TMI Blog2012 (10) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged the rejection of the tender and the annulment process in a second round despite withdrawal of the earlier writ petition filed for the same relief, it was not maintainable. The scope of writ petition no.534 of 2011 was and had to be limited to the validity of the amendment in the conditions of eligibility introduced by RGPPL in the second tender notice issued by it. The RGPPL as the owner acting as a prudent and responsible public authority discharging public trust obligations was well within its rights to raise questions and seek answers on an important matter like the eligibility of RDS to participate, no matter EIL and GAIL had on the basis of the certificates produced before them recommended RDS as an eligible bidder. There was in that view no justification for either RDS or the High Court to raise an accusing finger against RGPPL simply because it had demanded proof regarding the claim of eligibility from RDS or collected relevant information under RTI Act and referred the material so collected to GAIL and EIL for evaluation and opinion. The final decision to scrap the project being within its powers under the terms of the tender notice RGPPL’s invocation of that p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment and order dated 17th October, 2011 passed by the High Court of Delhi whereby Writ Petition (C) No.534 of 2011 filed by the respondent has been allowed and the rejection of the tender submitted by it quashed with a mandamus to the appellant- company to take a fresh decision on the subject in the light of the observations made by the High Court. 3. The factual matrix leading to the filing of the writ petition by RDS Project Ltd. (hereinafter referred to as RDS for short) has been set out at considerable length in the order passed by the High Court. We do not, therefore, consider it necessary to re-count the same all over again except to the extent the same is absolutely necessary for the disposal of these appeals. Suffice it to say that Government of India has entrusted the task of reviving and restructuring of the Dabhol Project to Gas Authority of India Ltd. (GAIL) and National Thermal Power Corporation ( NTPC for short) both Government of India undertakings who have in turn formed a joint venture company in the name and style of Ratnagiri Gas Power Pvt. Ltd., the appellant in this appeal, for short referred to as RGPPL . The appellant-RGPPL is charged with the duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis whereof it claimed to be satisfying the Bid Qualification Criteria ( BQC for short), were also given. It also enclosed along with its tender, completion certificate dated 5th April, 2008 issued by Deputy Chief Engineer-IV, Andaman Harbour Works under the Ministry of Shipping, Road Transport and Highway, Government of India certifying that RDS had completed breakwater of 500 meters against a tender dated 26th May, 1999. Completion certificate dated 30th June, 2003 issued by the Senior Executive Manager of Ellen Hinengo Ltd. a Tribal Society (EHL) and letter dated 10th November, 2000 addressed by the said Ellen Hinengo Ltd. to RDS asking it to commence work for construction of breakwater at Mus in Car Nicobar Island pursuant to tender dated 3rd November, 2000 were also produced by RDS apart from a certificate issued by EHL about the offshore location of the breakwater. 8. Tenders received from different parties were techno commercially evaluated by EIL all of whom were found to be technically qualified except Hung-Hua Ranjit Buildcon Ltd. who went out of the reckoning at that stage itself. Names of only four bidders found techno commercially eligible were recommended by E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with its bid in response to the tender notice. 12. A further development in the meantime took place in the form of the CAG forwarding a report in which certain adverse observations regarding the completion of the breakwater at chainage 22M to chainage 200 M in the Andaman and Nicobar Project were made. The report revealed that in January, 1998 the contractor had completed only 15 to 47 percent of the work and that in April, 1998 the Executive Engineer had taken out a part of the unexecuted work for awarding it to another contractor. The CAG found that due to delay in the construction of a portion of the breakwater coupled with non-compliance of contractual terms, the department had suffered a loss of Rs.2.61 crores, apart from increase in cost of the work by Rs.3.55 crores. 13. The report of the CAG was forwarded by the appellant to GAIL with the request to arrange copies of work order, and satisfactory evidence of the credentials of RDS. GAIL was also informed that in the absence of satisfactory evidence furnished by RDS, the appellant was not in a position to place the matter for award of contract before the Board of Directors. 14. While correspondence between RGPPL, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of the fact that the tender process had been scrapped and a decision to invite fresh tenders had been taken. 18. In Writ Petition (C) No.8252 of 2010 which was filed by RDS to challenge the annulment of the tender process and the rejection of its techno commercial bid as non-responsive a similar order was made by which the writ petition was dismissed as withdrawn reserving liberty to the respondent-RDS to take recourse to seek redress in accordance with law if it was excluded from consideration in the fresh tender which RGPPL had decided to issue. We shall presently refer to the writ petition and the effect of its withdrawal in greater detail. Suffice it to say that the maintainability of Writ Petition No.534 of 2011 filed by RDS out of which the appeal arises was assailed by the appellant herein on the ground that the earlier petition filed by it having been withdrawn the second petition filed by RDS was not according to the appellant maintainable insofar as the same sought to question the validity of the decision taken by the Board of Directors on 4th October, 2010 cancelling the tender process and the communication of the said decision with reasons for rejection of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision dated 4.10.2010 of the Respondent No.1, as communicated to the Petitioner vide letter dated 6.10.2010 whereby bid of the Petitioner has been rejected and the entire bidding process for the completion of the breakwater of LNG Terminal of Dabhol Power Project, Maharashtra, has been annulled; and (B) Issue a Writ of Mandamus or any other appropriate writ, order or direction, directing the Respondent No.1 to formalise the awarding of the contract for the DABHOL PROJECT to the Petitioner; and (C) Issue any other appropriate writ, order or direction, as this Hon ble Court may deem fit and proper in the facts and circumstances of the case. 21. When the above petition came up before the High Court on the 14th December, 2010 learned counsel for RDS withdrew the writ petition and the accompanying application reserving liberty to seek redress in case the tender which is floated sought to exclude RDS in any manner from competing for the allotment of the work in question. Since the answer to question No.1 above depends on the interpretation of the said order we may extract the same in extenso: Learned senior counsel for the petitioner submits that though the tender proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh petition for redress only in case the fresh tender to be floated by the appellant for allotment of the works in any manner sought to exclude RDS from participation in the same. This necessarily implies that if RDS was allowed to participate in the fresh tender process it would have had no quarrel with the annulment of the entire tender process based on the first tender notice. Conversely if the fresh tender notice sought to disqualify RDS from bidding for the works it could seek redress against such exclusion. Liberty granted by the High Court to file a fresh petition was in our considered opinion limited to any such fresh challenge being laid by RDS to its exclusion in terms of any fresh tender notice. The order passed by the High Court did not permit RDS to re-open and re-agitate issues regarding rejection of its bid pursuant to the earlier tender notice and the annulment of the entire tender process, even if the second tender notice sought to disqualify it from competition by altering the conditions of eligibility to its disadvantage. In fresh Writ Petition No.534 of 2011 filed by RDS not only were the amended conditions of the tender notice assailed but the validity of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delve deep into this aspect of the controversy, we may point out that allegations of mala fides are more easily made than proved. The law casts a heavy burden on the person alleging mala fides to prove the same on the basis of facts that are either admitted or satisfactorily established and/or logical inferences deducible from the same. This is particularly so when the petitioner alleges malice in fact in which event it is obligatory for the person making any such allegation to furnish particulars that would prove mala fides on the part of the decision maker. Vague and general allegations unsupported by the requisite particulars do not provide a sound basis for the court to conduct an inquiry into their veracity. The legal position in this regard is fairly well-settled by a long line of decisions of this Court. We may briefly refer to only some of them. In State of Bihar v. P.P. Sharma 1992 Supp. (1) SCC 222, this Court summed up the law on the subject in the following words: 50. Mala fides means want of good faith, personal bias, grudge, oblique or improper motive or ulterior purpose. The administrative action must be said to be done in good faith, if it is in fact done honest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings to enable them to answer the charge. In the absence of the person concerned as a party in his/her individual capacity it will neither be fair nor proper to record a finding that malice in fact had vitiated the action taken by the authority concerned. It is important to remember that a judicial pronouncement declaring an action to be mala fide is a serious indictment of the person concerned that can lead to adverse civil consequences against him. Courts have, therefore, to be slow in drawing conclusions when it comes to holding allegations of mala fides to be proved and only in cases where based on the material placed before the Court or facts that are admitted leading to inevitable inferences supporting the charge of mala fides that the Court should record a finding in the process ensuring that while it does so, it also hears the person who was likely to be affected by such a finding. Decisions of this Court have repeatedly emphasised this aspect, which is of considerable importance. In State of M.P. and Ors. v. Nandlal Jaiswal and Ors. (1986) 4 SCC 566, speaking for the Court, P.N. Bhagwati, J., as His Lordship then was, disapproved the observations made by the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shing mala fides lies very heavily on the person who alleges. 28. The above was reiterated in a recent decision of this Court in Nirmal Jeet Singh Hoon v. Irtiza Hussain Ors. (2010) 14 SCC 564 and All India State Bank Officers Federation v. Union of India (1997) 9 SCC 151. In the latter case this Court observed: 22. There is yet another reason why this contention of the petitioners must fail. It is now settled law that the person against whom mala fides are alleged must be made a party to the proceeding. The allegation that the policy was amended with a view to benefit Respondents 4 and 5 would amount to the petitioners contending that the Board of Directors of the Bank sought to favour Respondents 4 and 5 and, therefore, agreed to the proposal put before it. Neither the Chairman nor the Directors, who were present in the said meeting, have been impleaded as respondents. This being so the petitioners cannot be allowed to raise the allegations of mala fides, which allegations, in fact, are without merit. (emphasis supplied) 29. In the case at hand there was no allegation of malice in fact against any individual nor was any individual accused of bias, spite or ult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though., so far as the state of ins mind was concerned he acted ignorantly, and in that sense innocently. 'Malice in fact' is a different thing. It means an actual malicious intention on the part of the person who has done the wrongful act. 31. Reference may also be made to the decision of this Court in State of AP Ors. v. Goverdhanlal Pitti (2003) 4 SCC 739 where the difference between malice in fact and malice in law was summed up in the following words: 11. The legal meaning of malice is ill-will or spite towards a party and any indirect or improper motive in taking an action . This is sometimes described as malice in fact . Legal malice or malice in law means 'something done without lawful excuse'. In other words, 'it is an act done wrongfully and wilfully without reasonable or probable cause, and not necessarily an act done from ill feeling and spite'. It is a deliberate act in disregard of the rights of others'. [See Words and Phrases legally defined in Third Edition, London Butterworths 1989]. . Where malice is attributed to the State, it can never be a case of personal ill-will or spite on the part of the State. If at all, it is malice in legal sense, it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding RDS eligible but discovery of material in proceedings under the RTI Act and an adverse CAG report instead of clearing the mist had created further confusion in the process, supporting what may have been a mere hunch or apprehension in the beginning about the capacity of RDS to handle a major project having regard to the fact that it had overshot the time schedule for completion of a much lesser project in Car Nicobar. In that backdrop and as owner of a project being executed at a colossal cost running into hundreds of crores of rupees, RGPPL was perfectly justified in adopting a careful approach to ensure that those found eligible by its technical experts and consultants were indeed so qualified and possessed the necessary wherewithal, experience and expertise to execute the project at Dabhol. It was also well within its right to demand documentary proof from RDS to support its claim that it had indeed executed the project at Mus in Car Nicobar area so as to make it eligible for claiming award of the works in question. In the course of the hearing we had on several occasions asked learned counsel for RDS to furnish documentary evidence to probabilize if not conclusively es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithstanding the withdrawal of the earlier petition filed by RDS. 34. Independent of what has been said above we may point out that the High Court has rested its finding on malafides entirely on the conflict between recommendations made by EIL in its letter dated 8th March, 2010 holding RDS to be techno commercially responsive and letter dated 1st December, 2010 by which the said recommendation has been reversed. The High Court has while dealing with the change in the view taken by the EIL, inspired as it was by the legal opinion tendered to it on the subject, observed: It was submitted before us that this opinion became the edifice for the change of view that the EIL took on 1.9.2010. We may note at the outset that the opinion is completely converse to the stand taken by the EIL up to 11.8.2010. It is pertinent to note (a fact we were told in the hearing) that the said legal opinion bears the endorsement of Mr. Grover, Director (Projects) calling upon Mr. R.K. Bhandari, General Manager (Project), EIL to simply comply with the view taken by the legal department. As noticed here in above by us, Mr. R.K. Bhandari was the same gentleman, who on 10.6.2010 had opined that no rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le or misdirection on issues of vital importance, fresh recommendations made in tune with the legal opinion could not be held to have been vitiated by malice in law. The High Court, it appears, felt that since the officers referred to above were senior officers they ought to have known what was meant by terms like single project and single bidder appearing in clause 8.1.1.1. We need hardly point out that in cases where the decision making process is multi-layered, officers associated with the process are free and indeed expected to take views on various issues according to their individual perceptions. They may in doing so at time strike discordant notes, but that is but natural and indeed welcome for it is only by independent deliberation, that all possible facets of an issue are unfolded and addressed and a decision that is most appropriate under the circumstances shaped. If every step in the decision making process is viewed with suspicion the integrity of the entire process shall be jeopardized. Officers taking views in the decision making process will feel handicapped in expressing their opinions freely and frankly for fear of being seen to be doing so for mala fides reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above finding of the High Court Mr. Nariman, learned Solicitor General, argued that if the annulment of the tender process pursuant to the first tender notice was held to be valid and beyond challenge at the instance of RDS, the conditions on which fresh tenders are invited including the conditions of eligibility stipulated in the tender notice was not open to challenge by a prospective tenderer. Relying upon the decision of this Court in Air India Ltd. v. Cochin International Airport Ltd. and Ors. (2000) 2 SCC 617, Mr. Nariman argued that the High Court went wrong in declaring the provisions of Clause 8.1.1.1 of the second tender notice to be legally bad. The following passage from the above decision is apposite: 7. .. The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny . 39. Having said that we must say to the credit of Mr. Nariman that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int out that the High Court had quashed the communication and held RDS to be eligible. That finding has not yet attained finality, as the appellant has questioned the judgment of the High Court in the present appeal. Whether or not RDS is eligible, therefore, remains relevant not for the purpose of taking the tender process initiated with the issue of the first tender notice forward but for purposes of finally determining whether RDS will be eligible to participate in any fresh tender notice issued in future, in which Clause 8.1.1.1 remains, the touch stone for determining the eligibility of the tenderers. It is in the above background that we need to examine whether RDS was eligible to compete for the works based on the first tender notice. 41. In its communication dated 6th October, 2010 the appellant had summed up the reasons for declaring RDS to be techno commercially non- responsive in the following words: From perusal of the various documents, it can be concluded that the qualifying project claimed by you to have been awarded in November 2000 had the maximum length of 290 m and not 400 m required under BQC. The breakwater(s) at Mus (chainage 22 m to 200 m and chainage 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e executed a single project of that length single handedly without associating any other agency with the execution of the work. It was important for the appellant to do so because the breakwater length in the present case is more than four times the length stipulated as a condition of eligibility. It is the further case of the appellant that apart from Recon International one Surya Rao was also associated with the execution of the project, which fact is according to the appellant evident from the government files produced by Mr. Gulati appearing for the Central Government. 45. On the question whether the Breakwater constructed at Mus in Car Nicobar comprised one or two projects, also there was some debate which was rendered academic, by Mr. Nariman, making a fair and unqualified concession that for purposes of determining the eligibility of RDS the breakwater at Mus Car Nicobar could be treated as a single project. With that concession, what remains to be determined is whether RDS had limited its claim to eligibility only on the award made in its favour in November, 2000. If so, whether it is debarred or stopped from claiming that it had executed the project from chainage 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t bind them or that the same was contrary to the facts. The High Court ought to have examined the issue on merits, rather than taking a short cut. The High Court has incidentally taken support from the certificate dated 5th April, 2008 and clarification issued on 5th June, 2010 to hold that the RDS had indeed executed the qualifying project at Car Nicobar. We had in the course of the hearing asked Mr. Gulati, learned counsel for the Central Government, to disclose to us the basis on which the certificate and the clarification had been issued by the officers concerned. We got no satisfactory answer to the query. We even asked the parties to produce the relevant record including the government files, so that we could ourselves answer the question regarding eligibility of RDS but in the absence of any conclusive evidence, and in the absence of a specific finding from the High Court, on the question, we remained handicapped. A remand to the High Court, therefore, became inevitable which part we must say in fairness to learned counsel for both sides, was conceded even by them. 49. In the result we allow these appeals, set aside the judgment and order passed by the High Court and reman ..... X X X X Extracts X X X X X X X X Extracts X X X X
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