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Wednesday, October 19, 2016

in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd.[7] a two-Judge Bench eloquently exposited the test which is to the following effect:- “We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given.”- tenders are floated and offers are invited for highly complex technical subjects. It requires understanding and appreciation of the nature of work and the purpose it is going to serve. It is common knowledge in the competitive commercial field that technical bids pursuant to the notice inviting tenders are scrutinized by the technical experts and sometimes third party assistance from those unconnected with the owner’s organization is taken. This ensures objectivity. Bidder’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 malafide 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 court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 10143 OF 2016
                      (@ S.L.P. (C) No. 29297 of 2016)


Montecarlo Ltd.                                …Appellant(s)

                                   VERSUS

NTPC Ltd.                                    …Respondent(s)




                               J U D G M E N T

Dipak Misra, J.





      The respondent, NTPC Limited, had issued separate invitation for  bids
for development and operation  of  three  coal  mines,  viz.,  Dulanga  Coal
Block, Chatti Bariatu and Talaipalli in the State of  Odisha.   Online  bids
were invited on Single Stage Two Envelope Bidding basis (Envelope-I: Techno-
Commercial Bid and  Envelope-II:  Price  Bid).  There  was  stipulation  for
Reverse Auction from the  eligible  bidders.  It  was  also  stated  in  the
Invitation For Bids (IFB) issued  on  22.01.2016  that  the  bids  shall  be
received on 17.03.2016 and Envelope-I, that is, Techno-Commercial  Bid  will
be opened on 17.03.2016. The date of opening of Envelope-II, that is,  Price
Proposal shall be intimated separately.  Clause  5  of  the  IFB  stipulated
Qualifying Requirements (QR).  Clauses 5.1 and 5.1.2  dealt  with  technical
criteria.

2.    The respondent had also issued “Instructions To Bidders”  (ITB)  which
contain clauses as to how the proposal shall be conducted. Clause  6.3.1  of
ITB deals with Preliminary Examination of  Techno-Commercial  Proposals.  We
think it appropriate to reproduce the same:-

“6.3.1 Preliminary Examination of Techno-Commercial Proposals:

(a) OWNER will examine the Project Proposals to determine whether  they  are
complete, whether required  securities  have  been  furnished,  whether  the
documents have been properly signed and whether the bids  are  generally  in
order.

(b) Prior  to  the  detailed  evaluation,  OWNER  will  initially  determine
whether each  Techno  Commercial  Proposal  is  of  acceptable  quality,  is
generally  complete  and  is  substantially  responsive   to   the   bidding
documents.  For purposes of this determination, a  substantially  responsive
Proposal  is  one  that  conforms  to  all   the   terms,   conditions   and
specifications  of  the  bidding  documents  without  material   deviations,
objections,  conditionalities  or  reservations.   A   material   deviation,
objection, conditionality or reservation is one  (i)  that  affects  in  any
substantial way the scope, quality or  performance  of  the  contract;  (ii)
that  limits  in  any  substantial  way,  inconsistent  with   the   bidding
documents, the Owner’s rights or the successful Bidder’s  obligations  under
the contract;  or  (iii)  whose  rectification  would  unfairly  affect  the
competitive position of  other  Bidders  who  are  presenting  substantially
responsive Proposals.

(c) OWNER’s determination of a Techno Commercial  Proposal’s  responsiveness
is to be based on the contents of  the  Techno  Commercial  Proposal  itself
without recourse to extrinsic evidence.  If a Techno Commercial Proposal  is
not substantially responsive, it will be rejected  by  OWNER,  and  may  not
subsequently  be  made  responsive  by  the  Bidder  by  correction  of  the
nonconformity.”


3.    Clauses 6.3.2 6.3.2.1, 6.3.2.2 and 6.3.4  provide  for  Evaluation  of
Responsive   Techno-Commercial   Proposal,   Evaluation   of   Qualification
Proposals, Evaluation of  Technical  Proposals  and  Clarification  Meeting.
Clause 6.3.5 deals with the steps  where  the  responsive  Techno-Commercial
Proposal  which  meets  the  QR  specified  in  Chapter  7   and   Technical
Requirements specified in Chapter 8 of REF  Documents  and  stipulates  that
they shall be considered for Price Proposal Phase of  the  Bidding  Process.
It has also been provided therein that the bidders who meet QR specified  in
Chapter  7  and  Technical  Requirements  specified  in  Chapter  8  of  REP
documents shall be terms as “shortlisted bidders”.   Chapter 7 of ITB  deals
with technical criteria. Clauses 7.1.1 and  7.1.2,  being  significant,  are
extracted below:-

“7.1.1 The Bidder should have, in the preceding  7  (seven)  years  reckoned
from the date of opening of the Techno-commercial Bids developed &  operated
single coal/lignite mine  having  coal/lignite  reserves  of  at  least  150
million tonnes & annual capacity of at least 6 MTPA and produced at least  2
million tonnes of coal/lignite from such mine.

                                  OR

7.1.2 The Bidder should have, in the  preceding  7  (seven)  years  reckoned
from the date  of  opening  of  the  Techno-commercial  Bids,  operated  and
produced:

a) At least 23  Million  SCM  of  aggregated  volume  of  overburden  and/or
coal/lignite from a maximum of seven open cast  mines  of  Coal/Lignite,  in
any year.

b) At  least  11.5  Million  SCM  of  composite  volume  of  overburden  and
coal/lignite from single open cast mine in any year, out of which  at  least
3 million tonnes shall be coal/lignite.

The qualifying works at clause 7.1.2(a) can be from same mine  or  different
mines including the  mine  considered  to  meet  qualifying  requirement  at
clause 7.1.2(b).”

4.    At this stage, it is necessary to refer to Notes  appended  to  Clause
7.3.3 that deals with route-3.   Notes are as under:-

“i. The word “operated” means that the  Bidder  should  have  performed  the
necessary activities of drilling, excavation, hauling etc.  on  its  own  or
through sub-contracting.
ii. The word “developed” means that the Bidder  should  have  performed  the
necessary activities  of  Land  Acquisition/assisted  in  Land  Acquisition,
Statutory  clearances/assisted  in  Statutory  clearances  and  carried  out
‘Infrastructure development’ on its own or through sub-contracting.”

5.    Chapter 9 of the ITB deals with  Evaluation  Methodology  for  Techno-
Commercial  Proposal  (Qualification  Proposal  and   Technical   Proposal).
Clause 9.1 deals with Evaluation of Qualification Proposal  and  Clause  9.2
deals with Evaluation of Technical Proposal.  They read as under:-

“9. Evaluation Methodology for  Techno  Commercial  Proposal  (Qualification
Proposal and Technical Proposal)

9.1 Evaluation of Qualification Proposal:

The  Techno-Commercial  Proposal   shall   be   scrutinized   to   establish
“responsiveness” as per Clause 6.3.1.

The Responsive Techno-Commercial Proposal shall be evaluated  in  detail  to
determine their fulfillment of Qualifying requirements specified in  Chapter
7 of this RFP document.

During the bid evaluation, NTPC may, at its discretion, ask the  Bidder  for
a  clarification  of  its  Qualification  Proposal   including   documentary
evidence  pertaining  to  only  the  reference   mines   declared   in   the
Qualification Proposal for the purpose  of  meeting  Qualifying  Requirement
specified in Chapter 7 of this RFP document.  The request for  clarification
and the response shall be in writing and no change in the substance  of  the
TECHNO-COMMERCIAL Proposal including substitution of reference mines in  the
Qualification Proposal by new/additional mines for conforming to  Qualifying
Requirement shall be sought, offered or permitted.

The Qualification Proposals which meets the qualification criteria shall  be
considered for Technical Proposal Evaluation Phase of the  Bidding  Process.
The  Bidders  who  meet  the  qualification  criteria  shall  be  termed  as
Qualified Bidders.

9.2 Evaluation of Technical Proposal:

The Technical Proposals shall be evaluated  to  determine  their  compliance
with the Technical Proposal Requirements.  For this purpose, NTPC shall  use
the supporting documents and/or information available with  or  obtained  by
NTPC.

9.2.1 During evaluation NTPC may seek clarification from  the  Bidders,  may
conduct discussions with the  Bidders,  and  may  ask  the  bidder  to  make
Technical presentation.

Technical proposal shall include details as has been sought vide Chapter 8.

9.2.2 The Technical Proposals without  sufficient  information  as  per  the
terms of Chapter  8  of  this  document  shall  be  deemed  “Non  Responsive
Technical Proposal”.

9.2.3 The Responsive Technical Proposals meeting  the  requirements  to  the
satisfaction of Owner shall be considered  for  further  detailed  Technical
Evaluation.”
                                                            [emphasis added]



6.    Clause 9.3 provides how detailed  evaluation  of  technical  proposals
submitted by the bidder shall take place. Clauses 9.3.1 and 9.3.2 which  are
relevant for the present purpose are reproduced below:-

“9.3.1 The purpose of  technical  evaluation  is  to  check  responsive  and
assess the compliance with the requirements of NTPC.

9.3.2 To ensure effective evaluation  of  Technical  Proposals  the  Bidders
shall provide  the  necessary  details  as  specified  in  Clause  8.4.  The
Technical evaluation will be for evaluating whether the  Technical  Proposal
of the Bidder meets the following criteria.

(a) Time Schedule to Achieve First Year Coal Production Target – NTPC  shall
evaluate  the  PERT  chart  submitted  by  the  Bidder,  to  determine   its
completeness; reasonableness; and achievability.

(b) Adequacy of the Equipment Plan – The Bidder shall  submit  an  equipment
plan giving details of  the  equipment  that  shall  be  used  by  the  Mine
Operator to provide Mining  Services  which  shall  be  not  less  than  the
Minimum Equipment to be deployed as specified  by  NTPC  at  Schedule  6  of
Project Agreement. NTPC shall evaluate the adequacy  of  equipment  to  meet
the criteria imposed by NTPC in terms of quantity of production, quality  of
coal produced etc.”
                                                         [emphasis supplied]

7.    The controversy in the instant case basically pertains to whether  the
appellant meets the qualification criteria as  provided  under  the  heading
Technical Criteria that occurs in Clauses 7.1 and 7.2 of QR.  To  appreciate
the same, it is essential to have  a  look  at  the  bid  submitted  by  the
appellant.   The  appellant  had  uploaded  the  proposal  on  26.4.2016  by
referring to three mines in support of its stand to meet the QR.  The  three
mines that have been referred to in the  proposal  are  (i)  Mata  No  Madh,
Lignite Mine, Kutch, GMDC  (Mine  1);  (ii)  June  Kundada  OCP  of  Western
Coalfield Limited (Mine 2) and (iii) Khadia OCP, Northern Coalfield  Limited
(Mine 3). As regards the Mine No. 1, the appellant declaring  the  scope  of
work in the aforesaid Mine had furnished the following details:-

|“Sl.|Particulars           |Mine 1 (Lignite Project, Mata|
|No. |                      |No Madh, Kutch)              |
|10. |Brief description of  |Turnkey mining Contract      |
|    |scope of work         |involving overburden/inter   |
|    |                      |burden removal, excavation   |
|    |                      |and/or loading of lignite    |
|    |                      |from mines face and ancillary|
|    |                      |activities                   |
|11. |Drilling              |Yes/No                       |
|    |Carried out Drilling  |Our own/subcontracting       |
|    |on our own or through |                             |
|    |subcontracting        |                             |
|    |Excavation            | Yes/No                      |
|    |Carried out Excavation|Our own/subcontracting       |
|    |on our own or through |                             |
|    |subcontracting        |                             |
|    |Hauling               |Yes/No.                      |
|    |Carried out Excavation|Our own/subcontracting”      |
|    |on our own or through |                             |
|    |subcontracting        |                             |




8.    As the proposal would reflect, the  appellant  had  not  provided  the
information that it had carried out the  drilling  in  the  aforesaid  Mine,
namely,  Mata  No  Madh.  The  respondent-owner  sent  a  communication   on
17.5.2016 seeking certain clarification  pertaining  to  the  QR  and  other
aspects. The High Court has referred to the said communication and we  think
it necessary to reproduce the same:-

“Ref:01/CS-7014-602(R1)-9-PAA Dated: 17.05.2016
To,
M/s. Montecarlo Limited,
706, Ship Building, Near Municipal Market,
C.G. Road, Navrangpura, Ahmedabad-380 009,
Gujarat, India

Kind Attn. Sh. Shekhar Shanna, Sr. General Manager

Sub: Development and  Operation  of  Dulanga  Coal  Block  as  per  IFB  No.
40051319; Bid Doc. No.CS-7014-802(R1)-9

Dear Sir,

1.0 This has reference to  your  Project  Proposal  (Techno-Commercial  Bid)
against IFB No.40051319 for  the  subject  package.  You  are  requested  to
furnish the following information  with  respect  to  the  details/documents
furnished in the bid for qualification requirement data:

(i) Against QR requirement of Clause 7.1.2 of ITB: It  is  observed  in  the
Contract Agreement dtd. 11.02.2014 submitted by the  bidder  in  support  of
meeting qualifying requirement for Lignite  project  Mata  No  Madh,  Kutch,
Gujrat that the necessary activity of drilling as  per  stipulations  of  QR
(sr.no. i of Notes) is not mentioned. The same may please be clarified  with
supporting documents.

(ii) Against QR requirement of Clause 7.2 of ITB: Details of Other non  cash
expenses in Million for calculating Annual Cash Accrual for three year  viz.
2013-14, 2014-15 & 2015-16

2.0 It is requested that the  requisite  information  along  with  necessary
documents be furnished to us at the earliest, preferably by 24.05.2016.

3.0 It may please be noted that seeking the above clarifications should  not
be  construed  that  the  bid  submitted  by  you   is   considered   techno
commercially  responsive  and/or  meeting  the  Qualification   requirements
(QR).”

9.    The response that was given by the appellant on 21.5.2016  is  to  the
following effect:-

“A) Para 1.0 (i) of your above letter against QR of Clause 7.1.2 of ITB:  We
are attaching the followings:

a) A certificate from GMDC (client of our Lignite Project at Mata  No  Math)
Vide No.GMDC/MMLG/298/2016-17 dated 18.05.2016 mentioning our scope on  this
Turnkey  Project  which  includes  activities  of  Mine  Planning,   Quality
Control, Drilling, Ripping, Dust suppression,  Nala  Diversion,  preparation
of Garland drain, dewatering of Monsoon and seepage water,  preparation  and
monitoring of haul road for better  hauling  as  required  to  complete  the
mining process.

b) Certificates from Northern Coalfields Ltd. (NCL) and  Western  Coalfields
Ltd. (WCL) are also attached herewith mentioning drilling  as  part  of  the
Mining Process of these projects as ready reference:

i) NCL Certificate No.GM/KSL/2016/460 dated 31.03.2016
ii) NCL Certificate No.GM/KSL/25 dated 24.04.2016
iii)NCL Certificate No.GM/KHD/OS/2016/43 dated 23.04.2015
iv)WCL Certificate No. WCL/MA/MGR/JKOC/2015/400 dated 04.12.2015
v) WCL Certificate No. WCL/MA/MGR/JKOC/2015/27 dated 14.04.2016

Further, as you are kindly aware that Indian Lignite deposits occur  in  the
Tertiary sediments in  southern  and  western  parts  of  peninsular  shield
particularly  in  Tamilnadu,  Rajasthan  and  Gujarat.  The  Overburden  and
interburden comprises of Clay, Claystone, mudstone and as  well  as  lignite
[Geologically younger  sediments  (Formations)  then  occurrences  of  Coal]
which can be excavated by hydraulic Shovel dumper combination. As  such,  in
lignite deposits of Tamilnadu, Gujarat and Rajasthan,  Blast  hole  drilling
is normally not required.

B) Para 1.0 (ii) of your above letter against QR of Clause 7.2 of ITB:

We are attaching the following:

a) Financial certificate of last 3 years

We hope that the above submission clarifies your points on QR requirement;

If your require further clarification/information  in  this  regard,  kindly
inform us. We shall be pleased to provide the same at your convenience.”

10.   To  the  said  letter,  a  document  issued  by  the  Gujarat  Mineral
Development Corporation Ltd (GMDC) dated 18.5.2016 was  enclosed.  The  said
certificate reads as follows:-

“GMDC/MMLG/298/2016-17   Dated:18.05.2016

                           To Whom It May Concern

This  is  to  certify   that   the   Turnkey   Mining   Contract   involving
Overburden/Inter burden removal, Excavation and/or Loading of  Lignite  from
mining face and ancillary activities at Lignite project, Mata No  Madh  Vide
Tender Notice No. (R1)/LP/01/13-14 dated 30.08.2013,  has  been  awarded  to
M/s. Montecarlo Limited,  having  registered  office  at  7th  Floor,  Shilp
Building, Nr. Municipal Market, C.G. Road, Navrangpura, Ahmedabad –  380009,
Gujarat, India.

Name of Work: Turnkey  Mining  Contract  involving  Overburden/Inter  burden
removal, Excavation and/or loading of Lignite from mines face and  ancillary
activities at Lignite project, Mata No Madh.

Name of Contractor     : M/s. Montecarlo Limited

LOI No.                : GMDC/LP/13306/13-14
  Dated: 15/01/2014
Estimated Cost/
Contract Value         : 663.04 Cr.
Awarded Quantity       : Over Burden (1109.00)
                   Lac CUM
                         Lignite (148.00) Lac MT
Contract Period  : 28.01.2014 to 27.01.2019

The scope of Project is to carry  out  mining  operation  on  Turnkey  basis
comprising of removal of  over  burden,  inter  burden  and  lignite  and/or
loading from mines faces using hydraulic showel and dumper  combination  and
other activities like Mine Planning,  Quality  control,  Drilling,  Ripping,
Dust suppression, Nala Diversion, preparation of Garland  drain,  dewatering
of Monsoon and seepage water, preparation and monitoring of  haul  road  for
better hauling etc. as required to complete the mining process.

Quantities Executed (year-wise) by M/s. Montecarlo Limited are shown below:

|Sr. |Period     |Over Burden  |Lignite      |Total Work   |
|No  |           |Removal (cum)|Dispatched   |Done Amount  |
|    |           |             |(MT)         |(Rs.)        |
|1   |28.01.2014 |18,24,674.03 |7,64,791.18  |33,59,23,240.|
|    |To         |             |             |00           |
|    |31.03.2014 |             |             |             |
|2   |01.04.2014 |1,37,54,520.7|32,10,961.46 |135,57,06,364|
|    |To         |6            |             |.00          |
|    |31.03.2015 |             |             |             |
|3   |01.04.2015 |1,45,66,445.2|13,68,861.67 |55,38,02.,253|
|    |To         |2            |             |.00          |
|    |31.03.2016 |             |             |             |


M/s.  Montecarlo  Limited  successfully  carried  out  Dewatering  of  Mine.
Yearwise details are shown for dewatering by deploying  high  capacities  of
Diesel and Electrical operated pump:

|Sr. No.     |Period             |Dewatering in Lac m3    |
|1.          |01.04.2015         |65.0                    |
|            |To                 |                        |
|            |31.03.2016         |                        |


This  certificate  is  issued  as  per  their  request   vide   letter   no.
ML(P)/mn/4190/clt/2016-17/020 date: 18.05.16 for applying tender.”

11.   On the basis of the said  communications,  the  respondent  formed  an
opinion that the bid of the appellant was technically  non-responsive.   The
reason for arriving at the said conclusion by the respondent  was  that  the
appellant did  not  have  necessary  experience  of  drilling  for  blasting
purposes.  As the appellant was regarded as technically  non-responsive,  it
invoked  the  jurisdiction  of  the  High   Court   challenging   the   said
determination made by the respondent.  It  was  contended  before  the  High
Court that the tender documents that contained QR was of the  experience  of
a bidder in only drilling, excavation and hauling, etc. and not blasting  or
drilling for blasting purposes.  It was further  urged  that  the  scope  of
work for Dulanga Mines projects which was taken into  consideration  by  the
respondent in evaluating the technical proposal of the petitioner  as  being
non-responsive had been wrongly  understood.  The stand of NTPC  before  the
High  Court  was  that  the  assessment  by  the  Technical  Committee   was
absolutely justified and the writ petitioner therein did  not  meet  the  QR
and, therefore, was treated as non-responsive.

12.   The High Court referred to how tender  documents  that  reflected  the
nature of mine operations, how blasting is an inherent part and drilling  is
differently understood in the  sense  that  the  appellant  had  understood.
Thereafter, placing reliance on Tata Cellular  v.  Union  of  India[1]   and
Michigan Rubber (India) Ltd. v. State of Karnataka and Ors.[2], it  came  to
hold that the decision taken by the owner was correct and did not  adversely
affect public interest but subserved  the  public  purpose.  Being  of  this
view, the High Court dismissed the writ petition. Hence, the present  appeal
by special leave.

13.   We have heard Mr. P.  Chidambram  and  Mr.  Harin  P.  Raval,  learned
senior counsel with Mr. Sandeep Singh, learned  counsel  for  the  appellant
and Mr. Vikas Singh, learned senior counsel with  Mr.  Ankit  Jain,  learned
counsel for the respondent.

14.   The dispute and the dissention between the parties  rest  on  how  the
Chapter 7 (QR) of ITB that contains Clause 7.2  that  deals  with  technical
criteria is to be understood.   We are  not  really  concerned  with  Clause
7.1.  The centrality of controversy  hinges  on  the  interpretation  to  be
placed on Clause 7.1.2.  It is submitted by Mr. Chidambram,  learned  senior
counsel appearing  for  the  appellant  that  the  appellant  satisfied  the
condition as postulated in the QR under Clause 7.1.2 (a)  and  Clause  7.1.2
(a) stipulates that 23  Million  BCM  of  aggregated  volume  of  overburden
and/or  coal/lignite  from  a  maximum  of  seven   open   cast   mines   of
coal/Lignite, in any year and clause 7.1.2. (b)  lays  down  that  at  least
11.5 Million BCM of composite volume of  overburden  and  coal/lignite  from
single open cast mine in any year, out of which at  least  3  million  tones
shall  be coal/lignite.   Learned senior counsel would lay emphasis  on  the
documents which the appellant had filed to show that  it  had  operated  and
produced  from  single  mine  11.5  Million  BCM  of  composite  volume   of
overburden and coal/lignite from single  open  cast  mine  in  a  year.  Mr.
Singh, learned senior counsel resisting the said stance would urge that  the
appellant does not satisfy the condition of drilling as  is  required  under
the QR regard being had to the nature of  work.  In  this  context,  we  may
usefully take note of the definition  of  “operated”.   The  said  term,  as
defined,  means  activities  of  drilling  and  excavation.   The  documents
produced by the appellant indicate the scope of  work  including  activities
of operation of coal/lignite mine. It reads as follows:-

|“10.|The scope of work includes the following activities of operation |
|    |of the Coal/Lignite Mine                                         |
|    |Drilling      |Yes/No            |Yes/No           |Yes/No       |
|    |Carried out   |Our own/sub       |Our own/         |Our own/sub  |
|    |Drilling on   |contracting       |sub contracting  |contracting  |
|    |our own  or   |                  |                 |             |
|    |through sub   |                  |                 |             |
|    |contracting   |                  |                 |             |
|    |Excavation    |Yes/No            |Yes/No           |Yes/No       |
|    |Carried out   |Our own/ sub      |Our own/sub      |Our own/ sub |
|    |Excavation on |contracting       |contracting      |contracting  |
|    |our own or    |                  |                 |             |
|    |through sub   |                  |                 |             |
|    |contracting   |                  |                 |             |
|    |Hauling       |Yes/No            |Yes/No           |Yes/No       |
|    |Carried out   |Our own/sub       |Our own/         |Our own/     |
|    |Hauling on our|contracting       |sub contracting  |sub          |
|    |own or through|                  |                 |contracting  |
|    |sub           |                  |                 |             |
|    |contracting   |                  |                 |             |


|S.No|Particulars|Mine 1              |Mine 2          |Mine 3        |
|.   |           |                    |                |              |
|11  |Annual     |Year (From          |Year (From      |Year (From    |
|    |Production |01.04.2014          |01.04.2014      |01.04.2014 to |
|    |in Million |to                  |to              |31.03.2015)   |
|    |Bank Cubic |31.03.2015)         |31.03.2015)     |              |
|    |Meters.    |                    |                |              |
|    |Bidder to  |                    |                |              |
|    |refer Note |                    |                |              |
|    |(vii) of   |                    |                |              |
|    |the        |                    |                |              |
|    |Qualifying |                    |                |              |
|    |Requirement|                    |                |              |
|    |s of       |                    |                |              |
|    |Chapter 7  |                    |                |              |
|    |           |Coal/   |Overburden |Coal/   |Overbur|Coal/L|Over   |
|    |           |Lignite |(in Million|Lignite |den (in|ignite|burden |
|    |           |(in MT) |BCM)       |(in MT) |Million|(in   |(in    |
|    |           |        |           |        |BCM)   |MT)   |Million|
|    |           |        |           |        |       |      |BCM)   |
|    |           |3.210   |13.754     |1.221   |3.386  |-     |12.707”|
|    |           |Million |           |Million |       |      |       |
|    |           |Tonne   |           |Tonne   |       |      |       |


15.   We have already analysed what is covered by  the  word  “operated”  as
per ITB. In this regard, the High Court has referred  to  Schedule  II  that
deals with description of mining services.  Clause 5  deals  with  the  Mine
Operations.  We think it appropriate to reproduce Clauses 5.1, 5.9 and  5.10
of the same:-

“5.1. The Mine Operator shall construct and operate the Site  in  accordance
with the following scope:

(a) Plan the mine (Site), its development and construction

(b) Strip OB and store such OB on dumps

(c) Mine and extract coal in accordance with the requirements of Owner

(d) Make provisions for HEMM,  other  mining  machinery  and  its  effective
maintenance

(e) Implement, and comply with EMP and environmental clearances;

(f) Construction, maintenance and operation of mine dewatering plant,  sump,
and garland drains with de-silting provisions

(g) Construct and maintain all access ways and haul roads

(h) Arrangement and use of explosives, as per Indian Explosives Act

(i) Drilling and blasting

(j) Construction  and  maintenance  of  wokshops,  stores  etc  as  per  the
requirement.

(k)  Construction,  Operation  and  maintenance  of  complete  power  supply
system.

(l) Mine illumination as per prevalent laws

(m) Arrangement of petrol/diesel, oil and lubricants.

(n) (if applicable) control any spontaneous combustion on Site

(o) Conduct advance infill drilling.

(p) OB  dump  management  including  rehandling  of  internal  dump  as  per
Environmental Clearance.

(q) Progressive  mine  closure  with  effective  land  reclamation  plan  in
accordance with approved mine closure plan.  The Mine Operator shall  submit
to the Owner  the  annual  financial  statement  of  cost  incurred  towards
progressive   mine   closure   activities   duly   certified   by   National
Environmental  Engineering  Research  Institute  (NEERI)  or  Central   Mine
Planning & Design Institute Limited (CMPDIL) or any other institute  as  may
be notified by the Government for these purpose to an  acceptable  level  by
the Coal Controller.

(r) POL Store shed

(s) Development of Power Supply Distribution System beyond  33KV  switchgear
breaker terminals  of  Darlipalli  STPP  for  various  equipments/facilities
included in Mine Operator’s scope.

x           x          x

5.9 Blasting:

Blasting shall be required for coal and selectively for overburden with  the
objective of  achieving  good  fragmentation  so  that  the  excavators  can
operate at high levels of efficiency.

5.10 Overburden and Inter burden Removal:

The  terms  overburden  and  interburden  are  each  included  in  the  term
overburden below unless noted otherwise.  The  Mine  Operator  shall  ensure
the following in respect of Overburden removal:

(a) The Mine Operator shall assess the admissibility of accommodation of  OB
volume in  the  external  dump/in-pit-dump  and  accordingly  if  warranted,
notify or seek necessary clearances/ approvals from  appropriate  authority,
keeping in view the stipulation  of  MoEF,  contained  in  Forest  Clearance
Stage – 1, dated 10.01.2014.

(b) The Mine Operator’s daily and  weekly  scheduling  shall  be  consistent
with the AAPP. All levels, benches,  haul  roads,  and  highwalls  shall  be
consistent  with  the   Monthly   Production   Plans   and   the   statutory
requirements.

(c) Weekly digging plans shall contain recommended  methods  for  excavation
and removal of overburden including blasting plans if needed.

(d) The Owner shall not be responsible for any  costs  associated  with  the
Mine Operator inefficiently scheduling daily and weekly activities.

(e) The Mine Operator considers itself fully  aware  of  conditions  of  the
Overburden in the mining area. No claim for lack of knowledge  of  the  site
conditions shall be allowed.

(f) Reasonable efforts shall be made to keep coal clean and free from  soil,
overburden,  rock,  clay,  parting  bands,  steel,  stones,  timber,   rags,
equipment parts or any other deleterious material.

(g) The Mine Operator shall ensure the quality of the coal is  not  affected
by its mining methods which cause coal ash to rise above the  target  levels
presented in AAPP.

(h) Water in the pit shall be kept to a minimum.

(i) Fires or hot spots in the coal shall be handled  expeditiously  and  not
transported to the crusher.  The Owner shall be notified of any  significant
occurrence. Oxidized coal shall be treated as  Overburden  for  compensation
purposes.

(j) Any equipment repairs on the coal bench shall be cleaned  after  use  to
prevent contamination.

(k) All equipment  shall  undergo  pre  shift  inspections  including  loose
bucket teeth or other parts.

(l) The Mine Operator shall be responsible to provide equipment to suit  the
varying thickness of the seams and partings which must be mined.

(m) The Owner may instruct the Mine Operator to maintain  an  overburden  or
inter burden cover over in-pit coal inventory prior to mining.

(n) If, during the excavation or overburden, any coal  is  found,  the  Mine
Operator shall inform the Owner and  seek  instructions  before  proceeding.
Overburden shall be hauled and placed in areas as shown in the Mining Plan.

(o) Reject coal placed in overburden or interburden dumps  shall  be  buried
in 5 meter lifts and compacted to ensure  no  ingress  of  air  which  could
cause spontaneous combustion.  The Mine Operator shall be required,  at  its
own expense, to dig out, compact and replace any smouldering dump area.

(p) Placement of overburden shall be carried out with due  regard  to  water
run off, final topography, and long term ground stabilization.

(q) Any erosion  or  land  slip  in  areas  of  placed  materials  shall  be
rectified by the Mine Operator at its own expense.”

16.   Clause 5.7.2. deals with drilling and blasting. It is as follows:-

“5.7.2. Drilling & Blasting

Crawler-mounted pneumatically operated  down  the  hold  drilling  rigs  are
capable to meet the future requirement of 8 m/hr will be  deployed  for  OB.
R.B.H. drills will be used for drilling about 160 mm dia. holes in coal.

After shot holes are drilled into the horizontal bench cut  by  the  shovel,
the faces  are  blasted  using  explosives  and  detonators.  Coal  is  also
extracted after blasting off the coal faces.

Drilling & Blasting would be required both in OB and Coal,  benches,  before
excavation by shovel. Except for coal benched which will be  mined  by  CSMs
Heavy ANFO type/Slurry Emulsion is proposed to be used based  on  the  daily
requirement. However, flexibility may have  to  be  provided  for  usage  of
suitable alternative/available explosives as per the requirement.”



17.   We have referred to these clauses which are  technical  but  they  are
fundamental to understand the QR.  They clearly  demonstrate  that  drilling
is imperative. Mr. Chidambram, learned  senior  counsel  for  the  appellant
would argue with all the conviction at his command  that  the  appellant  is
engaged in drilling in Lignite and the tender requirement was  coal/lignite.
 According to the learned senior counsel, drilling  in  lignite  would  meet
the requirement but the owner has travelled beyond the postulates of the  QR
to insist on  drilling  for  the  purpose  of  blasting.   We  have  already
referred to the certificate issued by GMDC in favour of  the  appellant  and
the documents filed by the appellant.  The High  Court  has  considered  the
documents and opined that the documents filed  in  support  of  the  QR  are
substantially inadequate. Adverting to  the  facet  of  drilling,  the  writ
court has opined that there is specific use of the words “drilling  for  the
purposes of blasting”. It is urged by Mr. Chidambram and Mr. Raval,  learned
senior counsel that in the absence of a definitive prescription,  the  court
cannot add an attribute or quality component to the  qualifying  clause.  In
this regard, we may usefully  refer  to  certain  authorities.  In  Sterling
Computers Limited v. M/s M & N Publications Limited & Ors[3], the Court  has
held that under some special circumstances a discretion has to  be  conceded
to the authorities who have to enter into contract giving  them  liberty  to
assess the overall situation for purpose of taking a  decision  as  to  whom
the contract be awarded and at what terms. It has also  been  observed  that
by way of judicial review the court cannot examine the details of the  terms
of the contract which have been entered into by the  public  bodies  or  the
State. Courts have inherent limitations on the scope of any such enquiry.

18.   In Tata Cellular  (supra)  a  three-Judge  Bench  after  referring  to
earlier decisions culled out certain  principles,  namely,  (a)  the  modern
trend points to judicial restraint in administrative action, (b)  the  court
does not sit as a court of appeal but merely reviews  the  manner  in  which
the decision was made, (c) 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, and (d)  the  Government  must  have
freedom of contract and that  permits  a  fair  play  in  the  joints  as  a
necessary  concomitant  for  an  administrative  body  functioning   in   an
administrative sphere or quasi-administrative sphere. Hence, the  Court  has
laid down that 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.
 19.  In Jagdish Mandal v. State of Orissa and Ors[4]  the  Court  has  held
that  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.
20.   In Master Marine Services (P) Ltd. v. Metcalfe &  Hodgkinson  (P)  Ltd
and Anr[5], it has been ruled that the State can choose its  own  method  to
arrive at a decision and it is free to grant any relaxation  for  bona  fide
reasons, if the tender conditions permit such  a  relaxation.  It  has  been
further  held  that  the  State,  its  corporations,  instrumentalities  and
agencies have the public duty to be fair to all concerned.  Even  when  some
defect is found in the decision-making process, the court must exercise  its
discretionary powers  under  Article  226  with  great  caution  and  should
exercise it only in furtherance of public interest and  not  merely  on  the
making out of a legal point.

21.   In  B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. and Ors.[6]  a
two-Judge Bench, after referring to  series  of  judgments  has  culled  out
certain principles which include the one that  where  a  decision  has  been
taken purely on public interest, the court ordinarily should apply  judicial
restraint.
22.   In Michigan Rubber (India) Ltd. (supra)  the  Court  referred  to  the
earlier judgments and opined that before a court  interferes  in  tender  or
contractual matters, in exercise of power of judicial review should pose  to
itself the question whether the process adopted  or  decision  made  by  the
authority is mala fide or intended to favour someone or whether the  process
adopted or decision made is so arbitrary and irrational  that  the  judicial
conscience cannot countenance.  Emphasis was laid  on  the  test,  that  is,
whether award of contract is against public interest.
23.    Recently  in  Afcons  Infrastructure  Ltd.  v.  Nagpur   Metro   Rail
Corporation Ltd.[7] a two-Judge Bench eloquently exposited  the  test  which
is to the following effect:-
“We may add that the owner or the employer of  a  project,  having  authored
the tender documents, is the best person to understand  and  appreciate  its
requirements and interpret its documents.  The  constitutional  Courts  must
defer to this  understanding  and  appreciation  of  the  tender  documents,
unless  there  is  mala  fide  or  perversity  in   the   understanding   or
appreciation or in the application of the terms of  the  tender  conditions.
It is possible that  the  owner  or  employer  of  a  project  may  give  an
interpretation to the  tender  documents  that  is  not  acceptable  to  the
constitutional Courts but that by itself is not  a  reason  for  interfering
with the interpretation given.”

24.   We respectfully concur with the aforesaid statement of law.   We  have
reasons to do so. In the present scenario, tenders are  floated  and  offers
are  invited  for   highly   complex   technical   subjects.   It   requires
understanding and appreciation of the nature of work and the purpose  it  is
going to serve. It is common knowledge in the competitive  commercial  field
that technical bids pursuant to the notice inviting tenders are  scrutinized
by the technical experts and sometimes third  party  assistance  from  those
unconnected  with  the  owner’s  organization   is   taken.   This   ensures
objectivity. Bidder’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 malafide 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  court  should
follow the principle of restraint.  Technical evaluation  or  comparison  by
the court would be impermissible.  The principle that  is  applied  to  scan
and understand  an  ordinary  instrument  relatable  to  contract  in  other
spheres has to be treated differently  than  interpreting  and  appreciating
tender documents relating to technical works and projects requiring  special
skills. The owner should be allowed to carry out the purpose and  there  has
to be allowance of free play in the joints.
25.   In view of the aforesaid analysis, we do not  perceive  any  infirmity
in the judgment and order passed by the High  Court  and,  accordingly,  the
appeal stands dismissed.  In the facts and circumstances of the case,  there
shall be no order as to costs.

                                            ..............................J.
                                                               (Dipak Misra)



                                            ..............................J.
                                                          (Uday Umesh Lalit)
New Delhi;
October 18, 2016.
-----------------------
[1]

      [2] (1994) 6 SCC 651
[3]
      [4] (2012) 8 SCC 216
[5]
      [6] (1993) 1 SCC 445
[7]
      [8] (2007) 14 SCC 517
[9]
      [10] (2005) 6 SCC 138
[11]
      [12] (2006) 11 SCC 548
[13]
      [14] 2016 (8) SCALE 765


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