REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 21858 OF 2017
(Arising out of Special Leave Petition (Civil) No.22055 of 2017)
M/s Sam Built Well Pvt. Ltd. … Appellant
Versus
Deepak Builders & Ors. … Respondents
J U D G M E N T
R.F. Nariman, J.
1. Leave granted.
2. The present appeal involves a notice inviting tenders
(NIT) dated 16th March, 2017 by which the director of the
Institute of Nano Science and Technology, Mohali, invited
percentage rate composite bids from eligible firms/contractors
in a two bid system for construction of the Institute of Nano
1
Science and Technology Campus at Knowledge City, Sector 81,
Mohali, consisting of research, academic and administrative
buildings together with hostel, residential, amenity and utility
buildings. The estimated cost of the said project was Rs.162.18
crores, with earnest money payable being Rs.1.72 crores. The
period of completion was stated to be 20 months and the last
date for submission of tender was 10th April, 2017. Clause 8 of
the said NIT is important and states as under:
“8. Contractors/bidders who fulfill the following
minimum criteria shall be eligible to apply. Joint
ventures/consortium are not accepted.
(a) Should have satisfactorily completed the
works as mentioned below during the last date
of submission of bids.
(i) Three similar completed works each costing
not less than Rs.64.9 crores, or
(ii) Two similar completed works each costing not
less than Rs.97.3 crores,
(iii) One similar completed work of aggregate cost
not less than Rs.129.7 crores.
Similar work shall mean work of “construction of
institutional/educational buildings campus with
minimum five storeys RCC framed structure building
including electrical, plumbing, fire fighting, HVAC
2
works under composite contract executed in India in
a single contract.”
3. Several persons submitted their bids, including
Respondent No.1, who claimed that it had done “similar work”
as follows:
Sr.
No.
Name of
work
Completion
date
Current cost
after addition of
7% per annum
Remarks
1 Construction
of District
Administrative
complex at
Sector-76,
SAS Nagar,
Mohali
31.03.2016 Rs. 97.76 Cr.
Current
enhanced value
as per clause
2.2.4
Rs. 97.76 cr x
107% =
Rs.104.60 Cr.
It has
basement
plus 5
storeys RCC
framed
structure
2. Construction
of Office
Building of
Punjab Mandi
Board,
Phase-11, SA
Nagar, Mohali
05.10.2011 Rs.62.65 cr.
Current
enhanced value
as per clause
2.2.4
Rs. 62.25cr x
114% =70.96cr.
It has
basement
plus six
storeys RCC
framed
structure
3
3 Construction
of Jang-eAzadi
Memorial
Project at
Kartarpur,
Jalandhar
(Phase-1)
16.03.2015 Rs.172.32 cr It has height
of 42 meters
i.e. more
than 8
storeys RCC
framed
structure
4 Construction
of Judicial
Court
Complex at
Sector 76,
SAS Nagar,
Mohali
23.12.2015:
14 courts out
of 25 courts
were
inaugurated
on 23rd Dec.,
2015 and are
functioning
from the
building.
Work of
Phase 2 for
remaining
courts in
progress.
Work of Phase 2
for remaining
courts in
progress. Work of
Rs. 75.28 cr. was
completed upto
31.03.2017 and
balance work in
progress
It has
basement
plus 5
storeys RCC
framed
structure
5 Total Value Rs.423.16 Cr.
4. Pre-bid meetings were conducted in March, 2017 and
ultimately Respondent No.1 submitted its tender on 7th April,
2017. 5 out of 16 bidders, who initially came forward,
participated in the tender process. Admittedly, a technical
4
evaluation report dated 24th April, 2017 stated that the eligibility
criteria contained in Clause 8 of the NIT was not met by
Respondent No.1. This was reiterated by two other expert
bodies, namely, Tata Consultancy Services and the Building
Works Committee of the Institute. Respondent No.2 then
addressed a letter to Respondent No.1 informing it about its
ineligibility. On 3rd May, 2017, Respondent No.1 filed a Writ
Petition which was dismissed by the learned Single Judge
stating that “similar work”, which requires to be considered
under Clause 8 of the NIT, would be work which involves not
only construction of administrative blocks, but also several
other buildings. Looking at the four projects, the last of which
was admittedly kept out of consideration, it was found that none
of the work could be said to be “similar” in nature and referring
to the fact that three specialists had stated that Respondent
No.1 was ineligible, the Court adopted the hands-off posture,
considering the limited parameters of judicial review. However,
by the impugned judgment dated 4th August, 2017, the Division
Bench of the High Court allowed the appeal of Respondent
5
No.1 and set aside the judgment of the learned Single Judge
stating that though there was no malafides in the present case,
the judgment of the learned Single Judge was incorrect and
that, therefore, Respondent No.1 was clearly eligible. The
appeal was then disposed of by directing Respondent No. 2 to
consider Respondent No.1’s bid, along with other eligible bids,
and award the contract after assessing the bids on all
permissible criteria.
5. Pursuant to the said judgment, we have been informed
that the tender was ultimately awarded on 20th August, 2017 to
Respondent No.1, inter alia, for the reason that Respondent
No.1 quoted a figure of roughly 4 to 5 crores less than that of
the Appellant. Further, even though we are in December,
2017, the Appellant has, admittedly, not yet left the site of
construction and resultantly Respondent No.1 has not yet
commenced work.
6. Dr. A.M. Singhvi, learned senior counsel appearing on
behalf of the Appellant, has taken us through three expert
6
committee reports in the present case. According to the
learned senior counsel, it is incorrect to state that the National
Building Code of India, 2016, which is framed by the Bureau of
Industrial Costs and Prices, does not apply to the facts of the
present case inasmuch as the special conditions of the tender
specifically make the said Code applicable and that, therefore,
the expert committee reports based, inter alia, on the provisions
of the Code, cannot be interfered with. Also, according to the
learned senior counsel, the learned Single Judge correctly
appreciated that in tender matters, judicial review is very limited
and argued before us that the Division Bench, while setting
aside the judgment of the learned Single Judge, has not kept in
view the parameters of judicial review of tenders. Equally,
according to the learned senior counsel, it being clear that there
are no malafides or perversity involved, it would not be possible
for a Writ Court, sitting in judicial review, to interfere with the
tender process as has been done by the Division Bench.
7
7. Per contra, Shri Mukul Rohatgi, learned senior counsel
appearing for Respondent No.1, supported the impugned
judgment and stated that the National Building Code of India
was only made applicable in so far as safety aspects of the
buildings are concerned. This being the case, according to
him, all the expert committee reports in relying upon the
provisions of the said Code could not have done so. Also,
according to him, one look at the three projects that have been
carried out by Respondent No.1 would show that they are all
projects consisting of buildings which have basement plus 5 or
more storeys and that, therefore, it is clear that they were
“similar works” within the meaning of the expression contained
in Clause 8 of the NIT, as these were nothing other than
institutional buildings that were constructed by Respondent
No.1.
8. Dr. Singhvi, in rejoinder, stated that none of the three
works could possibly be called “similar work” because an entire
complex had to be constructed, and similar work was also
8
defined to mean, “construction of institutional/educational
buildings campus with minimum five storeys RCC framed
structure building…”. According to the learned senior counsel,
one building, albeit of 5 storeys or more, would not suffice.
9. Having heard learned counsel for both parties, it is
important to set out the parameters for judicial review in cases
like the present one. In a similar case, namely, Afcons
Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016)
16 SCC 818 at 825-26, paragraph 4.2(a) of Section III of the
tender conditions in that case again spoke of a certain minimum
number of “similar contracts” as previous work experience.
The question before this Court was whether an inter-state high
speed railway project could be similar to metro civil construction
work. After laying down the parameters of judicial review and
referring to various judgments for the same, this Court held:
“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
9
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.
16. In the present appeals, although there does
not appear to be any ambiguity or doubt about the
interpretation given by NMRCL to the tender
conditions, we are of the view that even if there was
such an ambiguity or doubt, the High Court ought to
have refrained from giving its own interpretation
unless it had come to a clear conclusion that the
interpretation given by NMRCL was perverse or
mala fide or intended to favour one of the bidders.
This was certainly not the case either before the
High Court or before this Court.”
10. In Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272 at
288, this Court referred to various judgments, including the
judgment in Afcons Infrastructure Ltd. (supra), and concluded
as follows:
“26. 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.
10
It is common knowledge in the competitive
commercial field that technical bids pursuant to the
notice inviting tenders are scrutinised by the
technical experts and sometimes third-party
assistance from those unconnected with the
owner's organisation 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
mala fide or procedure adopted is meant to favour
one. The decision-making process should clearly
show that the said maladies are kept at bay. But
where a decision is taken that is manifestly in
consonance with the language of the tender
document or subserves the purpose for which the
tender is floated, the 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
11
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.”
11. We have already noticed that three expert committees
have scrutinized Respondent No.1’s tender and found
Respondent No.1 to be ineligible. The impugned judgment of
the Division Bench of the High Court expressly states that no
malafides are involved in the present case. Equally, while
setting aside the judgment of the learned Single Judge, the
Division Bench does not state that the three expert committees
have arrived at a perverse conclusion. To merely set aside the
judgment of the learned Single Judge and then jump to the
conclusion that Respondent No.1’s tender was clearly eligible,
would be directly contrary to the judgments aforestated. Not
having found malafides or perversity in the technical expert
reports, the principle of judicial restraint kicks in, and any
appreciation by the Court itself of technical evaluation, best left
to technical experts, would be outside its ken. As a result, we
find that the learned Single Judge was correct in his reliance on
12
the three expert committee reports. The Division Bench, in
setting aside the aforesaid judgment, has clearly gone outside
the bounds of judicial review. We, therefore, set aside the
judgment of the Division Bench and restore that of the learned
Single Judge.
12. Dr. Singhvi, learned senior counsel appearing for the
Appellant, has stated that the Appellant is willing to match the
offer of Respondent No.1. We record the aforesaid statement
and order that the tender awarded to Respondent No.1 dated
20th August, 2017, based upon the Division Bench judgment,
must be set aside, and the award of the tender to the Appellant
must be restored. We hasten to add that it will be open to
Respondent No.2 to accept Dr. Singhvi’s offer that the project
will be executed at the amount indicated by Respondent No.1.
13
13. The appeal is allowed in the aforesaid terms with no order
as to costs.
…………………………..J.
(R.F. Nariman)
…………………………..J.
(Navin Sinha)
New Delhi;
December 14, 2017.
14
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 21858 OF 2017
(Arising out of Special Leave Petition (Civil) No.22055 of 2017)
M/s Sam Built Well Pvt. Ltd. … Appellant
Versus
Deepak Builders & Ors. … Respondents
J U D G M E N T
R.F. Nariman, J.
1. Leave granted.
2. The present appeal involves a notice inviting tenders
(NIT) dated 16th March, 2017 by which the director of the
Institute of Nano Science and Technology, Mohali, invited
percentage rate composite bids from eligible firms/contractors
in a two bid system for construction of the Institute of Nano
1
Science and Technology Campus at Knowledge City, Sector 81,
Mohali, consisting of research, academic and administrative
buildings together with hostel, residential, amenity and utility
buildings. The estimated cost of the said project was Rs.162.18
crores, with earnest money payable being Rs.1.72 crores. The
period of completion was stated to be 20 months and the last
date for submission of tender was 10th April, 2017. Clause 8 of
the said NIT is important and states as under:
“8. Contractors/bidders who fulfill the following
minimum criteria shall be eligible to apply. Joint
ventures/consortium are not accepted.
(a) Should have satisfactorily completed the
works as mentioned below during the last date
of submission of bids.
(i) Three similar completed works each costing
not less than Rs.64.9 crores, or
(ii) Two similar completed works each costing not
less than Rs.97.3 crores,
(iii) One similar completed work of aggregate cost
not less than Rs.129.7 crores.
Similar work shall mean work of “construction of
institutional/educational buildings campus with
minimum five storeys RCC framed structure building
including electrical, plumbing, fire fighting, HVAC
2
works under composite contract executed in India in
a single contract.”
3. Several persons submitted their bids, including
Respondent No.1, who claimed that it had done “similar work”
as follows:
Sr.
No.
Name of
work
Completion
date
Current cost
after addition of
7% per annum
Remarks
1 Construction
of District
Administrative
complex at
Sector-76,
SAS Nagar,
Mohali
31.03.2016 Rs. 97.76 Cr.
Current
enhanced value
as per clause
2.2.4
Rs. 97.76 cr x
107% =
Rs.104.60 Cr.
It has
basement
plus 5
storeys RCC
framed
structure
2. Construction
of Office
Building of
Punjab Mandi
Board,
Phase-11, SA
Nagar, Mohali
05.10.2011 Rs.62.65 cr.
Current
enhanced value
as per clause
2.2.4
Rs. 62.25cr x
114% =70.96cr.
It has
basement
plus six
storeys RCC
framed
structure
3
3 Construction
of Jang-eAzadi
Memorial
Project at
Kartarpur,
Jalandhar
(Phase-1)
16.03.2015 Rs.172.32 cr It has height
of 42 meters
i.e. more
than 8
storeys RCC
framed
structure
4 Construction
of Judicial
Court
Complex at
Sector 76,
SAS Nagar,
Mohali
23.12.2015:
14 courts out
of 25 courts
were
inaugurated
on 23rd Dec.,
2015 and are
functioning
from the
building.
Work of
Phase 2 for
remaining
courts in
progress.
Work of Phase 2
for remaining
courts in
progress. Work of
Rs. 75.28 cr. was
completed upto
31.03.2017 and
balance work in
progress
It has
basement
plus 5
storeys RCC
framed
structure
5 Total Value Rs.423.16 Cr.
4. Pre-bid meetings were conducted in March, 2017 and
ultimately Respondent No.1 submitted its tender on 7th April,
2017. 5 out of 16 bidders, who initially came forward,
participated in the tender process. Admittedly, a technical
4
evaluation report dated 24th April, 2017 stated that the eligibility
criteria contained in Clause 8 of the NIT was not met by
Respondent No.1. This was reiterated by two other expert
bodies, namely, Tata Consultancy Services and the Building
Works Committee of the Institute. Respondent No.2 then
addressed a letter to Respondent No.1 informing it about its
ineligibility. On 3rd May, 2017, Respondent No.1 filed a Writ
Petition which was dismissed by the learned Single Judge
stating that “similar work”, which requires to be considered
under Clause 8 of the NIT, would be work which involves not
only construction of administrative blocks, but also several
other buildings. Looking at the four projects, the last of which
was admittedly kept out of consideration, it was found that none
of the work could be said to be “similar” in nature and referring
to the fact that three specialists had stated that Respondent
No.1 was ineligible, the Court adopted the hands-off posture,
considering the limited parameters of judicial review. However,
by the impugned judgment dated 4th August, 2017, the Division
Bench of the High Court allowed the appeal of Respondent
5
No.1 and set aside the judgment of the learned Single Judge
stating that though there was no malafides in the present case,
the judgment of the learned Single Judge was incorrect and
that, therefore, Respondent No.1 was clearly eligible. The
appeal was then disposed of by directing Respondent No. 2 to
consider Respondent No.1’s bid, along with other eligible bids,
and award the contract after assessing the bids on all
permissible criteria.
5. Pursuant to the said judgment, we have been informed
that the tender was ultimately awarded on 20th August, 2017 to
Respondent No.1, inter alia, for the reason that Respondent
No.1 quoted a figure of roughly 4 to 5 crores less than that of
the Appellant. Further, even though we are in December,
2017, the Appellant has, admittedly, not yet left the site of
construction and resultantly Respondent No.1 has not yet
commenced work.
6. Dr. A.M. Singhvi, learned senior counsel appearing on
behalf of the Appellant, has taken us through three expert
6
committee reports in the present case. According to the
learned senior counsel, it is incorrect to state that the National
Building Code of India, 2016, which is framed by the Bureau of
Industrial Costs and Prices, does not apply to the facts of the
present case inasmuch as the special conditions of the tender
specifically make the said Code applicable and that, therefore,
the expert committee reports based, inter alia, on the provisions
of the Code, cannot be interfered with. Also, according to the
learned senior counsel, the learned Single Judge correctly
appreciated that in tender matters, judicial review is very limited
and argued before us that the Division Bench, while setting
aside the judgment of the learned Single Judge, has not kept in
view the parameters of judicial review of tenders. Equally,
according to the learned senior counsel, it being clear that there
are no malafides or perversity involved, it would not be possible
for a Writ Court, sitting in judicial review, to interfere with the
tender process as has been done by the Division Bench.
7
7. Per contra, Shri Mukul Rohatgi, learned senior counsel
appearing for Respondent No.1, supported the impugned
judgment and stated that the National Building Code of India
was only made applicable in so far as safety aspects of the
buildings are concerned. This being the case, according to
him, all the expert committee reports in relying upon the
provisions of the said Code could not have done so. Also,
according to him, one look at the three projects that have been
carried out by Respondent No.1 would show that they are all
projects consisting of buildings which have basement plus 5 or
more storeys and that, therefore, it is clear that they were
“similar works” within the meaning of the expression contained
in Clause 8 of the NIT, as these were nothing other than
institutional buildings that were constructed by Respondent
No.1.
8. Dr. Singhvi, in rejoinder, stated that none of the three
works could possibly be called “similar work” because an entire
complex had to be constructed, and similar work was also
8
defined to mean, “construction of institutional/educational
buildings campus with minimum five storeys RCC framed
structure building…”. According to the learned senior counsel,
one building, albeit of 5 storeys or more, would not suffice.
9. Having heard learned counsel for both parties, it is
important to set out the parameters for judicial review in cases
like the present one. In a similar case, namely, Afcons
Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016)
16 SCC 818 at 825-26, paragraph 4.2(a) of Section III of the
tender conditions in that case again spoke of a certain minimum
number of “similar contracts” as previous work experience.
The question before this Court was whether an inter-state high
speed railway project could be similar to metro civil construction
work. After laying down the parameters of judicial review and
referring to various judgments for the same, this Court held:
“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
9
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.
16. In the present appeals, although there does
not appear to be any ambiguity or doubt about the
interpretation given by NMRCL to the tender
conditions, we are of the view that even if there was
such an ambiguity or doubt, the High Court ought to
have refrained from giving its own interpretation
unless it had come to a clear conclusion that the
interpretation given by NMRCL was perverse or
mala fide or intended to favour one of the bidders.
This was certainly not the case either before the
High Court or before this Court.”
10. In Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272 at
288, this Court referred to various judgments, including the
judgment in Afcons Infrastructure Ltd. (supra), and concluded
as follows:
“26. 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.
10
It is common knowledge in the competitive
commercial field that technical bids pursuant to the
notice inviting tenders are scrutinised by the
technical experts and sometimes third-party
assistance from those unconnected with the
owner's organisation 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
mala fide or procedure adopted is meant to favour
one. The decision-making process should clearly
show that the said maladies are kept at bay. But
where a decision is taken that is manifestly in
consonance with the language of the tender
document or subserves the purpose for which the
tender is floated, the 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
11
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.”
11. We have already noticed that three expert committees
have scrutinized Respondent No.1’s tender and found
Respondent No.1 to be ineligible. The impugned judgment of
the Division Bench of the High Court expressly states that no
malafides are involved in the present case. Equally, while
setting aside the judgment of the learned Single Judge, the
Division Bench does not state that the three expert committees
have arrived at a perverse conclusion. To merely set aside the
judgment of the learned Single Judge and then jump to the
conclusion that Respondent No.1’s tender was clearly eligible,
would be directly contrary to the judgments aforestated. Not
having found malafides or perversity in the technical expert
reports, the principle of judicial restraint kicks in, and any
appreciation by the Court itself of technical evaluation, best left
to technical experts, would be outside its ken. As a result, we
find that the learned Single Judge was correct in his reliance on
12
the three expert committee reports. The Division Bench, in
setting aside the aforesaid judgment, has clearly gone outside
the bounds of judicial review. We, therefore, set aside the
judgment of the Division Bench and restore that of the learned
Single Judge.
12. Dr. Singhvi, learned senior counsel appearing for the
Appellant, has stated that the Appellant is willing to match the
offer of Respondent No.1. We record the aforesaid statement
and order that the tender awarded to Respondent No.1 dated
20th August, 2017, based upon the Division Bench judgment,
must be set aside, and the award of the tender to the Appellant
must be restored. We hasten to add that it will be open to
Respondent No.2 to accept Dr. Singhvi’s offer that the project
will be executed at the amount indicated by Respondent No.1.
13
13. The appeal is allowed in the aforesaid terms with no order
as to costs.
…………………………..J.
(R.F. Nariman)
…………………………..J.
(Navin Sinha)
New Delhi;
December 14, 2017.
14
