2007 Supreme(Bom) 690

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
J.N. Patel, Actg. C.J. & S.C.DHARMADHIKARI, J.
Reliance Energy Ltd.Petitioner
Versus
MSRDC Ltd. and Ors. Respondent
WRIT PETITION NO.39 OF 2007
Decided on: 4th June 2007.
Advocate Appeared
Mr. Rafiq Dada, Senior Advocate with Mr.Shaunak Thakker with Mr.D.J.Kakalia with Ms. Bhavna Singh and Ms.Reshma Thakwani Mulla & Mulla for petitioner
Mr. R.M.Kadam, Advocate General with P.P.Chavan Little & Co. for respondent Nos. 1 and Mr. P.G.Sawant, A.G.P. for respondent No.3

Headnote:

TENDERS - JUDICIAL REVIEW - EXTENT - MAINTAINABILITY OF PETITION - ARBITRARINESS - ACCOUNTING STANDARDS - APPLICABILITY - INTERPRETATION OF TERMS - DEPRECIATION AND AMORTISATION - TREATMENT OF NON-CASH EXPENSES - FINANCIAL CRITERIA - SATISFACTION - DECISION OF TENDER AUTHORITY - JUDICIAL INTERFERENCE.

Fact of the Case:

Petitioners challenged the decision of the Respondents excluding them from participating as a Bidder for the Mumbai Trans Harbour Link Project. The decision was based on the Petitioners not satisfying the financial criteria, particularly the Net Cash Profit criterion, as per the pre-qualification document (PQ document) issued by the Respondent No.1. The Petitioners contended that their Consortium satisfied the Net Worth Financial Criteria and also the Net Cash Profit Financial criteria. Applying the relevant and applicable Accounting Standards only one view is possible, which is that the Petitioners Consortium satisfies the twin criteria. However, the decision taken in not permitting the Petitioners Consortium to participate further, thus, cannot be sustained and is violative of the mandate of Article 14 of the Constitution of India.

Finding of the Court:

The Court held that the extent of Judicial Review in cases where bidders are denied participation at the threshold is well settled. In such cases, the Court will not sit as a Court of appeal but only reviews the manner in which the decision is arrived at. The judicial review is concerned with reviewing not the merits of the decision in support of which application for judicial review is made but the decision making process itself. The Court further held that the petition was maintainable even in the absence of M/s. Hyundai being made party thereto, considering the nature of the arrangement between the parties, correspondence by M/s. Hyundai on record and no serious prejudice being pointed out by the respondents on account of Hyundai being not made party to the petition. On the issue of arbitrariness, the Court held that the action of the respondents was being scrutinised within the parameters laid down by the Supreme Court in various decisions and strictly in accordance with the same. The Court also held that the decision of the Tendering Authority, after due consideration of the divergent views of experts and officials, cannot be substituted with the Court's views and altered in the exercise of Judicial Review.

Issues: 1. Extent of Judicial Review in cases where bidders are denied participation at the threshold; 2. Maintainability of the petition in the absence of M/s. Hyundai being made party thereto; 3. Whether the decision to deny participation to the petitioners at the threshold can be termed as arbitrary, irrational and unreasonable, so also violative of the mandate of Article 14 of the Constitution of India.

Ratio Decidendi: 1. The extent of Judicial Review in cases where bidders are denied participation at the threshold is well settled. In such cases, the Court will not sit as a Court of appeal but only reviews the manner in which the decision is arrived at. The judicial review is concerned with reviewing not the merits of the decision in support of which application for judicial review is made but the decision making process itself. 2. The petition is maintainable even in the absence of M/s. Hyundai being made party thereto, considering the nature of the arrangement between the parties, correspondence by M/s. Hyundai on record and no serious prejudice being pointed out by the respondents on account of Hyundai being not made party to the petition. 3. The decision of the Tendering Authority, after due consideration of the divergent views of experts and officials, cannot be substituted with the Court's views and altered in the exercise of Judicial Review.

Final Decision: The petition was dismissed. The ad-interim order dated 12.12.2006 was continued for a period of two weeks from the date of the judgment to enable the petitioner to take appropriate steps.