SUPREME COURT OF INDIA
M. R. Shah, B.V. Nagarathna, JJ.
Balaji Ventures Private Limited – Appellant
Versus
Maharashtra State Power Generation Company Limited & Anr. – Respondents
Special Leave Petition (C) No. 1616 of 2022 with Special Leave Petition (C) No. 1673 of 2022
Decided On : 24-01-2022
Tender Clause - Transportation of Raw Coal - Clause 1.12(V) - [Michigan Rubber (India) Limited Versus State of Karnataka & Others, (2012) 8 SCC 2016; Unflex Limited Versus Government of Tamil Nadu & Others, (2022) 1 SCC 165; Meerut Development Authority versus Association of Management Studies & Another, (2009) 6 SCC 171; Silppi Constructions Contractors vs. Union of India, (2020) 16 SCC 489; Montecarlo Limited vs. National Thermal Power Corporation Limited, (2016) 15 SCC 272] - The court discussed the validity of clause 1.12(V) of the tender document, which required the bidder to obtain permission and consent of a private siding owner to operate the siding for dispatch of coal. The court referred to various legal provisions and held that the clause was not arbitrary, mala fide, or tailor-made, and was applicable to all bidders. The court also noted that a corrigendum had been issued, modifying the clause and extending the submission deadline. The court dismissed the writ petitions, affirming the validity of the tender clause.
Fact of the Case:
The petitioner challenged clause 1.12(V) of the tender document, which required obtaining permission and consent of a private siding owner to operate the siding for dispatch of coal. The High Court initially granted interim relief, allowing the petitioner to participate in the tender process without insisting on the impugned requirement. However, the High Court later dismissed the writ petitions.
Finding of the Court:
The court disapproved the grant of interim relief by the High Court and affirmed the validity of clause 1.12(V) of the tender document. The court held that the clause was not arbitrary, mala fide, or tailor-made, and was applicable to all bidders. The court dismissed the Special Leave Petitions.
Issues: The issues involved the validity of clause 1.12(V) of the tender document, the grant of interim relief by the High Court, and the petitioner's challenge to the tender condition.
Ratio Decidendi: The court held that the tender inviting authority is the best judge of its requirements and tender documents, and interference should be minimal unless there is arbitrariness, irrationality, bias, mala fides, or perversity. The court also emphasized the freedom of contract for the government and the need to prevent arbitrariness, bias, or mala fides.
Final Decision: The Special Leave Petitions were dismissed, affirming the validity of clause 1.12(V) of the tender document and the decision of the High Court.
ORDER
1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 24.01.2022 passed by the High Court of Judicature at Bombay Bench at Nagpur in Writ Petition No. 5260 of 2021 and Writ Petition No. 5444 of 2021 by which the High Court has dismissed the said writ petitions preferred by the petitioner in which the petitioner -bidder challenged the Clause 1.12(V) of the tender document, the original writ petitioner has preferred the present Special Leave Petitions.
2. That the respondent herein Maharashtra State Power Generation Company Ltd. floated a tender inviting bids for transportation of raw coal against Road-cum-Rail allocation from various mines of Western Coal fields Limited to the Thermal Power Station to its Principal Power Station. That one of the tender conditions was that bidder should have permission and consent of private siding owner to operate the Vimla siding for dispatch of coal to TPS of Mahagenco and the permission/consent of Vimla private siding owner to operate the siding should be submitted along with the bid, failure of which, the bid will not be considered and the siding should be available for the entire period of the contract. The petitioner herein - original writ petitioner challenged the said Clause 1.12(V) before the High Court by way of Writ Petition No.5260 of 2021 and Writ Petition No.5444 of 2021. The aforesaid writ petitions came up for hearing before the Division Bench on 14.12.2021 and 20.12.2021 respectively. The High Court entertained the said writ petitions and passed an interim order directing that the original petitioner shall be allowed to take part in the tender process without insisting upon the impugned requirement of obtaining NOC from Vimla and such opportunity shall also be provided to all other prospective bidders and for that purpose, the deadline for submission of the bids shall be extended by further suitable time, which should be decided by the respondents. By way of interim relief, the Division Bench also directed to issue a corrigendum to the tender notice on the lines that clause 1.12 (V) condition would not be insisted upon or would be treated as an optional or further time shall be given to the prospective bidders for fulfilment of the same conditions. The interim order reads as under:
"6. Considering the submissions and also the request made on behalf of the respondent for grant of time, we are of the view that some interim relief before grant of further time would have to be provided in the matter. Accordingly, we direct that the petitioner shall be allowed to take part in the tender process without insisting upon the impugned requirement of obtaining NOC from Vimla and such opportunity shall also be provided to all other prospective bidders and for that purpose, we further direct that the deadline for submission of the bids shall be extended by a further suitable time, which may be decided by the respondent and a corrigendum to the tender notice on the lines that clause 1.12 (V) condition would not be insisted upon or would be treated as an optional or further time shall be given to the prospective bidders for fulfillment of this condition, whichever is found to be convenient by the respondent shall be issued so that all interested parties would have a reasonable notice of change in the terms and conditions of the tender notice and that would ensure equality of opportunity to all the bidders.
7. We would also like to examine the reasonableness of the impugned condition, as the condition seeks involvement of a private party in a tender floated for disposition of public property and therefore, the private operator, "Vimla Infrastructure (India) Private Limited", be added by the petitioner as a party respondent to this petition by making necessary amendment to the cause title forthwith."
2.1 That thereafter the respondent issued a corrigendum on 01.12.2021 as a result of which clause 1.12(V) of the tender conditions came to be modified and the necessary
Meerut Development Authority versus Association of Management Studies & Another
Montecarlo Limited vs. National Thermal Power Corporation Limited
The court emphasized the minimal interference in tender conditions by the judiciary and the need to prevent arbitrariness, bias, or mala fides in government contracts.
The tender inviting authority is the best judge of its requirements and tender documents, and the court's interference should be minimal unless there is arbitrariness, bias, mala fides, or perversity....
The main legal point established in the judgment is that the involvement of a private party in a tender process can be justified if it aims to ensure the uninterrupted supply of essential goods, and ....
The main legal point established in the judgment is the limited scope of judicial review in tender conditions, emphasizing the authority of the tendering entity to interpret and appreciate its requir....
Court exercising powers under Article 226 of Constitution of India has jurisdiction to examine decision making process without even going into merits of such decision.
The rejection of bids by public authorities must adhere to the principles of fairness, reasonableness, and non-arbitrariness as mandated by Article 14 of the Constitution of India.
Judicial interference in the matter of tenders and contracts is limited and the court should exercise restraint in interfering with the administrative decision-making process.
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