TMI Blog2020 (3) TMI 1465X X X X Extracts X X X X X X X X Extracts X X X X ..... be overturned, and latitude ought to be granted to the State in exercise of executive power so that the constitutional separation of powers is not encroached upon - merely because the accusations made are against the State or its instrumentalities doesn't mean that an aggrieved person can bypass established civil adjudicatory processes and directly seek writ relief. In determining whether to exercise their discretion, writ courts ought not only confine themselves to the identity of the opposite party but also to the nature of the dispute and of the relief prayed for. Thus, although every wrong has a remedy, depending upon the nature of the wrong there would be different forums for redress. In cases where a constitutional right is infringed, writs would ordinarily be the appropriate remedy. In tender matters, such can be either when a party seeks to hold the State to its duty of treating all persons equally or prohibit it from acting arbitrarily; or when executive actions or legislative instruments are challenged for being in contravention to the freedom of carrying on trade and commerce. However, writs are impermissible when the allegation is solely with regard to violation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B.V. Balaram Das, Advs. JUDGMENT 1. Leave Granted. 2. These appeals have been preferred by Bharat Coking Coal Ltd. (hereinafter, BCCL ) being aggrieved by the order dated 12.04.2018 passed by a Division Bench of the High Court of Jharkhand at Ranchi, wherein a writ petition filed by AMR-Dev Prabha (Respondent No. 1) had been allowed and the auction process conducted by M/s. C1 India Pvt. Ltd. (Respondent No. 4, hereinafter C1-India ) was set aside and the resultant award of tender by BCCL to M/s. R.K. Transport Co (Respondent No. 6) had also been quashed. Factual Background 3. BCCL, a subsidiary of Coal India Ltd., operates coking coal mines in India and as part of its operations regularly outsources many mining and processing functions to external entities. Such allocation of tasks is done through competitive bidding processes, with Respondent No. 4 [M/s. C1 India Pvt. Ltd. (hereinafter C1 India )-an online procurement facilitator] being appointed as the service provider for e-tendering of its contracts. 4. A Notice Inviting Tender ( NIT ) was issued by the Appellant on 09.03.2015 for purposes of 'Hiring of HEMM for removal of OB, extraction and transportation of coal with fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een 2:17 PM and 2:36 PM. Accordingly, various bids were received by many participants, including numerous bids from the now aggrieved Respondent No. 1 and the ultimately successful Respondent No. 6. The auction proceeded to the extended time of 1 hour and 27 minutes (calculated as being the time of interruption between the erroneous closure at 1:03 PM and subsequent resumption at 2:30 PM), and Respondent No. 6 was declared successful with a bid of Rs. 2,043 crores at 7:27 PM. 8. This was communicated to BCCL, which then after assessing eligibility of M/s. R.K. Transport (Respondent No. 6, hereinafter RK Transport ), issued Letter of Acceptance ( LOA ) on 30.05.2015. As per earlier agreed contractual terms, a Performance Bank Guarantee had to be submitted within 28 days of receipt of LOA. Respondent No. 6 was unable to do so, and it requested BCCL to provide an additional two months for compliance. The Appellant returned the Earnest Money Deposit ( EMD ) to all unsuccessful bidders, including Respondent No. 1, through speed post on 18.06.2015. Finally, the requisite guarantees were submitted after a delay of 49 days, which was condoned by the Appellant and job was started on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of contract to R.K. Transport was not arbitrary for not only was it L-1 but also had offered a bid much better than that of AMR-Dev Prabha. Further, the first Respondent was held to have acquiesced to any possible irregularity in the process by participating in the resumed auction, and BCCL's condonation of delay in submission of guarantee by R.K. Transport was held to be permissible and in public interest. 14. This was challenged by Respondent No. 1, before a Division Bench of the High Court. During the pendency of the letters patent appeal, on 18.09.2017, counsel for AMR-Dev Prabha offered a lower bid of Rs. 1,950 Crores for the job, which they portrayed as being far better than their earlier bid of Rs. 2,345 Crores which they had made at 12:33 PM on 05.05.2015. This, however, was refused by the Appellant and instead a work order was issued to Respondent No. 6 on 23.11.2017, who shortly afterwards commenced work. 15. The Division Bench allowed the appeal vide impugned judgment dated 12.04.2018 and quashed the LOA issued by BCCL in favour of R.K. Transport and held that all consequent work was invalid. The Division Bench of the High Court further directed reconduction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to be the norm. The decision making process was shown as not being illegal as there was no allegation of receipt of extraneous gratification or violation of any statute; nor irrational as the decision of resuming the auction process to arrive at a better price wasn't such which would offend the sensibilities of a reasonable person; nor arbitrary as there was substantial discretion granted by the terms of the NIT. Respondent No. 1's participation in the tender process post-resumption was contended to bind him from making any further judicial challenge, and alternate remedies under contract and civil law were demonstrated. It was further stated that the entire process had been upheld by multiple independent authorities, not least being the CERT-In and one of the two IEMs. 19. Adopting such stand, Respondent No. 4 (C1-India) contended that the slight delay in the decision-making process, wherein it did not immediately take action, was because C1-India as a responsible e-services provider was first attempting to determine whether the interruption was at the bidders' end or its own. By the time a response had been received from the entity responsible for hosting and conne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble infirmity was merely minor and inconsequential. There had been a substantive compliance of the tender process and the Clauses of the Notice Inviting Tender (NIT), and public interest of ensuring the lowest price discovery had been kept at the forefront. It was contended that hyper technical compliance was often not possible, nor desirable as often-a-times strict procedural compliance could defeat the ends of substantive equality, like in the present case. 22. Reliance was placed on the CERT-IN report to demonstrate lack of any mala fide or tampering in the process. The interruptions at the end of TCL were claimed to be but natural and a part of operational inefficiencies which were not unheard of in e-tendering processes. 23. On the other side, Respondent No. 1 claimed that it had been declared as the lowest bidder (L-1) by virtue of automatic conclusion of the auction process at 1:03 PM, post which any resumption was impermissible and contrary to contractual terms. Further, a colour was sought to be cast, by claiming that such resumption was to benefit particular parties. The refusal of BCCL to accept the new bid which was more than Rs. 400 crores less than the previous offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 27. Substantial emphasis was placed on the offer made by the Respondent No. 1 to the Appellant during the course of hearing of the writ petition, the rejection of which was claimed as being contrary to public interest and settled law which aims at prioritising value maximisation of the public exchequer. Analysis 28. Two clear issues-in-dispute arise from the above discussion. The first pertains to the maintainability of the writ considering the nature of tender processes, and the second concerns application of that standard to the facts of the present case to determine whether there were lapses on part of BCCL and C1-India. (I) Maintainability of Writ Petition 29. The scope of judicial review in tenders has been explored in-depth in a catena of cases. It is settled that constitutional courts are concerned only with lawfulness of a decision, and not its soundness. [ Central Coalfields Ltd. v. SLLSML (Joint Venture Consortium), (2016) 8 SCC 622; Siemens Aktiengeselischaft Siemens Ltd. v. DMRC Ltd., (2014) 11 SCC 288] . Phrased differently, Courts ought not to sit in appeal over decisions of executive authorities or instrumentalities. Plausible decisions need not be overturned, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... travention to the freedom of carrying on trade and commerce. However, writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty. Hence, the persons seeking writ relief must also actively satisfy the Court that the right it is seeking is one in public law, and not merely contractual. In doing so, a balance is maintained between the need for commercial freedom and the very real possibility of collusion, illegality and squandering of public resources. 33. Such a proposition has been noticed by this Court even earlier in Jagdish Mandal v. State of Orissa (2007) 14 SCC 517 in the following words: 22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made lawfully and not to check whether choice or decision is sound . When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest of Respondent No. 1 was purely private and monetary in nature. 37. First, AMR-Dev Prabha's initial prayer sought to nullify the award of contract, which if granted, would have increased the sums payable by the State instrumentality from Rs. 2,043 crores to Rs. 2,345 crores. Second, the conduct of Respondent No. 1 over the course of the present proceedings, as highlighted by the Appellants, further bolsters the lack of public interest. Whereas initially the first Respondent was seeking quashing of the LOA issued to Respondent No. 6 owing to arbitrariness on part of BCCL and on the ground that sanctity of the auction process had been violated; later, before the Division Bench, Respondent No. 1 sought to make a new offer of Rs. 1,950 Crores. This shows how AMR-Dev Prabha's priority was only to secure the contract and not to uphold the law or protect larger public interest. 38. Even otherwise, granting such a prayer means that Respondent No. 1 would have gotten a special opportunity of negotiation, to the detriment of all other participants, which would probably be a more egregious violation of equality envisaged Under Article 14 than the procedural adherence which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor-made to benefit any particular tenderer or class of tenderers. So also, the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his document, which actually belonged to M/s. Montecarlo Ltd. and which became the basis for M/s. AMR Dev Prabha to stake their claim of being the lowest bidder at 13.03.47 hrs. It is also seen that this important fact, of generation of notification of closure of the auction by the system at 13:03:47 Hours, as the bid of M/s. AMR Dev Prabha remained unresponded for the specified period of 30 minutes, was neither reported by C1 India to BCCL nor to the participating bidders. Such, notification of closure of the auction, even though generated during the period of interruption in connectivity of the bidders with the server, should have been declared as 'null and void' before restarting the auction process. Even, BCCL did not demand any report from C1 India Pvt. Limited for the interruption period so as to take a call before proceeding further for restart of the reverse auction process. Further, considering that during this period BCCL was aware of the connectivity problem being faced by the bidders, it should have exercised intense real time monitoring which have not been done. Failure to do so is a reflection of the fact the adequate incident management system was not put in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Coalfields Ltd v. SLLSML (Joint Venture Consortium), (2016) 8 SCC 622] This is because notice must be kept of the impact of overturning an executive decision and its impact on the larger public interest in the form of cost overruns or delays. 49. There is also no need to venture into questions concerning quantum of extension of time. It is clear that the same message was communicated by CI-India to all, stating that the auction process would be extended by a period equivalent to the time between closure of auction at 1:03 PM and resumption at 2:30 PM. Not only did such uniform communication put all bidders on an equal footing, but there was no possibility of any confusion given the clear wordings of the email. When it is not the case of Respondent No. 1 that they thought that auction would close at 7:35 PM and hence they were taken by surprise at the early closure, nor did they in fact highlight or object to such interpretation over the course of the resumed auction process, the question is moot and a finding ought not to be given on it. 50. Additionally, we also do not see merit in the justification for delay in filing writ proffered by the first Respondent. It is claimed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
