TMI Blog2014 (2) TMI 1427X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant on what is essentially a short point raised by Mr. Lalit in support of the appeal. The contention is that while no malafide or extraneous considerations have prevailed to vitiate the decision of the DMRC allotting the contract in favour of HR, the process of evaluation of the bids offered by the eligible bidders should have in the facts and circumstances of the case included validation of the GEC values offered by HR to determine whether they were achievable having regard to the ground realities and the laws of physics relevant to the consumption of energy. It is common ground that the price bid offered by the tenderers was not itself determinative. What was equally important was the GEC values comprising X and Y factors which the tenderers had to disclose in their technical bids. That the values offered had to be converted into Indian Rupees and loaded to the price bid of the tenderers is also beyond question. That each one of the bidders had offered their GEC values comprising X and Y factors separately was also beyond doubt. There is no error even in the conversion of such values in terms of Indian Rupees nor is there any dispute about the effect of such loading of val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rajeev Dhawan, Sr. Advs., C. Mukund, Pankaj Jain, Firdouse Qutbwani, P.V. Saravana Raja, Anvesh Verma, Ashok Jain, Bijoy Kumar Jain, V.K. Biju, D.L. Chidananda, Ashwin Kumar D.S., Rajiv Nanda, Padma Laxmi Nigam, Sushma Suri, Bhawna Singh Dev, Tarun Johri, Payal Chandra, Soumik Ghosal, Ankur Gupta and Santosh Kumar, Advs. JUDGMENT T.S. Thakur, J. 1. Leave granted. 2. A Division Bench of the High Court of Delhi has by a common order passed in Writ Petition (C) No. 1853 of 2013 filed by the Appellant and Writ Petition No. 2615 of 2013 filed by Alstom Transport India Ltd. declined to interfere with the award of a contract for the supply of 486 Standard Gauge Cars Electrical Multiple Units meant for use in Phase-III of the Mass Rapid Transit System ('MRTS' for short) for Delhi and its extension corridors. The High Court has taken the view that the process of evaluation of the bids received from eligible bidders culminating in the award of a contract in favour of Respondent No. 2-Hyundai Rotem Company ('HR' for short) was transparent and did not suffer from any illegality, irregularity or perversity of any kind to warrant interference by it. The Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l bids were opened on 18th September, 2012 whereupon only six of the bidders including the Appellant were declared to be eligible. With the opening of the technical bids GEC values which the bidders were required to submit as a part of their technical bid and which were relevant and to a great extent critical for evaluation of the price bid under the applicable terms and conditions also became known to the bidders. The financial bids offered by these six bidders were then opened on 9th February, 2013 and the bid amount along with GEC values offered by each bidder announced by the DMRC. The price quotations of the six bidders found eligible were as under: Bidder Grand Total in INR INR per Car (without loading) Position before Loading due to difference in GEC values Siemens Consortium 3625,27,92,409 7,45,94,223 L-1 Bombardier Consortium 4242,27,83,378 8,72,89,678 L-2 Hyundai ROTEM 4290,57,94,689 8,82,83,528 L-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2185 359 12,222,384,171.24 3 CAFC 1949 123 4,187,613,518.28 4 HBC 2281 455 15,490,765453.80 5 HRC 1826 O (baseline) 0 6 SIEMENS 2346 520 17,703,731,947.20 7. The position that emerged after the GEC values component was loaded to the price bid of the bidder was as under: Bidder Grand Total in INR INR per Car (without loading) Positio n before Loadin g Grand Total (with energy loading) in INR INR per Car (with loading) Position after loading Total Energy (kWH) SEC value (kWH/ 1000G TKM) Siemens Consortium 3625,27,92,409 7,45,94,22 3 L-1 5395,65,24,355 11,10,21,655 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther letter dated 1st March, 2013 to the same effect having failed to cut any ice with the DMRC, the Appellant preferred Writ Petition No. 1853 of 2013 before the High Court of Delhi. That writ petition was notified for hearing on 1st May, 2013. In the meantime DMRC issued a Letter of Acceptance in favour of HR under intimation to the Appellant. The Appellant, therefore, sought a restraint order against the award of the contract before the High Court who in turn accepted an undertaking given by the counsel for the DMRC and HR that they will not act in pursuance of the letter of award pending disposal of the writ petition. 10. Alstom Transport India Ltd. was the only other bidder aggrieved by the award of the contract who filed Writ Petition No. 2615 of 2013 challenging the tender process. Both the writ petitions were eventually heard by the High Court on 1st May, 2013 and dismissed by the order under appeal before us. 11. Appearing for the Appellant, Mr. U.U. Lalit, learned senior Counsel, fairly conceded that the Appellant had not alleged any mala fides, bias or bad faith in the matter of evaluation of the bids by the DMRC or any process connected therewith nor even in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thoroughly examined the issues raised in the representation and found the detailed explanations provided in the Tender Committee Minutes to be satisfactory. The Sub-Committee, therefore, agreed with the recommendations of the Tender Committee culminating in the issue of a Letter of Acceptance to Respondent-HR. Our attention was drawn to the counter-affidavit filed by the DMRC in which the process of evaluation of the bids and the GEC values has been set out. The counter-affidavit further states that the DMRC was fully satisfied about the achievability of the GEC values offered by HR. There was, therefore, no room for validation of the GEC values by any outside agency. 13. It was further contended by Mr. Andhyarujina that the tender conditions specifically provide for levy of a penalty in case of failure of the committed GEC values. He referred to ERTC 3.24.1 according to which the defaulting Contractor shall be liable to pay penalty at the rate of Rs. 4.03 crores per unit of electricity committed in excess of the GEC values declared by it. The penalty stipulated thus works out to be approximately 18.47% which is significantly higher than the rupee component loaded for each u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eview of the process of evaluation and eventual award of the contract by DMRC, the authority competent to do so. Relying upon the decisions of this Court in Amrik Singh Lyallpuri v. Union of India and Ors. (2011) 6 SCC 535 and Union of India v. K.M. Shankarappa (2001) 1 SCC 582, it was argued that administrative review of a judicial decision was not legally permissible. It was also contended by Mr. Andhyarujina that pursuant to the allotment made in his favour, HR had taken substantial steps towards implementation of the project and that interference with the award of the contract at this belated stage was neither in public interest nor otherwise justified in the facts and circumstances of the case. 16. Appearing for the Respondent No. 2-HR, Mr. Venugopal, learned senior counsel adopted the submissions of Mr. Andhyarujina and took strong exception to the constitution of a Committee by the Minister of Urban Development, Government of India on a subject which was sub judice before the High Court. It was contended by Mr. Venugopal that the constitution of the Committee was not only against the sound advice tendered by the Secretary to the Government, Minister of Urban Development D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Tata Cellular's case (supra) where this Court once again reiterated that judicial review would apply even to exercise of contractual powers by the Government and Government instrumentalities in order to prevent arbitrariness or favouritism. Having said that this Court noted the inherent limitations in the exercise of that power and declared that the State was free to protect its interest as the guardian of its finances. This Court held that there could be no infringement of Article 14 if the Government tried to get the best person or the best quotation for the right to choose cannot be considered to be an arbitrary power unless the power is exercised for any collateral purpose. The scope of judicial review, observed this Court, was confined to the following three distinct aspects: (i) Whether there was any illegality in the decision which would imply whether the decision making authority has understood correctly the law that regulates his decision making power and whether it has given effect to it; (ii) Whether there was any irrationality in the decision taken by the authority implying thereby whether the decision is so outrageous in its defiance of logic or accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any review of the law on the subject is bound to be simply repetitive without any meaningful contribution to the existing legal literature on the subject. We remain content by referring to two only of a plentitude of judicial pronouncements on the subject in which the legal position has been succinctly restated. One of these decisions was delivered in Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517, where too this Court was dealing with the exercise of power of judicial review in matters relating to tenders and award of contracts. This Court identified the special features should be borne in mind while judicially reviewing award of contracts. We can do no better than extract the following observations of this Court in this regard: 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court what is to be examined is the legality and regularity of the process leading to award of contract. What the Court has to constantly keep in mind is that it does not sit in appeal over the soundness of the decision. The Court can only examine whether the decision making process was fair, reasonable and transparent. In cases involving award of contracts, the Court ought to exercise judicial restraint where the decision is bonafide with no perceptible injury to public interest. 23. The High Court has, in the case at hand, undertaken that exercise and concluded that there was neither any illegality nor any irregularity in the process of evaluation of the bids or the final allotment of the contract. That view has come to be assailed by the Appellant on what is essentially a short point raised by Mr. Lalit in support of the appeal. The contention, as noticed earlier, is that while no malafide or extraneous considerations have prevailed to vitiate the decision of the DMRC allotting the contract in favour of HR, the process of evaluation of the bids offered by the eligible bidders should have in the facts and circumstances of the case included validation of the GEC values offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tenderers had to disclose in their technical bids. That the values offered had to be converted into Indian Rupees and loaded to the price bid of the tenderers is also beyond question. That each one of the bidders had offered their GEC values comprising X and Y factors separately was also beyond doubt. There is no error even in the conversion of such values in terms of Indian Rupees nor is there any dispute about the effect of such loading of values to the price bid of all the tenderers because of which loading the bid offered by HR eventually emerged as L-1 with Appellant-Siemens sliding to L-4 position. That being so, the process of evaluation of bids could not be faulted as the same was strictly in accordance with the norms stipulated for such evaluation. Even Mr. Lalit fairly conceded that there was nothing that could be criticized in that process. What DMRC, according to him, should have done was to check whether the GEC values offered by the bidders were achievable. Inasmuch as no such verification was undertaken the evaluation process was flawed. There is, in our opinion, no merit in that contention. The reasons are not far to seek. In the first place, the contention urged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtake any such exercise. DMRC was, in our opinion, entitled to adopt such methods as were reasonable to satisfy itself above about the GEC values and their achievability offered by lowest tenderer in whose favour it was considering the award of the contract. The upshot of the above discussion, therefore, is that the process by which the bids were evaluated and eventually accepted was transparent, fair and reasonable and does not, therefore, call for any interference from this Court. 26. That brings us to the question whether the Government of India was justified in appointing a Committee to test the evaluation of bids and, if so, whether this Court ought to look into the Report of the Committee. There is more than one aspect that needs to be kept in view in this regard. The first and foremost is the fact that the Committee was appointed at a stage when the matter was already pending before the High Court. Considerable time was spent by learned Counsel for the parties in debating whether the constitution of the Committee by the Government itself tantamounted to interference with the course of justice, hence contempt. We do not, however, consider it necessary to pronounce upon tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or anxious to devise transparent methods by which such contract should be allotted. What is notable is that the Committee's hands were not stayed by the Government even when the High Court had pronounced upon the validity of the procedures adopted by the DMRC and the matter reached this Court. Continuance of the process of review even after the High Court had delivered its judgment amounted to subjecting the judicial pronouncement to an administrative review. There was no question of any such judicial determination or adjudication being subjected to any administrative review albeit in the name of a Committee constituted for the purpose. 28. Mr. Parasaran argued that the Committee's proceedings did not amount to sitting in appeal over the judgment of the High Court. The Committee may have not said anything adverse to view taken by the High Court but if the Committee were to find fault with the evaluation process which the High Court has held to be valid it indirectly amounted to putting a question mark on the judgment of the High Court itself. Suffice it to say what the Government ought to have stayed its hands once the matter landed in the Court. Inasmuch as the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any project. Experts in science may themselves differ in their opinions while taking decisions on matters related to safety and allied aspects. The opposing viewpoints of the experts will also have to be given due consideration after full application of mind. When the Government or the authorities concerned after due consideration of all viewpoints and full application of mind took a decision, then it is not appropriate for the court to interfere. 31. Reliance by the Appellant upon the report of the Committee is misplaced also for the reason that the same was ex parte. It is common ground that HR was never associated with the process of evaluation or verification if any conducted by the Committee. In the absence of any such opportunity to the party whose GEC values were being test checked for their achievability, the report can hardly provide a sound basis for a writ court to upset a decision which the competent authority has taken after due deliberations by not one but four different Committees including experts in the field. That apart, Mr. Parasaran fairly submitted that even the Government have not accepted the report submitted by the Committee so far. He urged that since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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