advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Monday, February 17, 2014

Technical bid & price bid - two Bids - Six were selected - the respondent No.2 quoted less bid, he was awarded with contract works - 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.- Writ - D.B. Declined to interfere as there is no fraud, illegality etc., in allotment of contract - Apex court dismissed the appeal and further held that in the absence of fraud, illegality etc., no court should interfere with the judgement of experts which accepted the bid and allotted contract simply because some of the experts differ with the opinion of experts = M/s Siemens Aktiengeselischaft & S. Ltd. …Appellant Versus DMRC Ltd. & Ors. …Respondents = 2014 ( Feb. Part) judis.nic.in/supremecourt/filename=41226

Technical bid & price bid  - two Bids - Six were selected -  the respondent No.2 quoted less bid, he was awarded with contract works -  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.- Writ - D.B. Declined to interfere as there is no fraud, illegality etc., in allotment of contract - Apex court  dismissed the appeal and further held that in the absence of fraud, illegality etc., no court should interfere with the judgement of experts which accepted the bid and allotted contract simply because some of the experts differ with the opinion of experts =
D.B. Delhi High court 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  High  Court  held
that the bidders were well aware of and had accepted the  tender  conditions
which were free  from  any  vagueness  or  uncertainty.  The  parameters  of
evaluation conditions were also held to have been applied uniformly  to  all
the bidders under a  procedure  that  was  open,  transparent  and  fair  as
required by  law.  
The  present  appeal  assails  the  correctness  of  that
judgment and order.  =
That
the Committee comprised a former Finance  Secretary  to  the  Government  of
India and a Civil Engineer, none of whom could claim to  be  expert  in  the
field relevant to the achievability of the GEC values, was not  disputed  by
Mr. Parasaran who urged that the Committee may have  taken  the  opinion  of
some experts on the subject.  Even assuming that  the  Committee  has  taken
expert advice regarding the tenability of the GEC values offered by  HR,  it
would simply mean that there is a conflict between the views  taken  by  the
experts of DMRC and those consulted by the  Committee.   Any  such  conflict
cannot be resolved by this Court in  exercise  of  its  powers  of  judicial
review.  So long  as  the  view  taken  by  the  experts  of  the  authority
competent to take a final decision is a possible view  the  very  fact  that
some other experts have expressed doubts about  the  sustainability  of  the
GEC values will not be enough for us to declare that the values  offered  by
HR are indeed  unachievable.   
This  Court  has  in  Federation  of  Railway
Officers Association v. Union  of  India  (2003)  2  SCR  1085,  stated  the
wholesome principle applicable in such situations in the following words:

           “Further, when technical questions  arise  and  experts  in  the
           field have expressed various views and all  those  aspects  have
           been taken into consideration by the Government in deciding  the
           matter, could it still be said that this Court should re-examine
           to interfere with the same. The  wholesome  rule  in  regard  to
           judicial interference in administrative decisions is that if the
           Government  takes  into  consideration  all  relevant   factors,
           eschews from considering irrelevant factors and acts  reasonably
           within the parameters of the law,  courts  would  keep  off  the
           same.”



30.   Reference may also be made to the  decision  of  this  Court  in  N.D.
Jayal v. Union of India (2004) 9 SCC 362 where this Court observed:

           “This Court cannot sit in judgment  over  the  cutting  edge  of
           scientific analysis relating  to  the  safety  of  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 the matter was pending in  this  Court,  the  Government
has simply placed the report of the Committee in  a  sealed  cover  for  the
Court to decide as to what value has to be attached to it.  
That  being  the
position, the preparation and submission of a  report  that  does  not  even
take the view point of the party  affected  by  it  into  consideration  can
hardly provide to this Court a good reason to scuttle the entire process  at
this stage when HR, the successful bidder,  has  already  taken  substantial
steps in the direction of executing the works allotted to it.

32.   Last but not the least, if the note submitted by the Director  in  the
MoUD is an indication of what the Committee may have  said,  the  difference
in the GEC values pointed out in the report of the Director,  may  have  led
to CAF which was also an  eligible  bidder  emerging  as  L-1  and  not  the
appellant.  
In terms of cost of the project it would hardly make  a  sizable
difference so as to justify a reversal of the steps that have  already  been
taken for execution of a project  that  is  of  utmost  importance  for  the
people living in the national capital execution whereof can brook  no  delay
especially when the same is being financed by an  agency  from  outside  the
country.
 In the result this appeal fails and is, hereby, dismissed  with  costs
of Rs.5,00,000/- to be deposited  within  six  weeks  from  today  with  the
Supreme Court Advocates-on-Record Welfare Fund.

2014 ( Feb. Part) judis.nic.in/supremecourt/filename=41226
T.S. THAKUR, C. NAGAPPAN

                                     REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                       CIVIL APPEAL NO.  2068  OF 2014
                (Arising out of S.L.P. (C) No.19233 of 2013)


M/s Siemens Aktiengeselischaft & S. Ltd.                …Appellant

      Versus

DMRC Ltd. & Ors.                             …Respondents




                               J U D G M E N T

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  High  Court  held
that the bidders were well aware of and had accepted the  tender  conditions
which were free  from  any  vagueness  or  uncertainty.  The  parameters  of
evaluation conditions were also held to have been applied uniformly  to  all
the bidders under a  procedure  that  was  open,  transparent  and  fair  as
required by  law.
The  present  appeal  assails  the  correctness  of  that
judgment and order.  
Alstom Transport India Ltd. & Ors.-Writ-Petitioners  in
connected Writ Petition No.2615 of  2013  have,  however,  remained  content
with the view taken by the High Court and have not chosen to appeal.

3.     Respondent-Delhi  Metro  Rail  Corporation  (‘DMRC’  for  short)  has
planned to implement Phase-III of the MRTS for Delhi to keep pace  with  the
ever increasing traffic demands in Delhi.   Phase-III  of  the  MRTS,  Delhi
comprises metro corridors of Mukundpur-Rajori Garden-Dhaula Kuan  -  Maujpur
- Gokulpuri  and  Janakpuri  (West)–Munirka  -  Kalkaji  -  Kalindi  Kunj  -
Botanical Garden - (Noida). The project, it is common  ground,  is  financed
with the help of a  loan  secured  by  the  DMRC  from  Japan  International
Cooperation Agency (‘JICA’ for  short).  The  loan  agreement,  inter  alia,
stipulates the bid procedure to be followed by DMRC.
What is  noteworthy  is
that the procedure, inter alia, provides for submission of tenders  to  JICA
for review, concurrence and analysis of bids by the DMRC and  reserves  with
the JICA the discretion to convey its views regarding the  analysis  of  the
bids and the proposal for award of the works.

4.    In keeping with the requirements of the  agreement  between  DMRC  and
JICA, the former invited sealed tenders in  two  parts  (Technical  &  Price
Bid) on International Competitive  Bid  (‘ICB’  for  short)  basis  for  the
design, manufacture, supply, testing,  commissioning  and  training  of  486
number of Standard Gauge Cars Electrical Multiple units referred to  earlier
at an estimated budget cost  of  Rs.3500  crores  funded  by  JICA.  Pre-bid
meetings were held to answer the queries, if any,  raised  by  the  bidders.
The DMRC in the meantime issued as many as 9 Addenda which necessitated  the
change in the dates fixed for submission of bids to enable  the  bidders  to
formulate their offers and make their bids in accordance with the terms  and
conditions finally stipulated for  the  purpose.  DMRC  eventually  received
eight bids  including  one  submitted  by  the  appellant  before  us.   The
technical 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.
price quotations of the six bidders found eligible were as under:



|Bidder             |Grand Total in |INR per Car  |Position before |
|                   |INR            |(without     |Loading due to  |
|                   |               |loading)     |difference in   |
|                   |               |             |GEC values      |
|Siemens Consortium |3625,27,92,409 |7,45,94,223  |L-1             |
|Bombardier         |4242,27,83,378 |8,72,89,678  |L-2             |
|Consortium         |               |             |                |
|Hyundai ROTEM      |4290,57,94,689 |8,82,83,528  |L-3             |
|Alstom Consortium  |4373,87,65,001 |8,99,97,459  |L-4             |
|CAF Consortium     |4614,18,66,794 |9,49,42,113  |L-5             |
|Hitachi + BHEL     |4891,32,60,656 |10,06,44,569 |L-6             |





5.    Significantly, however, the above did not represent the true inter  se
position of  the  bidders.   That  was  so  because  apart  from  the  price
quotation, the terms and conditions of the tender  notice  required  loading
of GEC values duly converted into Indian rupee to  the  price  quotation  of
each eligible  bidder.  The  GEC  values  in  turn  comprised  two  distinct
components, namely, ‘X’ factor representing the electricity consumption  for
the operation of the train without HVAC and  ‘Y’  factor  for  operation  of
HVAC.
The GEC values offered by the six bidders found technically  compliant
were as under:



|S.No.  |Bidder       |Other than   |HVAC (‘Y’)   |Total|
|       |             |HVAC (‘X)    |             |     |
|1      |ALSTOM       |1434         |595          |2029 |
|2      |BTC          |1621         |564          |2185 |
|3      |CAFC         |1159         |790          |1949 |
|4      |HBC          |1767         |514          |2281 |
|5      |HRC          |1259         |567          |1826 |
|6      |SIEMENS      |1560         |786          |2346 |


6.    In terms of Annexure ITT-8 the GEC value of respondent No.2 which  was
the lowest was taken as the baseline for the purpose of  loading  the  rupee
equivalent of the higher values offered by other bidders on to  their  price
bids.
The Indian rupee conversion of the  said  value  above  the  baseline,
proportionate to the higher GEC values was worked out as under:



|S.No.|Bidder   |GEC       |GEC for    |INR                 |
|     |         |(‘X’ +    |loading    |                    |
|     |         |‘Y’)      |           |                    |
|     |         |KWH       |           |                    |
|1    |ALSTOM   |2029      |203        |6,911,264,587.08    |
|2    |BTC      |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          |0                   |
|     |         |          |(baseline) |                    |
|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     |INR per|Posit|Grand     |INR per |Posit|Total|SEC |
|       |Total in  |Car    |ion  |Total     |Car     |ion  |Energ|valu|
|       |INR       |(withou|befor|(with     |(with   |after|y    |e   |
|       |          |t      |e    |energy    |loading)|loadi|(kWH)|(kWH|
|       |          |loading|Loadi|loading)  |        |ng   |     |/   |
|       |          |)      |ng   |in INR    |        |     |     |1000|
|       |          |       |     |          |        |     |     |GTKM|
|       |          |       |     |          |        |     |     |)   |
|Siemens|3625,27,92|7,45,94|L-1  |5395,65,24|11,10,21|L-4  |2346 |55.7|
|Consort|,409      |,223   |     |,355      |,655    |     |     |1   |
|ium    |          |       |     |          |        |     |     |    |
|Bombard|4242,27,83|8,72,89|L-2  |5464,51,67|11,24,38|L-5  |2185 |51.8|
|ier    |,378      |,678   |     |,548      |,616    |     |     |9   |
|Consort|          |       |     |          |        |     |     |    |
|ium    |          |       |     |          |        |     |     |    |
|Hyundai|4290,57,94|8,82,83|L-3  |4290,57,94|8,82,83,|L-1  |1826 |43.3|
|ROTEM  |,689      |,528   |     |,690      |528     |     |     |6   |
|Alstom |4373,87,65|8,99,97|L-4  |5065,00,29|10,42,18|L-3  |2029 |48.1|
|Consort|,001      |,459   |     |,588      |,168    |     |     |8   |
|ium    |          |       |     |          |        |     |     |    |
|CAF    |4614,18,66|9,49,42|L-5  |5032,94,80|10,35,58|L-2  |1949 |46.2|
|Consort|,794      |,113   |     |,313      |,601    |     |     |8   |
|ium    |          |       |     |          |        |     |     |    |
|Hitachi|4891,32,60|10,06,4|L-6  |6440,40,26|13,25,18|L-6  |2281 |54.1|
|+ BHEL |,656      |4,569  |     |,108      |,572    |     |     |7   |


8.    It is evident from a comparative study of the charts extracted  above,
that while the appellant was L-1 in the price  bid,  it  went  down  to  L-4
after GEC value was loaded to its price bid.   
On  the  contrary  respondent
No.2-HR who was L-3 in the price bid rose to L-1 position on account of  its
low GEC value in comparison to a higher GEC value offered by the  appellant.


9.    Allotment of the award in favour of HR as  the  lowest  bidder,  thus,
appeared as a writing on the wall to the appellant who sent a  communication
dated 12th February, 2013 to DMRC alleging that the GEC  values  offered  by
HR were  untenable  and  unsustainable  and  pointing  out  that  since  the
appellant’s price bid  was  lesser  than  that  of  the  HR  by  665  crores
(approx.) it should be taken as L-1 instead  of  determining  the  inter  se
position of the bidders on the basis of a supposedly anticipated  saving  in
the consumption of energy on a lifecycle of 30 years.
Yet  another  letter
dated 25th February, 2013 the appellant  called  for  evaluation  of  energy
values by an independent third party agency so as to ascertain  whether  the
GEC values offered by HR were  achievable.  Yet  another  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 award of the contract in  favour
of HR, the successful bidder.
He contended that the tender notice  no  doubt
required GEC values to be offered by the bidders to be made use  of  in  the
process of the evaluation of the bids but such values  were  not  sacrosanct
or immune from scrutiny and evaluation to determine whether  the  same  were
at all achievable.
He submitted that since all  the  six  bidders  competing
for the contract are significant players in the international  market,  they
could with a reasonable amount of certainty  say  whether  or  not  the  GEC
values offered by the bidders were sustainable.
It  was  contended  by  Mr.
Lalit that while the GEC value offered by the  appellant  was  the  highest,
the one offered by the respondent  successful  bidder  for  ‘X’  factor  was
wholly untenable.
He urged that the terms of the tender notice required  the
GEC values offered by the bidders to be validated before they could be  used
for processing  the  bids.
He  drew  considerable  support  from  a  report
submitted by the Director, Ministry  of  Urban  Development,  Government  of
India, to suggest that the stimulation test conducted by DMRC as a  part  of
the process of verification and validation of the GEC value  offered  by  HR
was not accurate and urged that the Government of India had appointed a two-
member Committee to check the evaluation process of the  bids.
The  report
of the Committee filed by the Government in this Court  in  a  sealed  cover
could, according to the learned Counsel, throw  considerable  light  on  the
subject and help this Court in deciding whether an independent  verification
of the GEC values was necessary.

12.   Mr. Andhyarujina, learned counsel  for  the  respondent-DMRC,  on  the
other hand, argued that the bids offered  by  the  eligible  tenderers  were
evaluated by three different Committees i.e. the Evaluation  Committee,  the
Appraisal Committee and finally by  the  Tender  Committee  in  a  fair  and
transparent manner. On receipt of the representations  from  the  appellant-
Siemens, Bombardier, Alstom and Hitachi regarding the GEC values offered  by
HR, the Board of Directors of DMRC constituted a sub-Committee  to  consider
the  said  representations.  The  Board  sub-Committee  consisted   of   six
directors out of whom three were Functional  Directors  besides  MD  of  the
DMRC, a nominee Director of MoUD of  Indian  Railways  and  one  independent
Director.  The Sub-Committee met on 4th and 5th March, 2013  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 unit, argued the learned counsel.   This  implies  that  the
lowest tenderer is under an onerous obligation to make good the  GEC  values
or else end up paying a penalty at a rate which is higher  than  the  amount
by which the financial bid has been loaded on a per unit  of  energy  basis.
The Letter of Acceptance issued to HR also makes a  specific  provision  for
levy of penalty and, thus, fully secures the interest of the DMRC.

14.    Reliance  upon  the  additional  documents  and  the  report  of  the
Committee appointed by the MoUD was, according to Mr.  Andhyarujina,  wholly
misplaced.  He submitted that there was no occasion for  the  Government  to
appoint a Committee for evaluation of the bids received by  DMRC  which  was
an autonomous entity.  The appointment of the Committee at the  instance  of
the Minister in disregard of the observations made  by  the  Secretary  MoUD
was not proper, argued the learned counsel, especially when the  matter  was
pending  adjudication  before  the  High  Court.  The  appointment  of   the
Committee was in any case not disclosed to the High Court by  the  Union  of
India on 1st May, 2013 when the matter was taken  up  for  hearing.  It  was
contended that the DMRC had at  all  times  maintained  that  there  was  no
question of any enquiry by an outside body regarding the evaluation  of  the
bids received by it not even by the Government of India.   He  drew  support
for that submission from the  following  statement  made  in  the  affidavit
filed by the Union of India in this Court:

           “All tenders are floated and finalized by respective Metro  Rail
           Corporations   including   DMRC.   MoUD   has   no    role    in
           award/cancellation of any contract/tender.”




15.   It was argued that the DMRC had also in its reply dated  14th  August,
2013 sent to the Government clearly stated that it would not respond to  the
preliminary observations of the Committee as the matter had in the  meantime
travelled to this Court and was sub judice.  Legal opinion obtained  by  the
DMRC from a Senior Advocate of this Court, also advised  that  in  a  matter
that is sub judice, any report by any outside  Enquiry  Committee  appointed
by the Government would be  impermissible  and  improper  nor  would  it  be
advisable for DMRC to participate in any such exercise.  In the premises  it
was contended that the Report by the Enquiry  Committee  submitted  to  this
Court in a sealed cover need not be looked  into  as  the  same  was  wholly
extraneous to a judicial review 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
& 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  subjudice  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  Department  but
was tantamount to interference with the course  of  justice.   Relying  upon
the decision of the Full Bench of the High Court of Patna  in  The  King  v.
Parmanand and Ors. AIR 1949 Patna 222 and D. Jones Shield v.  N.  Ramesam  &
Ors. AIR 1955 AP 156;  In Re: P.C. Sen AIR 1970 SC  1821  and  Jang  Bahadur
Singh v. Baij Nath Tiwari AIR 1969 SC 30, Mr. Venugopal argued that  when  a
matter is pending adjudication before a Court of law, nothing  can  be  done
which might disturb the course of justice by  either  interfering  with  the
judicial process or prejudging the merits of the case  or  by  usurping  the
functions of the  Court  having  seisin  over  the  proceedings.   Any  such
practice, argued the learned counsel, was  fraught  with  danger  and  would
amount to opening the door for  contempt  for  those  responsible  for  such
interference. It was  further  contended  by  Mr.  Venugopal  that  judicial
review in tender cases was limited to examining the decision-making  process
and not the decision itself. Reliance in  support  of  that  submission  was
placed by the learned counsel upon the  decisions  of  this  Court  in  Tata
Cellular v. Union of India (1994) 6 SCC 651; Asia Foundation &  Construction
Ltd.  v.  Trafalgar  House  Construction   (1997)   1   SCC   738;   Monarch
Infrastructure (P) Ltd. v. Ulhasnagar Municipal Corpn., (2000)  5  SCC  287;
Jagdish Mandal v. State of Orissa (2007) 14 SCC  517  and  Heinz  India  (P)
Ltd. v. State of U.P. (2012) 5 SCC 443.  It was submitted that the  decision
making process in the instant case was transparent, fair and reasonable  and
that the  High  Court  had  after  a  careful  examination  of  all  aspects
correctly held that there was no illegality  or  irregularity  in  the  said
process to warrant interference.

17.   Principles governing judicial review of administrative  decisions  are
now fairly well-settled by a long line of decisions rendered by this  Court,
since the decision of this Court in Ramana Dayaram Shetty  v.  International
Airport Authority of India and Ors. (1979) 3 SCC 489 which  is  one  of  the
earliest cases in which  this  Court  judicially  reviewed  the  process  of
allotment of contracts by an instrumentality of the State and declared  that
such process was amenable to judicial review. Several  subsequent  decisions
followed and applied the law to  varied  situations  but  among  the  latter
decisions one that reviewed the  law  on  the  subject  comprehensively  was
delivered by this Court 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 accepted  moral  standards  that  no
           sensible person who had applied his mind to the question  to  be
           decided could have arrived at the same; and


      (iii)       whether there was any procedural impropriety committed  by
           the decision making authority while arriving at the decision.


18.   The principles governing judicial review were then formulated  in  the
following words:

      (i)   The modern trend points to judicial restraint in  administrative
           action.


      (ii)  The court does not sit as a court of appeal but  merely  reviews
           the manner in which the decision was made.


      (iii)       The court does not  have  the  expertise  to  correct  the
           administrative decision.  If  a  review  of  the  administrative
           decision is permitted it will be substituting its own  decision,
           without the necessary expertise which itself may be fallible.


      (iv)  The terms of the invitation to tender cannot be open to judicial
           scrutiny because the invitation to tender is  in  the  realm  of
           contract. Normally speaking, the decision to accept  the  tender
           or award the contract is  reached  by  process  of  negotiations
           through several tiers. More often than not, such  decisions  are
           made qualitatively by experts.


      (v)   The Government must have freedom of contract. In other words,  a
           fair play in the  joints  is  a  necessary  concomitant  for  an
           administrative body functioning  in  an  administrative  sphere.
           However, the decision must not only be tested by the application
           of Wednesbury principle of reasonableness (including  its  other
           facts pointed out above) but must be free from arbitrariness not
           affected by bias or actuated by mala fides.


      (vi)  Quashing decisions may impose heavy administrative burden on the
           administration and lead to increased and unbudgeted expenditure.



19.   In M.P. Oil Extraction v. State of M.P. & Ors. (1997) 7 SCC 592,  this
Court held that if an objective and rational foundation for the fixation  of
royalty is disclosed, the Court will not  interfere  with  the  exercise  of
governmental decision by undertaking an exercise  to  determine  whether  or
not a better fixation was possible in the circumstances. This  Court  struck
a note of caution that in economic and policy matters the scope of  judicial
review was limited.

20.   It is unnecessary and platitudinous for us  to  burden  this  judgment
with reference to the decisions  of  this  Court  on  the  subject  for  the
governing principles are so well-known and well-settled that 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 & 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  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 prejudice to a tenderer, is made out. The power of
           judicial review will not be permitted to be invoked  to  protect
           private interest at the cost of public interest,  or  to  decide
           contractual disputes.”


                                                         (emphasis supplied)





21.   More recently in Heinz India (P) Ltd. & Anr. v. State of U.P.  &  Ors.
(2012) 5 SCC 443, this  Court  speaking  through  one  of  us  (Thakur,  J.)
examined the legal dimensions of judicial review and  quoted  with  approval
the following passage from Reid v. Secy. of State for Scotland (1999) 1  All
ER 481 which succinctly sums up the law.

               “Judicial review involves a challenge to the legal  validity
           of the decision. It does  not  allow  the  court  of  review  to
           examine the evidence with a view to forming its own  view  about
           the substantial merits of the case. It may be that the  tribunal
           whose decision is being challenged has done something  which  it
           had no lawful authority to do. It may have abused or misused the
           authority which it had. It may have departed from the procedures
           which either by statute or at common law as a matter of fairness
           it ought to have observed. As regards the  decisions  itself  it
           may  be  found  to  be  perverse,  or  irrational   or   grossly
           disproportionate to what was required. Or the  decision  may  be
           found to be erroneous in respect of a legal deficiency,  as  for
           example, through the  absence  of  evidence,  or  of  sufficient
           evidence, to support it,  or  through  account  being  taken  of
           irrelevant matter, or through a failure for any reason  to  take
           account of a relevant matter, or through some misconstruction of
           the terms of the statutory provision which the decision-maker is
           required to apply.  But  while  the  evidence  may  have  to  be
           explored in order to see if the decision  is  vitiated  by  such
           legal deficiencies it is perfectly clear that in case of review,
           as distinct from an ordinary appeal, the court may not set about
           forming its own preferred view of evidence.”




22.   There is no gainsaying that in any challenge to the award  of  contact
before the High Court and so also before this 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 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.   That  contention  does  not
suggest any illegality in the  process  of  allotment  of  the  contract  in
favour of HR, for no violation of any law, rule or regulation governing  the
process of  invitation  of  tenders  by  the  DMRC  or  its  evaluation  and
acceptance has been alleged or argued  before  us.   No  such  statutory  or
other provision has been brought to our notice which could possibly  provide
to the appellant a reason to contend that the allotment of the contract  was
itself illegal or in breach of any such provision  or  procedure  prescribed
thereunder.  It is no body’s case that  the  decision-making  authority  had
not understood the law that regulates its decision making  power  or  failed
to give effect to it.  We have, therefore, no  hesitation  in  holding  that
the allotment of contract did not  suffer  from  any  illegality  as  it  is
understood in the matter of judicial review of administrative action and  as
that expression has  been  used  by  this  Court  in  Tata  Cellular’s  case
(supra).  It is also not the case of the petitioner that the decision  taken
by the DMRC is so outrageous in its defiance  of  logic  or  accepted  moral
standards that no sensible person  who  had  applied  his  mind  could  have
arrived at the same. Perversity or irrationality  in  the  decision  or  the
decision making process is also not a ground that  can  be  invoked  in  the
case at hand.

24.    The  contention  urged  by  Mr.  Lalit  may  at  best  constitute  an
irregularity in the process of evaluation of the bids. That an  irregularity
can itself, in certain situations result in invalidating a  process,  cannot
be disputed.  The question, however, is whether there was  any  irregularity
in the evaluation of the bids in the present case  and  if  so  whether  the
same was sufficient to invalidate the evaluation  process  or  the  ultimate
award of the contract.  Whether or not there was  any  irregularity  in  the
process of evaluation of the bids shall in turn have to  be  examined  by  a
reference to the conditions of the tender notice  under  which  the  tenders
were invited, received, processed, evaluated and  eventually  accepted.   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 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 by Mr. Lalit does  not  find
support from any provision in the tender notice. There  is  nothing  in  the
tender document to suggest that the GEC values had to be  tested  for  their
achievability. As rightly  contended  by  Mr.  Lalit  all  the  six  bidders
declared eligible are  world  leaders  in  the  field  and  have  sufficient
expertise and know-how not only about the design and technology  which  they
use but also about their capacity to validate their respective  GEC  values.
If that be so, DMRC  could  be  supremely  confident  that  the  GEC  values
offered by HR were achievable especially when such values  offered  by  some
of the bidders for X and Y factors were lower than those offered by HR.   At
any rate the DMRC had sufficiently protected itself because under the  terms
and conditions stipulated in the tender notice  failure  of  the  successful
tender to make good the GEC  values  offered  by  them  would  result  in  a
penalty which was higher than the GEC value factor that was  loaded  to  the
price bid. We, therefore, do not see any real basis for the contention  that
the DMRC was supposed to go any  further  than  it  did  in  protecting  its
interest. In the absence of any  specific  stipulation  or  requirement  for
validation of the GEC values by the DMRC and its experts or by  any  outside
agency such a requirement could not be  implied  into  the  tender  process.
Inasmuch as the DMRC found the bid offered by HR to be  acceptable,  keeping
in view  the  GEC  values  offered  by  it,  the  former  had  committed  no
illegality in the evaluation of the bids or in  making  its  choice  of  the
contractor.



25.   Secondly, because even assuming that the process of validation of  the
GEC  values  and  their  achievability  was  an  implied  condition  in  the
evaluation process,  DMRC  had  on  the  basis  of  an  internal  simulation
satisfied itself that the GEC values were not unachievable. The  High  Court
has referred to the simulation results and so has our attention  been  drawn
to the said result from the original record produced by DMRC. We do not  see
any illegality or irregularity in the process of verification  conducted  by
the DMRC to test the achievability of the GEC values.  It is true that  DMRC
had conducted the simulation in regard to the GEC values offered by HR  only
but then in the absence of any condition  in  the  tender  notice  requiring
DMRC to conduct such verification even in regard to other GEC values,  there
was no need for it  to  undertake  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  that  aspect  in
these proceedings especially  because  we  have  not  been  called  upon  to
initiate such contempt proceedings.  All that we need say is that  once  the
Government had known that the entire issue regarding  the  validity  of  the
process adopted by DMRC including  the  transparency  and  fairness  of  the
process of evaluation of the bids was subjudice before  the  High  Court  of
Delhi and later before this Court, it ought to have kept its hands  off  and
let the law take its  course.  It  could  have  doubtless  placed  all  such
material as was relevant to that question before the High Court and  invited
a judicial pronouncement on the  subject  instead  of  starting  a  parallel
exercise.  The Government could even approach the High Court  and  seek  its
permission to review the process of evaluation either by itself  or  through
an expert Committee if it felt that any such process would  help  the  Court
in determining the issues falling for consideration before  the  Court  more
effectively.  Nothing of that sort was,  however,  done.   On  the  contrary
even when the  Secretary  to  the  MoUD  pointed  out  that  the  matter  is
subjudice  and  any  further  action  in  the   matter   could   await   the
pronouncement of the Court, the Hon’ble Minister heading MoUD  directed  the
constitution of the Committee with the following terms:

           “2(1) To examine if a fair,  equitable  and  transparent  tender
           process was followed by DMRC, as per the prescribed guidelines”.




27.   We have no manner of doubt that the terms of reference  give  a  clear
indication that the process initiated  by  the  Government  was  a  parallel
process  of  the  adjudication  of  the  very  same  issue   as   fell   for
consideration before the High Court and at a later stage before this  Court.
 We fail to appreciate how the Government could  have  possibly  done  this.
Confronted with  this  situation  Mr.  Mohan  Parasaran,  learned  Solicitor
General, argued that a reference to the Committee was not meant  to  subvert
judicial process but to only find ways and means to formulate  policies  and
procedures for future allotment of  contracts.  We  have  no  hesitation  in
rejecting that submission. The Reference Order extracted  above  speaks  for
itself. It no where states that  the  Committee  has  to  look  at  anything
beyond the process of evaluation of tenders received by DMRC.  It  does  not
even remotely suggest that the Government is concerned about the  procedures
that may be followed in the future 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 Government did nothing of this kind, it did not  act
properly.  Beyond that we do not consider it  necessary  or  proper  to  say
anything at this stage.

29.   It was contended by  Mr.  Lalit  that  the  report  submitted  by  the
Committee appointed by the Government ought to be taken  as  expert  opinion
on the subject and given due weight.
That  position  was  disputed  by  Mr.
Andhyarujina appearing for DMRC and Mr. Venugopal  appearing  for  HR.
That
the Committee comprised a former Finance  Secretary  to  the  Government  of
India and a Civil Engineer, none of whom could claim to  be  expert  in  the
field relevant to the achievability of the GEC values, was not  disputed  by
Mr. Parasaran who urged that the Committee may have  taken  the  opinion  of
some experts on the subject.  Even assuming that  the  Committee  has  taken
expert advice regarding the tenability of the GEC values offered by  HR,  it
would simply mean that there is a conflict between the views  taken  by  the
experts of DMRC and those consulted by the  Committee.   Any  such  conflict
cannot be resolved by this Court in  exercise  of  its  powers  of  judicial
review.  So long  as  the  view  taken  by  the  experts  of  the  authority
competent to take a final decision is a possible view  the  very  fact  that
some other experts have expressed doubts about  the  sustainability  of  the
GEC values will not be enough for us to declare that the values  offered  by
HR are indeed  unachievable.   
This  Court  has  in  Federation  of  Railway
Officers Association v. Union  of  India  (2003)  2  SCR  1085,  stated  the
wholesome principle applicable in such situations in the following words:

           “Further, when technical questions  arise  and  experts  in  the
           field have expressed various views and all  those  aspects  have
           been taken into consideration by the Government in deciding  the
           matter, could it still be said that this Court should re-examine
           to interfere with the same. The  wholesome  rule  in  regard  to
           judicial interference in administrative decisions is that if the
           Government  takes  into  consideration  all  relevant   factors,
           eschews from considering irrelevant factors and acts  reasonably
           within the parameters of the law,  courts  would  keep  off  the
           same.”



30.   Reference may also be made to the  decision  of  this  Court  in  N.D.
Jayal v. Union of India (2004) 9 SCC 362 where this Court observed:

           “This Court cannot sit in judgment  over  the  cutting  edge  of
           scientific analysis relating  to  the  safety  of  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 the matter was pending in  this  Court,  the  Government
has simply placed the report of the Committee in  a  sealed  cover  for  the
Court to decide as to what value has to be attached to it.  
That  being  the
position, the preparation and submission of a  report  that  does  not  even
take the view point of the party  affected  by  it  into  consideration  can
hardly provide to this Court a good reason to scuttle the entire process  at
this stage when HR, the successful bidder,  has  already  taken  substantial
steps in the direction of executing the works allotted to it.

32.   Last but not the least, if the note submitted by the Director  in  the
MoUD is an indication of what the Committee may have  said,  the  difference
in the GEC values pointed out in the report of the Director,  may  have  led
to CAF which was also an  eligible  bidder  emerging  as  L-1  and  not  the
appellant.  
In terms of cost of the project it would hardly make  a  sizable
difference so as to justify a reversal of the steps that have  already  been
taken for execution of a project  that  is  of  utmost  importance  for  the
people living in the national capital execution whereof can brook  no  delay
especially when the same is being financed by an  agency  from  outside  the
country.

33.   In the result this appeal fails and is, hereby, dismissed  with  costs
of Rs.5,00,000/- to be deposited  within  six  weeks  from  today  with  the
Supreme Court Advocates-on-Record Welfare Fund.

                                                       ………………………….……….…..…J.
                                                               (T.S. THAKUR)





                                                      ……………….…………………..…..…J.
New Delhi                                              (C. NAGAPPAN)
February 14, 2014

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.