IMPORTANT POINTS
Government must have freedom of contract and the authorities should be at liberty to assess overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms.
Court cannot examine details of the terms of the contract which have been entered into by the public bodies or the State.
Courts do not sit in appeal over administrative action they only review the manner of decision making.
Equity and natural justice not applicable to contract, being a commercial transaction.
Where a decision has been taken purely on public interest, the court ordinarily should apply judicial restraint.

Headnote:(a) Government contract – Judicial review – Judicial restraint – Authorities should be at liberty to assess overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms – Court cannot examine details of the terms of the contract which have been entered into by the public bodies or the State – Courts do not sit in appeal over administrative action – They only review the manner of decision making – Government must have freedom of contract – Equity and natural justice not applicable to contract, being a commercial transaction – Where a decision has been taken purely on public interest, the court ordinarily should apply judicial restraint. (Para 17, 18, 19, 20, 21, 22)
       (1994) 6 SCC 651; (2012) 8 SCC 216; (1993) 1 SCC 445; (2007) 14 SCC 517; (2005) 6 SCC 138; (2006) 11 SCC 548; 2016 (8) SCALE 765 – Relied upon
       (b) Government contract – Judicial review – Where the work, tender document and its assessment is highly technical; and the decision is taken in consonance with the language of the tender document or subserves the purpose for which the tender is floated, Courts should not interfere – Interference would be warranted when the decision making process is arbitrary or mala fide or procedure adopted is meant to favour one – Different principles for are applied to scan, interpret, appreciate and understand an ordinary instrument relatable to contract in other spheres, and the tender documents relating to technical works and projects requiring special skills – In such cases The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints. (Para 24)
       Facts of the case:
       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.
       The respondent had also issued “Instructions To Bidders” (ITB) which contain clauses as to how the proposal shall be conducted.
       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.
       The respondent formed an opinion that the bid of the appellant was technically non-responsive.
       The appellant having been regarded as technically non-responsive, invoked the jurisdiction of the High Court challenging the said determination made by the respondent.
       The High Court dismissed the writ petition.
       Finding of the Court:
       There is no infirmity in the impugned judgment.
       Result: Appeal dismissed.

JUDGMENT :

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.

7.1.2 The Bidder should have, in the preceding 7 (seven) years reckone

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2016 Supreme(SC) 837

SUPREME COURT OF INDIADipak Misra, Uday Umesh Lalit, JJ.Montecarlo Ltd. – AppellantVersusNTPC Ltd. – RespondentCivil Appeal No. 10143 of 2016 (@ S.L.P. (C) No. 29297 of 2016)Decided On : 18-10-2016

Cases Referred (7)

SUPREME COURT OF INDIA
Dipak Misra, Uday Umesh Lalit, JJ.
Montecarlo Ltd. – Appellant
Versus
NTPC Ltd. – Respondent
Civil Appeal No. 10143 of 2016 (@ S.L.P. (C) No. 29297 of 2016)
Decided On : 18-10-2016