TMI Blog2022 (1) TMI 1420X X X X Extracts X X X X X X X X Extracts X X X X ..... being taken by it, in acceptance of the case of the writ petitioner, was required to be substituted in place of the views of the tender inviting authority. That has been an error of law and cannot sustain itself in view of the consistent binding decisions of this Court, including the 3-Judge Bench decision in M/S GALAXY TRANSPORT AGENCIES, CONTRACTORS, TRADERS, TRANSPORTS AND SUPPLIERS VERSUS M/S NEW J.K. ROADWAYS, FLEET OWNERS AND TRANSPORT CONTRACTORS ORS. [ 2020 (12) TMI 1390 - SUPREME COURT] . The High Court, while supporting its process of reasoning, has referred to such principles which, with respect, we find entirely inapposite and beyond the periphery of the question involved in the present case. As noticed, in such matter of contracts, the process of interpretation of terms and conditions is essentially left to the author of the tender document and the occasion for interference by the Court would arise only if the questioned decision fails on the salutary tests laid down and settled by this Court in consistent decisions, namely, irrationality or unreasonableness or bias or procedural impropriety. In the case of Nabha Power Limited [ 2017 (10) TMI 1549 - SUPREME COURT] , a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ..........................................................1 Relevant Factual Matrix and Background..................................................................3 High Court disapproves the decision of tender inviting authority.............................7 Rival Submissions....................................................................................................16 Interpretation of Tender Document: Relevant Principles.........................................23 Application of relevant principles to the case at hand.............................................28 Conclusion................................................................................................................44 Preliminary Leave granted. 2. These two appeals against the same judgment and order dated 27.09.2021, as passed by the High Court of Delhi at New Delhi in Writ Petition (C) No. 6676 of 2021, have been considered together and are taken up for disposal by this common judgment. 2.1. By the impugned judgment and order dated 27.09.2021, the High Court has accepted the writ petition filed by the respondent No. 1 of these appeals (M/s. Resoursys Telecom- hereinafter referred to as the writ petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regoing preliminary comments, we may take note of the factual aspects in brief, and insofar as relevant for the issues at hand. Relevant Factual Matrix and Background 6. The dispute in the present appeals has its genesis in a Notice Inviting Tenders ( NIT ) bearing No. GEM/2021/b/1032762, as issued by the appellant-NVS on 12.02.2021 on the Government online portal i.e., Government e-market Place ( GeM ) for supply of 68,940 Tablets for school children. The NIT carried with it several of the terms and conditions but, we are concerned in the present appeals with the terms and conditions pertaining to Experience and Past Performance of the bidders. The relevant terms and conditions may be extracted as under: - 1. Experience Criteria: In respect of the filter applied for experience criteria, the Bidder or its OEM {themselves or through reseller(s)} should have regularly, manufactured and supplied same or similar Category Products to any Central / State Govt Organization / PSU / Public Listed Company for number of Financial years as indicated above in the bid document before the bid opening date. Copies of relevant contracts to be submitted along with bid in support of having supplied s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary approvals from the manufacturer (OEM). After opening the technical bids on 08.05.2021, the appellant-NVS rejected the bid of the writ petitioner on 25.06.2021, while stating the reason of rejection as technical specification mismatch . The writ petitioner felt that the grounds for rejection were not discernible and the rejection was vague and ambiguous; and, therefore, made a representation dated 27.06.2021 seeking clarification of the reason for rejection. The appellant-NVS, in its reply dated 29.06.2021, inter alia, stated as under: - 1.Does not qualify past Performance (Page 124) of tender document for any of the FY 2018-19, 2019-20, 2020-21. Work Orders of Smart Phones, Laptops, Aadhar Kits, Printers, Power-bank, etc are not considered as same or similar category products of tablets. 7.1. The writ petitioner M/s. Resoursys Telecom, as also the said OEM Lava International Limited submitted further representations while maintaining that they were duly complying with the Past Performance clause of the tender document. The appellant-NVS stated in its response dated 01.07.2021 that they were procuring Tablets for learning management and the Technical Evaluation Committee ( TEC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other departments and institutions, including the Electronic and Information Technology Departments of the States of Kerala, Himachal Pradesh, Bihar and Meghalaya; and it was submitted that in all such tender notices, the past experience of supply of tablets and smart phones had been treated alike. On the other hand, it was submitted on behalf of the tender inviting authority-NVS that the products like tablets, computers and smart phones were electronic goods, distinguishable on the basis of their technical, commercial and traderelated definitions, norms, and regulations provided by the authorities concerned. It was also argued that the tender inviting authority was the best person to interpret the terms of tender, and its decision could only be examined in case of it being arbitrary, biased or mala fide; and no such case being alleged, no interference was called for. The same contentions were urged on behalf of the impleaded party-Agmatel, while also raising the objection of jurisdiction. 11. While dealing with the rival contentions, the High Court of Delhi, after rejecting the contention on jurisdiction, formed the view that the product Smart Phone was definitely a similar catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same brand. The High Court, thus, concluded that even if the said two products were not the same , it would not mean that they do not belong to similar Category of Products . The High Court further said that the interpretation prevalent in the market, where these products were treated as falling in similar category, was demonstrated by the writ petitioner with reference to five tenders floated by different Governments/PSUs in different parts of the country. Applying such test, the High Court concluded that NVS could not have excluded the product Smart Mobile Phones from the similar category vis-a-vis the product Tablets . According to the High Court, the clause in question had been so worded as to provide maximum competition. These observations and findings of the High Court, forming the core of its decision, could be usefully reproduced as under: - 29. From the above, it would be seen that the author of the tender in question has consciously and repeatedly used the expression Category before the word Product . Thus, the use of the expression Category is not inadvertent, or unintentional. Secondly, the author has also repeatedly used the words same or similar in relation to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... content, transmitting audio-visual and the like. Both also have the facility to make audio calls through data networks though, mobile phones use the mobile call network for regular calls. Both these products are sold and traded through the same channels. In the same shop, which sells smart mobile phones, one is likely to find Tablets, and vice versa. In fact, the larger manufacturers and producers of electronic goods produce and sell both smart mobile phones, and tablets under the same brand. There are bound to be differences, since these two products are not same . They may not even belong to the same category of products. However, merely because they are not same , it does not mean that they do not belong to similar category of products . 31. The terms of tender must receive the natural and commonly understood interpretation, which has been prevalent in the trade. What is prevalent in the trade has been demonstrated by the petitioner by reference to the 5 tenders floated by different Government/ PSUs in different parts of the country for same/ similar products. 32. Applying the said test, can it be said that the respondent NVS could exclude smart mobile phones from the similar ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply with the terms and conditions stipulated in the tender floated by NVS. The decision taken by the TEC to exclude from consideration all other similar category products for the purpose of evaluating past performance of the bidders, was wholly incompetent and beyond the authority of the TEC. 37. From the counter affidavit, we also find that at various places, the respondent has averred that Tablets and smart mobile phones are not the same product, or similar product. It appears to us that the respondent has forgotten the eligibility criteria set out in the NIT, which is, same or similar category products , and not same product or even similar products. 38. If that interpretation as given by the respondent NVS were to be accepted, the word similar category of products becomes a surplusage, which cannot be the intention attributed to the tender framing authority. 39. To arbitrarily and whimsically change the goalpost, and determine what can, and cannot, be considered a similar product , at the time of evaluation of bids, disrupts the level playing field for bidders and extinguishes healthy competition. The respondents have argued that smartphones and tablets are separate products, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the tender. The High Court reiterated that in the first place, the terms and conditions were clear and if at all they were ambiguous, it could not be left to the option of tender floating authority to interpret it in a manner which is contrary to their plain meaning. The High Court said thus: - 47. We are conscious of the scope of judicial scrutiny in tender matters. We are also conscious that the tender floating authority is best person to interpret the terms of the tender, as they know what best is the requirement and how to achieve the same. (see Tata Cellular v. UOI (1994) 6SCC 651) However, the authorities cannot act arbitrarily, whimsically and contrary to the terms and conditions of the tender. As noticed hereinabove, the terms and conditions of the tender are clear. However, even if the terms of the tender are unclear and ambiguous, can it be left to the option of the tender floating authority to interpret it in a manner which is contrary to their plain meaning? The answer is No . 11.6. With the aforementioned reasons, findings and observations, the High Court proceeded to allow the writ petition and held the rejection of the technical bid of the writ petitioner as unrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Communication Devices and Accessories within sub-category Personal Communication Devices . The Smart Phones also fall under the category Data Voice or Multimedia Network Equipment or Platforms and Accessories within subcategory Digital Mobile Equipment and Components . With such categorisation, the learned Solicitor General would argue, the stand of the appellant-NVS is fortified that Smart Phones do not fall under same or similar category products as Tablets . It has further been argued that the terms were clear and none of the participating bidder found any ambiguity therein and hence, provided the requisite details of the supplies pertaining to Tablets only, except the writ petitioner. There was neither any ambiguity nor anyone asked for any clarification including the writ petitioner and only request was for reducing the past performance quantity from 80% to 40% whereupon, the quantity was reduced by corrigendum to 60%. The contention, thus, has been that everyone including the writ petitioner well understood the requirement in the past performance criterion as being that of supply of Tablet computers only. 12.3. It has further been submitted that the expressions same or simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... features. We shall refer to the relevant contents of this table too hereafter later. 13. More or less similar submissions have been made by the learned senior counsel appearing on behalf of the appellant-Agmatel (successful bidder) while supplementing that the High Court has erred in going into the technical evaluation of two products and their similarity; and this remains an impermissible area for judicial review, as held by this Court in the case of Galaxy Transport Agencies v. New J K Roadways: 2020 SCC OnLine SC 1035. The learned senior counsel has further argued that the view taken by the tender inviting authority and its evaluation committee remains a reasonable view that Smart Phones are not similar to Tablets . In this regard, the learned senior counsel has, apart from reiterating the categories specified on the online portal GeM, has also referred to the classification of Tablet computers by the Central Board of Excise and Customs under Section 151A of the Customs Act, 1950 while specifically noting that a Tablet computer is different from a Smart Phone , as it is an automatic data processing machine classifiable under the heading 847130 and not 8517. Learned senior couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablets. 14.2. With the aforesaid details and comparisons, it has been contended on behalf of the writ petitioner that the interpretation sought to be suggested by the tender inviting authority in the present case is entirely unreasonable and has rightly been interfered with by the High Court. It has also been submitted that in the present case, the tender inviting authority has attempted to exercise its discretion to suit a particular bidder and to curb the competition on rather inconsistent grounds by attempting to distinguish between otherwise identical products. It is contended that when the tender inviting authority was conscious of the terms stated in a particular manner, it cannot be permitted to change such terms by way of interpretation to suit a particular bidder or by taking away the level playing field. The submission has been that Smart Phones and Tablets are rather synonymous terms and the stand of the appellants deserves to be disapproved. 14.3. It has also been submitted on behalf of the writ petitioner that in fact, it has been awarded another contract for supply of 3,00,000 tablets and it had been regularly supplying various electronic products, including tablets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given. (page 825) (emphasis supplied) 15. In the judgment in Bharat Coking Coal Ltd. v. AMR Dev Prabha 2020 SCC OnLine SC 335, under the heading Deference to authority's interpretation , this Court stated: 51. Lastly, we deem it necessary to deal with another fundamental problem. It is obvious that Respondent No. 1 seeks to only enforce terms of the NIT. Inherent in such exercise is interpretation of contractual terms. However, it must be noted that judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes. 52. In the present facts, it is clear that BCCL and India have laid recourse to Clauses of the NIT, whether it be to justify condonation of delay of Respondent No. 6 in submitting performance bank guarantees or their decision to resume auction on grounds of technical failure. BCCL having authored these documents, is better placed to appreciate their requirements and interpret them. (Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., (2016) 16 SCC 818) 53. The High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment of the documents that have been supplied to this Court, it is well settled that unless arbitrariness or mala fide on the part of the tendering authority is alleged, the expert evaluation of a particular tender, particularly when it comes to technical evaluation, is not to be second-guessed by a writ court. Thus, in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, this Court noted: 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 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s expertise and technical capability and capacity must be assessed by the experts. In the matters of financial assessment, consultants are appointed. It is because to check and ascertain that technical ability and the financial feasibility have sanguinity and are workable and realistic. There is a multi-prong complex approach; highly technical in nature. The tenders where public largesse is put to auction stand on a different compartment. Tender with which we are concerned, is not comparable to any scheme for allotment. This arena which we have referred requires technical expertise. Parameters applied are different. Its aim is to achieve high degree of perfection in execution and adherence to the time schedule. But, that does not mean, these tenders will escape scrutiny of judicial review. Exercise of power of judicial review would be called for if the approach is arbitrary or mala fide or procedure adopted is meant to favour one. The decision-making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the two acceptable methods of calculation of net cash profit was not taken into account without any reason. In the given facts, the decision of the authority concerned was found to be arbitrary, whimsical and unreasonable. The said decision in Reliance Energy Ltd. (supra) has no direct application to the facts of the present case and even otherwise, it has not been the finding of the High Court that the term stated by the tender inviting authority-NVS was lacking in certainty. However, beyond this, as to which particular product was to be treated as similar category product, could not have been a matter of interpretative exercise by the Court, particularly when the view taken by the tender inviting authority and its evaluation committee has not been shown to be absurd or irrational or suffering from mala fide. 20. It has also rightly been pointed out by the appellants, with reference to the decision in Afcons Infrastructure Limited (as extracted in the quotation hereinabove), that an interpretation by owner or employer of a project to the tender document may not be acceptable to the Constitutional Courts but that, by itself, would not be a reason for interfering with the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut by the tender inviting authority-NVS does not deserve interference. Similarly, if in some of the notice inviting tenders, both smart phones and tablets were stated, or in some of the tenders, specific product tablet alone was stated, that would also not be decisive because that would, obviously, depend on the purpose for which the procurement was being made; and the procuring party, i.e., the tender inviting authority, ought to be extended the latitude to decide on its requirements. 22. In the same context, we may also deal with another feature of this case related with the supplies made by the writ petitioner to different organisations pursuant to different tender notices. 22.1. As noticed, the writ petitioner, in order to assert its fulfilment of the above referred Past Performance criterion, has relied upon the statements made by its OEM in the letter dated 16.04.2021. That reads as under: - PO details in FY 2019-20 (Single Year): Past Performance Clause Sr.No. Organisation Name PO Completion Certificate Quantity (Units) 1 Punjab Infotech PICTC/IT eG/2019/ 2872 dated 25.11.2019 1,75,443 2 Director ate of Welfare of Scheduled Castes- Assam DSC./Spl.Grant/T B/539/2019/45 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lified in technical bid. 22.3. The writ petitioner has also referred to the several such contracts where both the products, tablets and smart phones, have been procured simultaneously while suggesting that these terms have even been used interchangeably. On the other hand, the appellant-NVS has stated in detail that the supplies of Tablets by the writ petitioner fell short by 10.20% to 60% criterion and the writ petitioner was, in fact, largely supplying smart phones and not tablets. As regards the organisations and their tender processes referred by the writ petitioner, various comments have been offered by the appellant-NVS in a tabular form; the relevant parts thereof read as under: - Purchases/ Tenders referred by Resoursys Telecom through its WP no. 6676/2021 and additional affidavit filed therein Purchaser Purpose Objectives Claim through the WP Reply of NVS HP State Electronics Development Corporation Ltd. (for Himachal Pradesh Govt.) Rate Contract for procurement of android based smartphones HP State Electronics Development Corp had placed smartphones Tablets at par in the e-tender documents **Since, the referred tender was itself for smartphones, hence no compatibility and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion of smart phones in past experience. **The bid process was floated 6 years back. Department of Education, Govt. of Bihar Expression of interest (EOI) for selection of agencies for supply and service of Elearning tablets. In the tender documents under clause 3.7.3, the criteria is mentioned that the bidder should be either OEM or authorized supplier of Mobiles/ Tablets. **It is Expression of Interest not a Tender. **Referred bidder has prepared the documents of bid as per their need, expertise and familiarity. However, NVS has floated the bid of procuring Tablet on GeM portal, Govt of India adhering to the all norms provisions of bidding process. **Prequalification criteria are distinct from the NVS criterias. **Past performance criteria mentioned in clause 4 by NVS and criteria referred by the bidder under clause 3.7.3 are distinct. Govt. of Bihar, Rural Development Department Tender for procurement of Tablet and related accessories for BRDS under BIPS project Rural Development Department, Govt. of Bihar considered experience of products like tablet and smartphones under similar products. **The matter of NVS is distinct as no query was raised by the anyone of prospective bidde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23. Viewed from any angle, interference by the High Court in this matter does not appear justified, particularly when no case of mala fide or bias is alleged. Every decision of the administrative authority which may not appear plausible to the Court cannot, for that reason alone, be called arbitrary or whimsical. The High Court, in the present matter has obviously proceeded with an assumption that the view as being taken by it, in acceptance of the case of the writ petitioner, was required to be substituted in place of the views of the tender inviting authority. That has been an error of law and cannot sustain itself in view of the consistent binding decisions of this Court, including the 3-Judge Bench decision in Galaxy Transport (supra). 24. The High Court, while supporting its process of reasoning, has referred to such principles which, with respect, we find entirely inapposite and beyond the periphery of the question involved in the present case. As noticed, in such matter of contracts, the process of interpretation of terms and conditions is essentially left to the author of the tender document and the occasion for interference by the Court would arise only if the questioned d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion would always remain as to which of the two interpretation is to be accepted? Obviously, to avoid such unworkable scenarios, the principle is that the author of the tender document is the best person to interpret its documents and requirements. The only requirement of law, for such process of decisionmaking by the tender inviting authority, is that it should not be suffering from illegality, irrationality, mala fide, perversity, or procedural impropriety. No such case being made out, the decision of the tender inviting authority (NVS) in the present case was not required to be interfered with on the reasoning that according to the writ Court, the product Smart Phone ought to be taken as being of similar category as the product Tablet . 25. It has also been argued on behalf of the writ petitioner that the reasons for rejection by NVS have not been consistent. We are unable to find any inconsistency in the reasons assigned by the appellant-NVS in rejection of the bid of the writ petitioner. In the initial information, only this much was stated that there was a mismatch of technical specification but, when required further by the writ petitioner, the appellant-NVS elaborated, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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