affected all
intending applicants alike and were not
objectionable. In the same way, changes or
relaxations in other directions would be
unobjectionable unless the benefit of those
changes or relaxations were extended to some
but denied to others. The fact that a document
was belatedly entertained from one of the
applicants will cause substantial prejudice to
another party who wanted, likewise, an extension
of time for filing a similar certificate or document
but was declined the benefit. It may perhaps be
said to cause prejudice also to a party which can
show that it had refrained from applying for the
tender documents only because it thought it
would not be able to produce the document by
the time stipulated but would have applied had it
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known that the rule was likely to be relaxed."
(viii) In lvrcl Infrastructures & Projects vs NHAI in WP (C)
No.235 of 2011 it has been held as under:-
“30. There is no doubt about the proposition that the
terms & conditions of a tender document must be
strictly adhered to. However, the legal position in
this behalf is enunciated in Poddar Steel
Corporation Vs. Ganesh Engineering Works
&Ors. (1991) 3 SCC 273. It was held that
deviations from non-essential or ancillary /
subsidiary requirement being a minor technical
irregularity can be waived. The issue, thus, arises
whether the discrepancy in the present case can be
stated to be of such minor technical nature.”
(ix) In Ramunia Fabricators SDN BHD &
Ors. Vs. Oil and Natural Gas Corpn. Ltd. & Ors.,
150 (2008) DLT 1, the distinction between
essential and non-essential conditions in a contract
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was emphasized. In the facts of the case, the bids
were submitted by a subsidiary on the basis of the
documents purchased by another subsidiary of a
single parent company. The bid submitted by the
petitioner was held to be perfectly in tune with the
terms of the bid; The Hon’ble Court observed that
whether or not a condition is an essential would
depend upon the fact situation of each case and the
nature of the conditions while relying upon the
judgment in Poddar Steel Corporation"s case
(supra).
(x) In Kapsch Metro JV Vs. Union of India
& Anr., 140 (2007) DLT 378, it was emphasized
that public interest requires a wider participation of
bidders to ensure healthy competition especially
keeping in mind the dictum laid down in Poddar
Steel Corporation's case (supra). The deficiency of
17 days' period in the EMD of 180 days' validity
period which too was subsequently altered in order
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to conform to the prescribed requirement was held
to be a technical irregularity of little significance and
worthy of being waived.
19. On the other hand, the learned Additional Advocate
General has relied upon the following judgments of the honourable
Supreme Court and submit that the Tender conditions in question are
essential conditions:-
(i) In Jagadish Mandal v. State of Orissa (2007 (14) SCC
517, the Hon'ble Supreme Court has held as under:
"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
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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
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cost manifold. 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".
ii) Whether public interest is affected.
If the answers are in the negative, there should be no
interference under Article 226. Cases involving black-
listing or imposition of penal consequences on a
tenderer/contractor or distribution of state largesse
(allotment of sites/shops, grant of licences,
dealerships and franchises) stand on a different
footing as they may require a higher degree of
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fairness in action."
(ii) In Silppi Constructions Contractors v. Union of India,
(2019 SCC OnLine SC 1133) the Apex Court has held as under:-
"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
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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
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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.
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.... .... ....
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."
(iii) In Michigan Rubber India Limited v. State of
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Karnataka and others (2012 (8) SCC 216), the Hon'ble Supreme
Court has held as under:-
"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 courts
hardly 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
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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 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 fundamental
right to carry on business with the Government.
24) Therefore, a Court before interfering in
tender or contractual matters, in exercise of power
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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 negative,
then there should be no interference under Article
226."
(iv) In Afcons Infastructure Limited v. Nagpur Metro Rail
Corporation Limited and another (2016 (16) SCC 818), it has
been held as follows:-
"11. Recently, in Central Coalfields Ltd. v. SLL-
SML (Joint Venture Consortium) it was held by
this Court, relying on a host of decisions that the
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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.
Board of Trustees of the Port of Bombay it
was held that the constitutional Courts are
concerned with the decision making process. Tata
Cellular v. Union of India went a step further
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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 as
mentioned in Central Coalfields.
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."
(v) In Municipal Corpn, Ujjain v. BVG India Ltd., (2018) 5
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SCC 462], it has been held as under:-
"45. Evaluating tenders and awarding contracts
are essentially commercial transactions/contracts.
If the decision relating to award of contract is in
public interest, the Courts will not, in exercise of
the power of judicial review, interfere even if a
procedural aberration or error in awarding the
contract is made out. The power of judicial review
will not be permitted to be invoked to protect
private interest by ignoring public interest.
Attempts by unsuccessful bidders with an artificial
grievance and to get the purpose defeated by
approaching the Court on some technical and
procedural lapses, should be handled by Courts
with firmness. The exercise of the power of judicial
review should be avoided if there is no irrationality
or arbitrariness. In the matter on hand, we do not
find any illegality, arbitrariness, irrationality or
unreasonableness on the part of the expert body
while in action. So also, we do not find any bias or
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mala fides either on the part of the corporation or
on the part of the technical expert while taking the
decision. Moreover, the decision is taken keeping
in mind the public interest and the work
experience of the successful bidder.
46. As held in Tata Cellular (supra), the
terms of the tender are not open to judicial
scrutiny as the invitation to tender is a matter of
contract. Decisions on the contract are made
qualitatively by experts. M/s Eco Save Systems
Private Limited [respondent no.2 in Civil Appeal
arising from SLP (C) No. 11967/2016] is a project
consultant and technical advisor of the Ujjain
Municipal Corporation. It provides technical
consultancy and advisory services. The documents
produced along with the counter affidavit filed by
respondent no.2 would show that respondent no.2
is an expert in municipal solid waste management.
It is brought to our notice that respondent no.2
has developed a Detailed Project Report (DPR)
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cum Master Plan of Ujjain City for up-gradation,
systematization and abidance of the Municipal
Solid Waste Rules, 2000 for the period 2012 to
2042, and the Jawaharlal Nehru National Urban
Renewal Mission is stated to have sanctioned
35.88 crores for the purpose. There is no dispute
by any of the parties that respondent no.2 is an
expert in municipal solid waste management. We
also hasten to add that there are no allegations of
bias or mala fides against the technical committee,
though grounds are taken by BVG India Limited
before the High Court that the decision of the
expert committee is not proper.
... ... ....
64. Thus, the questions to be decided in this
appeal are answered as follows:
64.1 Under the scope of judicial review, the High
Court could not ordinarily interfere with the
judgment of the expert consultant on the issues of
technical qualifications of a bidder when the
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consultant takes into consideration various factors
including the basis of non-performance of the
bidder;
64.2 A bidder who submits a bid expressly
declaring that it is submitting the same
independently and without any partners,
consortium or joint venture, cannot rely upon the
technical qualifications of any 3rd Party for its
qualification.
64.3 It is not open to the Court to independently
evaluate the technical bids and financial bids of
the parties as an appellate authority for coming to
its conclusion inasmuch as unless the thresholds of
mala fides, intention to favour someone or bias,
arbitrariness, irrationality or perversity are met,
where a decision is taken purely on public interest,
the Court ordinarily should exercise judicial
restraint.
65. In view of the above, the impugned
judgment and order of the High Court cannot be
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sustained and the same is set aside."
20. In clause 3.2 of the RFP, it has been specifically mentioned
that the letter of authorization (power of attorney) is a required
document and if it is received without signature, it is a ground for
rejection treating it as non responsive. As per clause 3.2(g), the
signature of the authorized person on all pages on hard copy of the bid
is stated as a requirement for the preliminary examination and if the
documents are not properly signed if it is not in order, the RFP would
be rejected as non responsive. Similarly, for the consortium bid, the
consortium agreement is expected to state the roles and
responsibilities and admittedly these two conditions have not been
complied with and this cannot be treated as an essential requirement
when the tender document specifically mentioned that the
requirements as per the aforesaid clause are essential documents.
21. In view of the ratio laid down by the Hon'ble Supreme Court
cited supra, the defects as pointed out by the respondents are
essential conditions as per the tender document and this court is not
inclined to interfere with the impugned minutes of the rejection of the
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petitioner’s bid. Accordingly, the writ petition is dismissed. No costs.
The connected Miscellaneous Petitions are also dismissed.
24.3.2021.
Index: Yes/No.
ssk.
To
1. The Commissioner,
Erode City Municipal Corporation,
894 Brough Road, Erode 638 001.
2. The Chief Engineer,
Erode City Municipal Corporation,
894 Brough Road, Erode 638 001.
3. Assistant Executive Engineer,
Erode City Municipal Corporation,
Zone-2, 894 Brough Road,
Erode 638 001.
4. City Engineer,
Erode City Municipal Corporation,
894 Brough Road, Erode 638 001.
5. Erode Smart City Limited,
Registered office: Erode Corporation Building,
246, Meenachi Sundaranar Salai,
Erode 638 001.
6. M/s.Bharat Electronics Ltd.,
Kotdwara 246 149.
Uttarkhand.
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7. M/s.SS Tech Commercials (P) Ltd.,
14, Arulmigu Sugavenswara
Kovil Complex, Cherry Road,
Salem 636 001.
8. M/s.Lantra Soft Pvt. Ltd.,
998, J.M.Building,
Avanashi Road,
Coimbatore 641 018.
9. M/s.Lookman Electroplast Industries,
15, Old No.9, First Floor,
II Street Extension,
III Main Road, CIT Nagar,
Nandanam, Chennai 600 035.
10. M/s.Trigyn Technologies Limited 27,
rep. by its Company Secretary,
Mukesh Tank,
SDF-I, SEEPZ-SEZ,
Andheri East,
Mumbai 400 096.
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B.PUGALENDHI, J.
Ssk.
P.D. Order in
W.P.No.3447 of 2021
Delivered on
24.3.2021.
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