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SUPREME COURT OF INDIA
S.A. BOBDE, CJI., B.R. GAVAI, SURYA KANT, JJ.
The Bharat Coking Coal Ltd. and Others – Appellants
Versus
AMR Dev Prabha and Others – Respondents
Civil Appeal Nos. 2197, 2198, 2199, 2200 of 2020, Special Leave Petition (C) Nos. 11915, 12139, 12867, 13321 of 2018
Decided On : 18-03-2020
(a) Constitution of India - Article 226 - Judicial review - Contractual matters - Tender - Courts ought not to sit in appeal over decisions of executive authorities or instrumentalities - Judicial review would be permissible in case of allegations of illegality, irrationality and procedural impropriety - Even then, judicial enquiry should confine to decision-making process and not the decision. (Para 29)
(b) Constitution of India - Article 226 - Writ petitions against State or its instrumentalities bypassing established civil adjudicatory processes not permissible - Use of constitutional avenues for enforcement of contractual obligations needs to be prevented - Depending upon the nature of the wrong there would be different forums for redress. (Para 31, 35)
(c) Constitution of India - Article 226 - Tender matters - Writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty - In order to maintain a writ, public interest too should be demonstrated in addition to arbitrariness, illegality or discrimination under Article 14 or encroachment of freedom under Article 19(1)(g). (Para 32, 35)
Constitution of India - Article 226 - Tender matters - Respondent 1 changing stance during course of litigation from nullifying contract awarded to respondent 6 and arbitrariness of appellant to making a new offer much lower that its bid - No public interest demonstrated - Granting such prayer would give special opportunity of negotiation to respondent 1, to the detriment of all other participants in violation of Article 14. (Para 38)
(d) Contractual matter - Being declared the L1 bidder does not bestow upon any entity a public law entitlement to award of the contract. (Para 40)
(e) Constitution of India - Article 226 - Possibility of improvement can’t be a ground for striking down an authority’s action - More so when no allegation of the decisions being accentuated by illegal gratification, or otherwise being fraudulent or contrary to a statute have either been clearly made or established. (Para 44)
(f) Contractual matter - There is no prohibition in law against public authorities granting relaxations for bona fide reasons - Further, in absence of allegation of mala fide, a minor deviation from NIT would not be sufficient to set aside the tender at behest of unsuccessful bidder. (Para 47, 48)
(g) Constitution of India - Article 226 - Delay and laches - Auction closed on 05.05.2015 - Respondent 6 failing to submit guarantees within a period of 28 days - Writ petition filed on 10.08.2015 claimimg cause of action arose on failure of respondent 6 to submit guarantees - Such event could not allow respondent 1 to challenge entire process of auction ignoring privity of contract between Respondent No. 6 and appellant. (Para 50)
(h) Interpretation of NIT - Authority issuing NIT - Better placed to appreciate their requirements and interpret the NIT - Such interpretation cannot be interfered unless patently perverse or mala fide. (Para 52)
Facts of the case:
BCCL, as part of its operations, regularly out-sources many mining and processing functions to external entities. Such allocation of tasks is done through competitive bidding processes, with Respondent No. 4 [M/s C1 India Pvt. Ltd. - an online procurement facilitator] being appointed as the service provider for e-tendering of its contracts.
A Notice Inviting Tender was issued by the appellant on 09.03.2015. An initial estimate of Rs. 1694.84 crores was prepared by the appellant, with the aim of contracting the firm which offered the lowest cost estimate for fulfillment of the tender work.
The bidding was slated to be conducted on the online e-reverse auction platform of C1-India on 04.05.2015 and 05.05.2015, with C1-India having near complete supervision and autonomy over the auction process. In turn, C1-India had hosted its server with Tata Communications Ltd. which was also providing internet connectivity. As per terms of the NIT, the auction would close at 6:00 PM on 05.05.2015. However, the auction would automatically terminate in case any particular bid went un-responded for a period of 30 minutes. In case of any technical faults at the service provider’s end, the auction period was to be paused and extended by the period of the fault.
Although the auction proceeded smoothly on the first day, on 05.05.2015 at around 12:55 PM, a fault occurred in connectivity of C1-India which was restored at 2:11 PM. In the interregnum, the last bid of Rs. 2345 Crores made by M/s AMR-Dev Prabha at 12:33 PM went un-responded for thirty minutes, and the auction was automatically closed at 1:03 PM.
The auction process was restarted at 2:30 PM and various bids were received by many participants, including numerous bids from the now aggrieved Respondent No. 1 and the ultimately successful Respondent No. 6. Respondent No. 6 was declared successful with a bid of Rs. 2043 crores at 7:27 PM.
BCCL issued Letter of Acceptance on 30.05.2015.
Three months after closure of the auction, Respondent No. 1 preferred a Writ Petition before the High Court on 10.08.2015, praying for a declaration that it emerged as the successful L1 bidder at 1:03 PM on 05.05.2015 and for quashing of the LOA issued by the appellant to Respondent No. 6 for being arbitrary. Simultaneously, it was also prayed that directions be issued to BCCL for awarding the contract to them and for conducting enquiry into the entire matter.
During the pendency of the Writ Petition two Independent External Monitors were appointed. The two IEMs submitted contradictory reports.
The Single Judge dismissed the first respondent’s writ.
The Division Bench allowed the appeal.
Finding of the Court:
There was neither any public law right of the first respondent which was affected, nor was there any public interest sought to be furthered.
Result: Appeal filed by BCCL as well as connected appeals filed by M/s RK Transport and M/s C1 India Pvt. Ltd. allowed. Appeal filed by AMR-Dev Prabha dismissed.
Key Points: - Courts should not sit in appeal over decisions of executive authorities or instrumentalities (!) (!) . - Writs are impermissible when the allegation is solely about violation of a contractual right or duty (!) (!) . - A public authority’s interpretation of its own tender (NIT) should not be interfered with unless it is patently perverse or mala fide (!) (!) . - Being declared the L1 bidder does not create a public law entitlement to contract award (!) . - Possibility of improvement cannot be a ground for striking down an authority’s action (!) . - Granting relaxations for bona fide reasons by public authorities is permissible and not sufficient to set aside a tender (!) (!) . - Delay and laches apply when a writ petition is filed long after the contract process completes and after the opportunity to challenge has passed (!) . - Public interest must be demonstrated to maintain a writ petition in tender matters; private monetary disputes do not suffice (!) (!) . - Technical connectivity issues coupled with process resumption, without mala fide intent, do not automatically invalidate the tender (!) (!) . - The ultimate result allows the appeal of the authority and dismisses the unsuccessful bidder’s challenge, setting aside the High Court’s intervention (!) .
JUDGMENT :
1. Leave Granted.
2. These appeals have been preferred by Bharat Coking Coal Ltd. (hereinafter “BCCL”) being aggrieved by the order dated 12.04.2018 passed by a Division Bench of the High Court of Jharkhand at Ranchi, wherein a writ petition filed by AMR-Dev Prabha (Respondent No. 1) had been allowed and the auction process conducted by M/s C1 India Pvt. Ltd. (Respondent No. 4, hereinafter “C1-India”) was set aside and the resultant award of tender by BCCL to M/s R.K. Transport Co. (Respondent No. 6) had also been quashed.
FACTUAL BACKGROUND
3. BCCL, a subsidiary of Coal India Ltd. operates coking coal mines in India and as part of its operations regularly out-sources many mining and processing functions to external entities. Such allocation of tasks is done through competitive bidding processes, with Respondent No. 4 [M/s C1 India Pvt. Ltd. (hereinafter “C1 India”) - an online procurement facilitator] being appointed as the service provider for e-tendering of its contracts.
4. A Notice Inviting Tender (“NIT”) was issued by the appellant on 09.03.2015 for purposes of ‘Hiring of HEMM for removal of OB, extraction and transportation of coal with fire fighting from XIV, XII, XI/XII, XII, XI, IX/X, V/VI/VII/VIII, IV/VIII, IV(T), IV(B), III, II I(T) and I(B) seams at Patch-DE (Mega Project) of Dhansar-Ena colliery of Kusunda Area along with crushing of coal by portable crusher’ (NIT No 312). An initial estimate of Rs. 1694.84 crores was prepared by the appellant, with the aim of contracting the firm which offered the lowest cost estimate for fulfilment of the tender work.
5. The bidding was slated to be conducted on the online e-reverse auction platform of C1-India on 04.05.2015 and 05.05.2015, with C1-India having near complete supervision and autonomy over the auction process. In turn, C1-India had hosted its server with Tata Communications Ltd. (“TCL”) which was also providing internet connectivity through a leased line to C1-India. As per terms of the NIT, the auction would close at 6:00 PM on 05.05.2015. However, the auction would automatically terminate in case any particular bid went un-responded for a period of 30 minutes. In case of any technical faults at the service provider’s end, the auction period was to be paused and extended by the period of the fault; however, bidders were to be responsible for connectivity problems at their end.
6. Although the auction proceeded smoothly on the first day, on 05.05.2015 at around 12:55 PM, C1-India is stated to have received certain telephone calls from various participants claiming that there were connectivity problems leading to failure in submitting bids. An email was thus sent by C1-India to TCL at 12:59 PM stating “my link is down.” In response, TCL informed C1-India through an email at 2:11 PM that bandwidth issues had indeed been experienced owing to a dual fiber cut in their intra-city network as well as a fault in their patch cord. In the interregnum, the last bid of Rs. 2345 Crores made by M/s AMR-Dev Prabha (Respondent No. 1) at 12:33 PM went un-responded for thirty minutes, and the auction was automatically closed at 1:03 PM.
7. Taking conscious notice of these technical issues communicated by TCL and estimating that a lower price could be discovered had such fault not arisen, C1-India (allegedly with the concurrence of BCCL officials) took a decision to restart the auction process at 2:30 PM. Such resumption, with the possibility of extension of time, was communicated to all bidders telephonically, as well as through emails sent between 2:17 PM and 2:36 PM. Accordingly, various bids were received by many participants, including numerous bids from the now aggrieved Respondent No. 1 and the ultimately successful Respondent No. 6. The auction proceeded to the extended time of 1 hour and 27 minutes (calculated as being the time of interruption between the erroneous closure at 1:03 PM and subsequent resumption at 2:30 PM) and Respondent No. 6 was declared successful with
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