REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4002 OF 2020
(ARISING OUT OF SLP (C) NO. 8496 OF 2020)
THE STATE OF MADHYA PRADESH & ANR. …APPELLANTS
VERSUS
U.P. STATE BRIDGE CORPORATION LTD.
& ANR. ...RESPONDENTS
WITH
CIVIL APPEAL NO. 4003 OF 2020
(ARISING OUT OF SLP (C) NO.8738 OF 2020)
WITH
CIVIL APPEAL NOS. 4004-4005 OF 2020
(ARISING OUT OF SLP (C) NOS.9539-9540 OF 2020)
J U D G M E N T
R.F. Nariman, J.
1. Leave granted.
2. These appeals pertain to a notice inviting tender [“N.I.T.”] dated
02.12.2019 by the State of Madhya Pradesh, Public Works
Department [“PWD”]. The N.I.T. was for the construction of an
Elevated Corridor (Flyover) from LIG Square to Navlakha Square
(Old NH 3) A-B Road in Indore district in the State of Madhya
Pradesh of a length of 7.473 kilometers. The work was for an
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estimated cost of Rs. 272.66 crores, to be completed within a period
of 24 months including the rainy season. Various parts of the N.I.T.
are important and are referred to hereunder:
3. Under Section - 2, entitled “INSTRUCTIONS TO BIDDERS”, under
clause A, entitled “GENERAL”, sub-clause 2.1.4 reads as follows:
“2.1.4 The BID shall be furnished in the format exactly as
per Appendix-I i.e. Technical Bid as per Appendix IA and
Financial Bid as per Appendix IB. BID amount shall be
indicated clearly in both figures and words, in Indian
Rupees in prescribed format of Financial Bid and it will be
signed by the Bidder's authorised signatory. In the event of
any difference between figures and words, the amount
indicated in words shall be taken into account.”
Clause 2.2.2.2(ii) reads as follows:
“2.2.2.2 Technical Capacity
xxx xxx xxx
(ii) For normal Highway projects (including Major Bridges/
ROB/ Flyovers/ Tunnels):
Provided that at least one similar work of 25% of Estimated
Project Cost Rs. 68.17 Crores (Rs.Sixty Eight Crores
Seventeen Lakhs only) shall have been completed from the
Eligible Projects in Category 1 and/or Category 3 specified
in Clause 2.2.2.5. For this purpose, a project shall be
considered to be completed, if more than 90% of the value
of work has been completed and such completed value of
work is equal to or more than 25% of the estimated project
cost. If any Major Bridge/ROB/Flyover/Tunnel is (are) part
of the project, then the sole Bidder or in case the Bidder
being a Joint Venture, any member of Joint Venture shall
necessarily demonstrate additional experience in
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construction of Major Bridge/ROBs/Flyovers/Tunnel in the
last 5 (Five) financial years preceding the Bid Due Date i.e.
shall have completed at least one similar Major
Bridge/ROB/Flyover having span equal to or greater than
50% of the longest span of the structure proposed in this
project and in case of tunnel, if any, shall have completed
construction of at least one tunnel consisting of single or
twin tubes (including tunnel(s) for roads/ Railway/ Metro
rail/ irrigation/ hydroelectric projects etc.) having at least
50% of the cross-sectional area and 25 length of the tunnel
to be constructed in this project.”
Clause 2.2.2.5 states as follows:
“2.2.2.5 Categories and factors for evaluation of Technical
Capacity:
(i) Subject to the provisions of Clause 2.2.2 the following
categories of experience would qualify as Technical
Capacity and eligible experience (the “Eligible Experience”)
in relation to eligible projects as stipulated in Clauses
2.2.2.6(i) & (ii) (the “Eligible Projects”). In case the Bidder
has experience across different categories, the experience
for each category would be computed as per weight of
following factors to arrive at its aggregated Eligible
Experience:
Category Project/Construction experience
on Eligible Projects
Factors
1 Project in highways sector that
qualify under I Clause 2.2.2.6
(i)
1
2 Project in core sector that
qualify under Clause 2.2.2.6 (i)
0.70
3 Construction in highways sector
that qualify under Clause
2.2.2.6(ii)
1
4 Construction in core sector that
qualify under Clause 2.2.2.6(ii)
0.70
3
(ii) The Technical capacity in respect of an Eligible Project
situated in a developed country which is a member of
OECD shall be further multiplied by a factor of 0.5 (zero
point five) and the product thereof shall be the Experience
Score for such Eligible Project.”
Under clause 2.6.2(a), the authorities reserved the right to reject any
bid, inter alia, on the following grounds:
“2.6.2 The Authority reserves the right to reject any BID
and appropriate the BID Security if:
(a) at any time, a material misrepresentation is made or
uncovered, or…”
Under Section - 3, entitled “EVALUATION OF TECHNICAL BIDS
AND OPENING & EVALUATION OF FINANCIAL BIDS”, clauses
3.1.6.1 and 3.1.6.2 state as follows:
“3.1.6. Tests of responsiveness
3.1.6.1 As a first step towards evaluation of Technical BIDs,
the Authority shall determine whether each Technical BID is
responsive to the requirements of this RFP. Technical BID
shall be considered responsive only if:
(a) Technical BID is received online as per the format at
Appendix-IA including Annexure I, IV, V and VI (Bid
Capacity format);
(b) Documents listed at clause 2.11.2 are received
physically on CPPP as mentioned;
(c) Technical Bid is accompanied by the BID Security as
specified in Clause 1.2.4 and 2.20;
(d) The Power of Attorney is uploaded on e-procurement
portal as specified in Clauses 2.1.5;
(e) Technical Bid is accompanied by Power of Attorney for
Lead Member of Joint Venture and the Joint Bidding
Agreement as specified in Clause 2.1.6, if so required;
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(f) Technical Bid contains all the information (complete in
all respects);
(g)Technical Bid does not contain any condition or
qualification; and
(h) Copy of online receipt towards payment of cost of Bid
document of Rs 30,000.00 (Rupees Thirty thousand only)
in favor of Chief Engineer PWD Bridge Const. Zone Bhopal
is Received;
3.1.6.2 The Authority reserves the right to reject any
Technical BID which is non-responsive and no request for
alteration, modification, substitution or withdrawal shall be
entertained by the Authority in respect of such BID.”
Under Section - 4, entitled “FRAUD AND CORRUPT PRACTICES”,
clause 4.1 read with the definition clause contained in clause 4.3(b),
read as follows:
“4.1 The Bidders and their respective officers, employees,
agents and advisers shall observe the highest standard of
ethics during the Bidding Process and subsequent to the
issue of the LOA and during the subsistence of the
Agreement. Notwithstanding anything to the contrary
contained herein, or in the LOA or the Agreement, the
Authority may reject a BID, withdraw the LOA, or terminate
the Agreement, as the case may be, without being liable in
any manner whatsoever to the Bidder, if it determines that
the Bidder, directly or indirectly or through an agent,
engaged in corrupt practice, fraudulent practice, coercive
practice, undesirable practice or restrictive practice in the
Bidding Process. In such an event, the Authority shall be
entitled to forfeit and appropriate the BID Security or
Performance Security, as the case may be, as Damages,
without prejudice to any other right or remedy that may be
available to the Authority under the Bidding Documents
and/ or the Agreement, or otherwise.”
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xxx xxx xxx
“4.3 For the purpose of this Section 4, the following terms
shall have the meaning hereinafter respectively assigned to
them:
xxx xxx xxx
(b) “fraudulent practice” means a misrepresentation or
omission of facts or suppression of facts or disclosure of
incomplete facts, in order to influence the Bidding Process”
Appendix IA consists of the letter comprising the technical bid
addressed to the Office of the Chief Engineer, Bridge Construction
Zone - Bhopal, which has to be filled up in a particular format.
Paragraphs 11 and 13 of this letter are important and are set out
hereinbelow:
“11. I/We certify that in regard to matters other than
security and integrity of the country, we/ any Member of the
Joint Venture or any of our/their Joint venture member
have not been convicted by a Court of Law or indicted or
adverse orders passed by a regulatory authority which
could cast a doubt on our ability to undertake the Project or
which relates to a grave offence that outrages the moral
sense of the community.
xxx xxx xxx
13. I/We further certify that no investigation by a regulatory
authority is pending either against us/any member of Joint
Venture or against our CEO or any of our directors/
managers/ employees.”
Appendix IB consists of the letter comprising the financial bid, which
is also in a particular format, paragraph 2 of which reads as follows:
6
“2. I/We acknowledge that the Authority will be relying on
the information provided in the BID and the documents
accompanying the Bid for selection of the Contractor for
the aforesaid Project, and we certify that all information
provided in the Bid are true and correct; nothing has been
omitted which renders such information misleading; and all
documents accompanying the Bid are true copies of their
respective originals.”
Annex I, entitled “Details of Bidder”, contains, in clause 7, the
following:
“7 (a) I/We further certify that no investigation by a
regulatory authority is pending either against us/any
member of Joint Venture or our sister concern or against
our CEO or any of our directors/managers/employees.
(b) I/We further certify that no investigation by any
investigating agency in India or outside is pending either
against us/ any member of Joint Venture or our sister or
against our CEO concern or any of our
directors/managers/employees.
A statement by the Bidder and each of the Members of its
Joint Venture (where applicable) disclosing material nonperformance or contractual non-compliance in current
projects, as on bid due date 'is given below (attach extra
sheets, if necessary) w.r.t. para 2.1.14.”
4. Eleven companies bid for the aforesaid project, including U.P. State
Bridge Corporation Limited [“UPSBC”], Rajkamal Builders
Infrastructure Pvt. Ltd. [“Rajkamal Builders”] and Rachana
Construction Co. Insofar as UPSBC is concerned, the State of
Madhya Pradesh rejected its bid on the ground that the bidder
suppressed information required under paragraph 13 of Appendix IA
7
and clause 7(b) of Annex I. Hence, the aforesaid bid was considered
to be non-responsive. Likewise, insofar as Rachana Construction
Co. is concerned, it did not fulfil the criteria under clause 2.2.2.2(ii)
of the N.I.T. for “one similar work” of 25% of the estimated project
cost, and was also therefore considered non-responsive. Pursuant
to the rejection of the technical bid of UPSBC in the Technical
Evaluation Committee’s meeting held on 13.03.2020, Writ Petition
No. 6681 of 2020 was filed by UPSBC and by an interim order dated
17.03.2020, the financial bid of UPSBC was ordered to be opened.
5. On the opening of the financial bids, it was found that UPSBC had
bid for a sum of Rs. 306.27 crores and Rajkamal had bid for Rs.
315.80 crores. Being disqualified, Rachana Construction Co.’s bid
for Rs. 293.25 crores was not under consideration.
6. By the impugned judgment dated 15.06.2020 in Writ Petition No.
6681 of 2020 filed by UPSBC, it was held that as on the date of
submission of the technical bid, since no investigation was pending
within the meaning of clause 7(b) of Annex I, there was no
suppression of facts by UPSBC, despite the fact that an FIR dated
15.05.2018 had been lodged against it in respect of a particular
bridge constructed by it at Janpad, Varanasi which had collapsed,
killing 15 persons and injuring 11 persons. The investigation in this
case resulted in a charge sheet being filed. After the trial
8
commenced, the High Court of Judicature at Allahabad, by an order
dated 30.07.2019, stayed the trial. Despite these facts not being
stated in the bid document submitted by UPSBC, the High Court
found that there was no suppression of facts, as clause 7(b) of
Annex I only required details as to investigations that were pending,
and as “investigation” as defined under the Code of Criminal
Procedure [“Cr.P.C.”] was different from inquiries and trials, there
was no need to disclose the FIR and its aftermath, as there was no
“investigation pending” strictly speaking, as it had culminated in a
charge sheet. The High Court was also swayed by the fact that there
was a difference of Rs. 9 crores between the financial bids of
UPSBC and Rajkamal. Public interest therefore demanded that the
rejection of UPSBC’s technical bid be set aside. The State of
Madhya Pradesh was therefore directed to issue a letter of intent
[“LOI”] in favour of UPSBC for the financial bid of Rs. 306.27 crores
within a period of 30 days from the date of the judgment.
7. Meanwhile, Rachana Construction Co. also filed Writ Petition No.
8404 of 2020 challenging the rejection of its technical bid by the
State of Madhya Pradesh. By the impugned judgment dated
02.07.2020, the High Court adverted to the judgment dated
15.06.2020 in UPSBC’s writ petition and thereafter went on to
examine whether Rachana Construction Co.’s bid had been rightly
9
rejected. Insofar as Rachana Construction Co.’s bid was concerned,
the High Court referred to clause 2.2.2.2(ii) in paragraph 9 of its
judgment and held that there was nothing wrong with the State of
Madhya Pradesh’s rejection, as follows:
“9. Even on merit also the petitioner has no case because
as per Clause 2.2.2.2(ii) all the tenders as also the
petitioner were required to submit the proof of completion
of one similar work and the value of the executed work
was to be at least 25% of the value of the work in the
present tender. Said Clause 2.2.2.2(ii) is reproduced below:
“2.2.2.2(ii) For normal Highway projects
(including Major Bridges/ ROB/ Flyovers/
Tunnels):
Provided that at least one similar work of
25% of Estimated Project Cost Rs.68.17
Crores (Rs. Sixty Eight Crores Seventeen
Lakhs only) shall have been completed from
the Eligible Projects in Category 1 and/or
Category 3 specified in Clause 2.2.2.5.
For this purpose, a project shall be
considered to be completed, if more than 90
% of the value of work has been completed
and such completed value of work is equal to
or more than 25% of the estimated project
cost. If any Major Bridge/ROB/Flyover/Tunnel
is (are) part of the project, then the sole
Bidder or in case the Bidder being a Joint
Venture, any member of Joint Venture shall
necessarily demonstrate additional
experience in construction of Major
Bridge/ROBs/Flyovers/Tunnel in the last
5(Five) financial years preceding the Bid Due
Date i.e. shall have completed at least one
similar Major Bridge/ROB/Flyover having
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span equal to or greater than 50% of the
longest span of the structure proposed in this
project and in case of tunnel, if any, shall
have completed construction of at least one
tunnel consisting of single or twin tubes
(including tunnel(s) for roads/Railway/Metro
rail/irrigation/hydro-electric projects etc.)
having at least 50% of the cross-sectional
area and 25% length of the tunnel to be
constructed in this project."
The aforesaid Clause specifically provides that for Highway
projects including Major Bridges/ROB/Flyovers/Tunnels, at
least one similar work of 25% of Estimated Project Cost
Rs.68.17 Crores shall have been completed. The petitioner
has place reliance on the certificate issued by DFCCIL,
Ahmedabad, which reveals that the petitioner is
undertaking construction work of 2 No. of road overbridges
of the total contract value Rs.76,87,90,595.00, therefore,
the construction of one road overbridge would be half of
the total contract value. Though the petitioner might have
signed one contract for two overbridges, but the cost of one
overbridge would be less than 68.17 Crores which is 25%
of the present work. Hence, the Evaluation Committee has
not committed any error while declaring the petitioner as
non-responsive. Thus, even on merits, the petitioner has
no case.
10. Learned counsel appearing for the petitioner
concluded his arguments by submitting that the petitioner
has quoted the rates of Rs.293.25 Crores as compared to
L-1 i.e. 3,06,27,00,000/- thus, Rs. 13.00 Crores can be
used for other valuable projects. As held above, once the
petitioner has been declared non-responsive, then its
financial bid and the rates quoted by the petitioner are
immaterial.”
8. In addition, the High Court also held that Rachana Construction Co.,
despite knowing that UPSBC had filed a writ petition, neither
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intervened in the said writ petition nor filed an independent writ
petition on its own until much later. Considering that the UPSBC had
been declared as L-1 by a judgment dated 15.06.2020, UPSBC
should have been arrayed as a respondent in the writ petition and
not being so arrayed, the petition also suffered from non-joinder of a
necessary party and therefore had to be dismissed.
9. Shri Saurabh Mishra, Additional Advocate General, took us through
the N.I.T. and relied upon several clauses thereof. His principal
argument was that the expression “investigation pending” cannot be
taken to be in the sense of the Cr.P.C., as otherwise the said clause
would be rendered otiose. “Investigation pending” would necessarily
include within its scope all subsequent steps towards criminality of
an accused, as a result of which clause 7(b) of Annex I required
UPSBC to disclose material facts. He also relied upon the clause
dealing with “fraudulent practice” and stated that the omission of a
material fact would amount to a fraudulent practice, and this being a
most material fact, as a particular bridge constructed by UPSBC had
collapsed resulting in an FIR being lodged against it, not being
disclosed by UPSBC, would be fatal under the fraudulent practice
clause also.
10. Shri Dhruv Mehta, learned Senior Advocate, appearing on behalf of
UPSBC, relied heavily on the judgment in Caretel Infotech Ltd. v.
12
Hindustan Petroleum Corpn. Ltd., (2019) 14 SCC 81 [“Caratel
Infotech”], for the proposition that where a tender was in a particular
format, nothing beyond the information that is required by that
format need be given, and since no investigation was in fact pending
against his client, clause 7(b) of Annex I could not have been
invoked to non-suit his client. He also relied upon the judgment in
Secy., Deptt. of Home Secy., A.P. v. B. Chinnam Naidu, (2005) 2
SCC 746, in which case the petitioner concerned had to fill up a
recruitment form in which previous convictions had to be stated.
Since merely being arrested would not amount to a previous
conviction, it was held that the petitioner could not be said to have
suppressed the fact of his being convicted. He then argued that in
any case if there is any ambiguity in the clause the rule of contra
proferentem applies, as a result of which the literal interpretation,
which is a possible interpretation, ought to prevail, and for this he
cited Bank of India v. K. Mohandas, (2009) 5 SCC 313. He was at
pains to point out that no ground other than clause 7(b) of Annex I
could now be taken, as the ground of fraudulent practice, which was
sought to be argued by the State of Madhya Pradesh in this Court,
was not a ground on which UPSBC’s bid was rejected. He also
pointed out that public interest would require that the financial bid be
accepted, being Rs. 9 crores less than that of Rajkamal.
13
11. Shri Anupam Lal Das, learned Senior Advocate appearing on behalf
of Rachana Construction Co. assailed the impugned judgments
dated 02.07.2020 and 04.08.2020 by relying upon the Contract
Agreement dated 23.08.2017 between his client and the Dedicated
Freight Corridor Corporation of India Limited [“DFCCIL”] for the work
of construction of two nos. of road over bridges for an amount of Rs.
76.87 crores, 95% of which had been completed, for which a
payment of Rs. 68.71 crores had been received. This being so, and
this being above 25% of the estimated cost of the present tender
(fixed at Rs. 68.17 crores), he stood technically qualified. It was
wholly incorrect for the authorities to have bifurcated one project
awarded under one tender into two, merely because two road over
bridges had to be built. He also stated that non-joinder of a
necessary party could not be held against him as all the facts were
known and UPSBC could have intervened in Rachana Construction
Co.’s matter.
12. Shri Puneet Jain, learned counsel appearing on behalf of Rajkamal,
attacked the judgment in UPSBC’s case and supported the
judgment in Rachana Construction Co.’s case, stating that quite
apart from the clauses referred to and relied upon by the State of
Madhya Pradesh, it was clear that Appendix IA had not been
properly read, as paragraphs 11 and 13 had to be read together.
14
Clearly paragraph 11 indicated that if UPSBC were “indicted” in a
criminal case, which would cast doubt on its ability to undertake the
project, this would be sufficient to reject UPSBC’s bid. Insofar as
Rachana Construction Co. is concerned, he referred to and relied
upon clause 2.2.2.2(ii) and in particular, the latter part of the clause,
which required that the bidder would have to demonstrate additional
experience in respect of the bridge to be constructed in the present
tender and would have to show that it had completed at least one
similar major bridge of a span equal to or greater than 50% of the
longest span of the structure proposed in this project. He adverted to
the two road over bridges that were constructed under the
agreement dated 23.08.2017 by Rachana Construction Co. for
DFCCIL, both being of a length of 2380 meters when taken together.
This would fall woefully short of 50% of 7.473 kilometers, which
would amount to 3.736 kilometers, and on this additional ground
also, Rachana Construction Co.’s bid ought to be rejected.
13. We have heard all the learned counsel for the parties. The
parameters of judicial review in matters such as the present have
been well stated in many decisions of this Court, beginning with the
celebrated Tata Cellular v. Union of India, (1994) 6 SCC 651, in
which a 3 judge bench of this Court laid down the following
principles:
15
“94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but merely
reviews the manner in which the decision was made.
(3) 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.
(4) 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.
(5) 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 or quasi-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.
(6) Quashing decisions may impose heavy administrative
burden on the administration and lead to increased and
unbudgeted expenditure.”
(pages 687-688)
14. Likewise, in Jagdish Mandal v. State of Orissa, (2007) 14 SCC
517, this Court held:
“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
16
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. The tenderer or
contractor with a grievance can always seek damages in a
civil court. Attempts by unsuccessful tenderers with
imaginary grievances, wounded pride and business rivalry,
to make mountains out of molehills of some
technical/procedural violation or some prejudice to self, and
persuade courts to interfere by exercising power of judicial
review, should be resisted. Such interferences, either
interim or final, may hold up public works for years, or
delay relief and succour to thousands and millions and may
increase the project cost manifold. Therefore, a court
before interfering in tender or contractual matters in
exercise of power of judicial review, should pose to itself
the following questions:
(i) 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 court can say: “the decision
is such that no responsible authority acting reasonably and
in accordance with relevant law could have reached”;
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no
interference under Article 226. Cases involving blacklisting
or imposition of penal consequences on a
tenderer/contractor or distribution of State largesse
(allotment of sites/shops, grant of licences, dealerships and
franchises) stand on a different footing as they may require
a higher degree of fairness in action.”
(pages 531-532)
15. In Central Coalfields Ltd. v. SLL-SML (Joint Venture
Consortium), (2016) 8 SCC 622, this Court held as follows:
“47. The result of this discussion is that the issue of the
acceptance or rejection of a bid or a bidder should be
looked at not only from the point of view of the
unsuccessful party but also from the point of view of the
17
employer. As held in Ramana Dayaram Shetty [Ramana
Dayaram Shetty v. International Airport Authority of India,
(1979) 3 SCC 489] the terms of NIT cannot be ignored as
being redundant or superfluous. They must be given a
meaning and the necessary significance. As pointed out in
Tata Cellular [Tata Cellular v. Union of India, (1994) 6 SCC
651] there must be judicial restraint in interfering with
administrative action. Ordinarily, the soundness of the
decision taken by the employer ought not to be questioned
but the decision-making process can certainly be subject to
judicial review. The soundness of the decision may be
questioned if it is irrational or mala fide or intended to
favour someone or a decision “that no responsible authority
acting reasonably and in accordance with relevant law
could have reached” as held in Jagdish Mandal [Jagdish
Mandal v. State of Orissa, (2007) 14 SCC 517] followed in
Michigan Rubber [Michigan Rubber (India) Ltd. v. State of
Karnataka, (2012) 8 SCC 216] .
48. Therefore, whether a term of NIT is essential or not is a
decision taken by the employer which should be respected.
Even if the term is essential, the employer has the inherent
authority to deviate from it provided the deviation is made
applicable to all bidders and potential bidders as held in
Ramana Dayaram Shetty [Ramana Dayaram Shetty v.
International Airport Authority of India, (1979) 3 SCC 489] .
However, if the term is held by the employer to be ancillary
or subsidiary, even that decision should be respected. The
lawfulness of that decision can be questioned on very
limited grounds, as mentioned in the various decisions
discussed above, but the soundness of the decision cannot
be questioned, otherwise this Court would be taking over
the function of the tender issuing authority, which it cannot.”
(page 638)
16. Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd.,
(2016) 16 SCC 818, puts the proposition extremely well when it
states:
“14. We must reiterate the words of caution that this Court
has stated right from the time when Ramana Dayaram
Shetty v. International Airport Authority of India [Ramana
18
Dayaram Shetty v. International Airport Authority of India,
(1979) 3 SCC 489] was decided almost 40 years ago,
namely, that the words used in the tender documents
cannot be ignored or treated as redundant or superfluous
— they must be given meaning and their necessary
significance. In this context, the use of the word “metro” in
Clause 4.2(a) of Section III of the bid documents and its
connotation in ordinary parlance cannot be overlooked.
15. 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.”
(page 825)
17. This view of the law has been subsequently reiterated and followed
in Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272 (see
paragraph 25 at page 287) and Caratel Infotech (supra) (see
paragraphs 38-39 at pages 92-93).
18. Judged by these parameters, it is clear that this Court must defer to
the understanding of clauses in tender documents by the author
thereof unless, pithily put, there is perversity in the author’s
construction of the documents or mala fides. As against this, Shri
Dhruv Mehta is also correct in drawing our attention to Caratel
Infotech (supra), and in particular, to paragraphs 4, 9, 22 and 23,
which are set out hereinbelow:
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“4. The appellant submitted the bid in respect of the etender on 19-12-2017. In terms of Clause 20 extracted
aforesaid, a format had been provided for the declaration to
be made, which is as under:
“DECLARATION NON BLACKLISTED/NON
BANNED/NON HOLIDAY LISTED PARTY
We confirm that we have not been banned or blacklisted or
delisted or holiday listed by any government or quasigovernment agencies or public sector undertakings
Date: __________
Name of Tenderer: _______________
Place: __________
Signature & Seal of Tenderer: _____________
Note: If a bidder has been banned by any government or
quasi-government agencies or public sector undertakings,
this fact must be clearly stated with details. If this
declaration is not given along with the unpriced bid, the
tender will be rejected as non-responsive.”
The appellant submitted the declaration in terms aforesaid
i.e. stating that the appellant had not been blacklisted by
any government or quasi-government agency or public
sector undertakings.”
(page 85)
“9. The decision of the High Court is predicated on two
facts—firstly the non-disclosure of the factum of the showcause notice issued to the appellant amounted to violation
of the undertaking. Linked to this issue is that Clause 20(iii)
of the tender provided for an integrity pact “ensuring
transparency and fair dealing” and that integrity pact had
been duly signed and submitted by the appellant.
Secondly, the Division Bench doubted the compliance, by
the appellant, of Clause 8 read with Clause 10(g) of
Section 4 of the tender. This controversy pertains to the
clause dealing with the business continuity and the
requirement of submitting a valid ISO certificate for the
purpose of securing the tender. The relevant clauses read
as under:
“8. Business continuity
OMCs currently have an agreement for inbound
calls with a service provider based in different
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regions. The successful bidder has to submit the
transition plan to migrate to new platform and
facility with “zero” disruption of services with
respect to the following areas:
(a) Toll-free services.
(b) IVRS based call handling.
(c) Diversion of call traffic at the successful
bidder's premises.
(d) Trained operators at the time of Go-Live date.
***
10. Other mandatory requirements:
***
(g) Valid ISO Certification 27001 for security and
ISO 2301 for business continuity.””
(page 86)
“22. It is no doubt true that Clause 20 does provide for four
eventualities, as submitted by the learned counsel for
Respondent 3. The present case is not one where on the
date of submission of the tender the appellant had been
banned, blacklisted or put on holiday list. The question
before us, thus, would be the effect of an action for
blacklisting and holiday listing being initiated. The
declaration to be given by the bidder is specified in Clause
20(ii), which deals with the first three aspects. The format
enclosed with the tender documents also refers only to
these three eventualities. It is not a case where no specific
format is provided, where possibly it could have been
contended that the disclosure has to be in respect of all the
four aspects. The format having been provided, if initiation
of blacklisting was to be specified, then that ought to have
been included in the format. It cannot be said that the
undertaking by the appellant made it the bounden duty of
the appellant to disclose the aspect of a show-cause notice
for blacklisting. We say so as there is a specific clause with
the specific format provided for, requiring disclosures, as
per the same.
23. It may be possible to contend that the format is not
correctly made. But then, that is the problem of the framing
of the format by Respondent 1. It appears that Respondent
1 also, faced with the factual situation, took a considered
view that since Clause 20(i) provided for the four
eventualities, while the format did not provide for it, the
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appellant could not be penalised. May be, for future the
format would require an appropriate modification!”
(page 89)
19. It is clear that Shri Dhruv Mehta is right when he refers to and relies
upon the aforesaid judgment for the proposition that where there is
a format which had to be strictly complied with, his client was
justified in going by the literal reading of the aforesaid format, which
only required a disclosure of pending investigations under clause
7(b) of Annex I of the N.I.T. However, as has correctly been pointed
out by Shri Saurbh Mishra and Shri Puneet Jain, clause 7(b) of
Annex I, which is in terms similar to paragraph 13 of Appendix IA,
must be read together with paragraph 11 thereof, which, as has
been pointed out hereinabove, requires the bidder to certify that in
regard to matters other than security and integrity of the country, the
bidder has not been convicted by a court of law or indicted. Clearly
in the facts of the present case, though the investigation is no
longer pending and though there is no conviction by a court of law,
UPSBC has certainly been “indicted”, in that, a charge sheet has
been filed against it relatable to the FIR dated 15.05.2018 in which
a trial is pending, though stayed by the High Court. Also, Shri
Saurabh Mishra is correct in stating that “fraudulent practice”, as
defined in clause 4.3(b) of the N.I.T., would include an omission of
facts or disclosure of incomplete facts in order to influence the
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bidding process. In the facts of the present case, there is clearly an
omission of a most relevant fact and suppression of the same fact,
namely that an FIR had been lodged against UPSBC in respect of
the construction of a bridge by it, which had collapsed, and in which
a charge sheet had been lodged.
20. This being the case, Secy., Deptt. of Home Secy., A.P. v. B.
Chinnam Naidu, (2005) 2 SCC 746 is clearly distinguishable, as in
the facts of that case, the expression “convicted” could not have
possibly included the factum of arrest which was pre-conviction. On
the facts of the present case, we have seen as to how UPSBC has
indulged in a fraudulent practice and has suppressed the fact that it
was indicted for offences relatable to the construction of a bridge by
it, which had collapsed. Equally, paragraphs 12 to 18 of the
judgment in Vinubhai Haribhai Malaviya v. State of Gujarat,
(2019) 17 SCC 1, which distinguish between investigation, inquiry
and trial in a criminal case, are also of no avail to UPSBC in view of
the finding hereinabove. Equally, the well-known rule of contra
proferentem as expounded in Bank of India v. K. Mohandas,
(2009) 5 SCC 313 (at paragraph 32) is also of no avail, given the
fact that there is no ambiguity whatsoever insofar as the fraudulent
practice clause and paragraph 11 of Appendix IA are concerned.
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21. Adverting to Shri Dhruv Mehta’s argument that his client has been
non-suited only on application of clause 7(b) of Annex I, a reference
to the Technical Evaluation Committee’s order dated 13.03.2020
declaring UPSBC’s bid non-responsive shows that it also refers to
Appendix IA comprising the technical bid and paragraph 13 thereof,
in particular. We have already held that paragraph 13 has to be
read along with paragraph 11, which clearly states that a person
who is “indicted” for a criminal offence has to disclose the factum of
indictment. A technical objection based on the rejection order
cannot be allowed to prevail in the face of the suppression of a
most material fact, that is of an FIR pertaining to the construction of
a bridge by UPSBC, which has collapsed.
22. Coming to the public interest factor, and the fact that the financial
bid of UPSBC is about Rs. 9 crores less than that of Rajkamal, the
sting has been removed inasmuch as Shri Puneet Jain readily
accepts that if, as a result of UPSBC being disqualified, his client is
to be awarded the tender, he will do so at the same amount as the
financial bid of UPSBC. For all these reasons, the impugned
judgment dated 15.06.2020 is set aside.
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23. We now come to Rachana Construction Co.’s case. Insofar as
Rachana Construction Co. is concerned, it will not be open for a
constitutional court, in accordance with all the decisions cited
hereinabove, to substitute their view of the view of the tendering
authority, when it reads clause 2.2.2.2(ii) in the manner that has
been done. Suffice it to say that the expression “at least one similar
work” could possibly mean only one such work, namely, the
construction of one such bridge and not two such bridges, even if
two bridges were to be constructed under the same tender
document. It is not possible, therefore, for this Court to say that the
construction of the aforesaid clause by the tendering authority is an
impossible one rendering it perverse. Also, Shri Puneet Jain’s
argument, though made here for the first time, does support the
State of Madhya Pradesh, in that the two road over bridges that
have been constructed under the agreement between DFCCIL and
Rachana Construction Co. have a span of only 2380 meters taken
together, which is certainly less than 50% of 7.473 kilometers. For
these reasons, we dismiss Rachana Construction Co.’s SLP and
uphold the judgment dated 02.07.2020 and the review judgment
dated 04.08.2020.
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24. Given the lapse of time taken in court proceedings, the State of
Madhya Pradesh is directed to issue a LOI as soon as is practically
possible to Rajkamal insofar as the present tender is concerned at
the same financial bid as that of UPSBC. All the appeals are
disposed of accordingly.
……………….......................... J.
(ROHINTON FALI NARIMAN)
……………….......................... J.
(K.M. JOSEPH)
New Delhi;
December 08, 2020.
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