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Asia Foundation & Construction Ltd. Versus Trafalgar House Construction (I) Ltd. & Ors.

1996 (10) Suppl. SCR 209, 1997 (1) SCC 738, 1997 (1) JT 309, 1996 (9) SCALE 428 - C.A. 16734 OF 1996 - Dated:- 17-12-1996 - S.C. AGRAWAL, G.B. PATTANAIK JJ. K. Parasaran, Sr. Adv. S. Ganesh, Gaurab Banerjee, R.N. Karanjawala, Arvind Kumar, Ms. Ruby Ahuja and Manik Karanjawala, Advs. with him for the appellants. Soli J. Sorabjee, V.A. Mohta, Sr. Advs., S.B. Upadhyay, Ashok Kr. Gupta, Zaki Ahmad Khan, Advs. with then for the Respondents. J U D G M E N T PATTANAIK. J. Leave granted. This Appeal by .....

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Ltd. who was the petitioner in OJC and respondent no. 1 herein, giving them opportunity to make fresh offers and then lowest bidder should be given the Award. The High Court also further directed that if there cannot be any negotation within one month from the date of the judgment then the Port Trust will be free to ask for rebidding for the particular project which is the subject matter of the Writ Petition. It is not necessary to narrate the entire gamut of facts Suffice it to state that for .....

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n receipt of the pre-qualification documents those were sent to a Committee for evaluation. The consultants submitted their evaluation recommending six firms including the appellant and respondent no. 1 for the construction of the Wharf. The Tender Committee of Port Trust reviewed the evaluation make by the consultants and recommended the names of all the six firms. The aforesaid evaluation report was sent to the Financial Institution, namely, the Asian Development Bank for obtaining its views. .....

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responsiveness of the bidders three bids were sent to the consultant for evaluation report. the consultant found some discrepancy in the bid documents about the amount of concrete required for pre-cast planks for the Wharf Deck. The consultants then corrected the error and after making re-calculation came to the conclusion that respondent no. 1's bid was the lowest. The Tender Committee of Paradip Port Trust accepted the recommendation of the consultants and submitted the same for approval o .....

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receipt of the views of the Bank and since substantial amount of finance was to be given by the Bank as loan the Port Trust again asked their consultants about the earlier bid evaluation. The Special Tender Committee again met on 16.5.96 and then formulated its views and communicated the same to the Bank on 12.5.96. The Bank wrote back on 5th June, 1996 suggesting that the contract be awarded to AFCONS so that the words can be financed from the loan and if the contract is awarded to anyone else .....

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d to the clarification sought for. The Project Manager addressed a letter on 12th July, 1996, stating therein that if the additional commercial information has been available at the time of assessment then the outcome would appear to favour award to AFCONS. it also further stated that completing the bid evaluation and making its recommendation of award to Essar the consultant has done so in a professional and impartial manner based upon the information available at that time. It was further stat .....

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g the relief of quashing of the award in question. The appellant in its counter-affidavit filed before the High Court not only denied the allegations made in the Writ Petition but also submitted that factually all through the bid of the appellant has been the lowest. It was also stated that the consultant has not taken into account the customs duty which was payable while making the evaluation in question. The Paradip Port Trust in its affidavit before the High Court had urged that since the loa .....

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ort Trust further made it clear that the re-bid was not in the interest of the project and not only it would jeopardise the entire loan sanctioned by the Asian Development Bank but there is every possibility of bid being substantially higher. The High Court by the impugned judgment took note of several clauses of the bid documents which consists of several parts and come to the conclusion that the award of contract should be made to the bidder whose bid has been determined to be the lowest evalu .....

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t further came to hold that "It is also not appreciated and it has not been explained by Asian Development Bank authorities who have not cared to appear in the case inspite of notice, as to why the Asian Development Bank authorities did not appreciate the evaluation of the bids and on correction the offer of the petitioners being lower than that of AFCON. The special fancy of the Asian Development Bank authorities in favour of AFCON has not been justified with reasons before this Court for .....

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rrived at as the situation demands under the parameters of law as it permits. Having considered the facts and circumstances leading to the award of contract in favour of the appellant the court came to the conclusion that it would be in the public interest to quash the award in favour of the appellant and accordingly it quashed the same and issued directions, as already stated. Mr. Parasaran, learned senior counsel appearing for the appellant submitted that the award of a contract by the State o .....

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e opinion of the Asian Development Bank who is to grant the loan for completion of the project the High Court was not justified in interfering with the contract award in favour of the appellant. He further contended that in project of this magnitude with which the Court was concerned, since the lowest tendered has no right to get the contract, unless the decision of the authority in awarding the contract can be said to be vitiated with arbitrariness or undue favouratism, it would not be for the .....

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on of the Paradip Port Trust in awarding the contract in favour of the appellant. Mr. Sorabjee, learned senior counsel appearing for respondent no. 1 and Mr. Mohta,. learned senior counsel appearing for respondent no. 3 on the other hand contended, that in view of the conceded position as noticed by the High Court that on error being corrected it is the respondent no. 1 who was the lowest bidder and yet the authorities awarded the contract in favour of the appellant, it was sufficient for the co .....

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face of it must be held to be arbitrary and the High Court was fully justified in interfering with the decision of awarding the contract in favour of the appellant. Mr. Sorabjee, learned senior counsel also urged that if this court is of the view that a re-bidding would take an undudly long period which may eventually result in escalation of the cost then this Court may issue appropriate direction as it thinks fit. Mr. Sorabjee, learned senior counsel also in course of arguments produced before .....

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n of the Trust awarding the contract in favour of the appellant neither can be said to be arbitrary nor unfair or illegal and on the other hand, the decision was in the public interest and, therefore, it was not proper for the High Court to interfere with the said decision. The learned counsel further urged that in the mean time agreement has already been executed and the direction of the High Court to negotiate with the parties did not yield result and, therefore, the only other option is for r .....

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ith the award of contract in favour of the appellant and whether such interference would subserve any public interest for which the Court purports to have exercised its power of judicial review. The Asian Development Bank came into existence under and Act called the Asian Development Act, 1966, in pursuance of an International agreement to which India was a signatory. This new financial institution was established for acceleration the economic development of Asia and the Fast East. Under the Act .....

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in the scheduled time and the procedure for granting the award must be duly adhered to. In the aforesaid premises on getting the evaluation bids of the appellant and respondent no. 1 together with the consultant's opinion after the socalled corrections made the conclusion of the bank to the effect "the lowest evaluated substantially responsive bidder is consequently AFCONS" cannot be said to be either arbitrary or capricious or illegal requiring court's interference in the matt .....

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e of the considered opinion that it was not within the permissible limits of interference for a court of law, particularly when there has been no allegation of malice or ulterior motive and particularly when the court has not found any mala fides or favouratism in the grant of contract in favour of the appellant. In Tata Cellular vs. Union of India (1994) 6 SCC 651 this Court has held that : "The duty of the court is to confine itself to the question of legality. Its concern should be: 1. W .....

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will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under :- (i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to its; (ii) Irrationality, namely, Wednesbury unreasonableness. (iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course o .....

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f the criteria has been satisfied justifying court's interference in the grant of contract in favour of the appellant. We are not entering into the controversy raised by Mr. Parasaran, learned senior counsel that the High Court committed a factual error in coming to the conclusion that respondent no. 1 was the lowest bidder and the alleged mistake committed by the consultant in the matter of bid evaluation in not taking into account the customs duty and the contention of Mr. Sorabjee, learne .....

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