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1999 Supreme(Del) 1062
High Court Of Delhi
LG INFORMATION AND COMMUNICATIONS LIMITED - Appellant
Versus
MAHANAGAR TELEPHONE NIGAM LIMITED - Respondent
L.P.A. 444 of 1999
Decided On : 12/01/1999
A.H.Desai, C.S.VAIDYANATHAN, MUKUL ROHTAGI, P.K.BAKSHI, RAVI SIKRI, SANDiP SETHI
A public authority's decision to seek clarification from a bidder under a tender clause is permissible to assist in bid evaluation and comparison, as long as it does not alter the quoted price, and such decision is not arbitrary or unreasonable.
Headnote:
TENDER - CLARIFICATION - ELIGIBILITY - JUDICIAL REVIEW - PUBLIC POLICY: 1. Judicial review of tender awards by public authorities is limited to preventing arbitrariness or favoritism. 2. Courts should exercise restraint in reviewing administrative decisions, as they lack the expertise to correct them and may substitute their own fallible decisions. 3. Invitation to tender terms are not subject to judicial scrutiny, as they fall within the realm of contract. 4. Government must have freedom of contract and fair play in tendering processes. 5. Relaxation of tender criteria is permissible if based on valid principles, such as expertise and past experience. 6. Clarification requests under tender clauses are permissible to assist in bid evaluation and comparison, as long as they do not alter the quoted price. 7. Administrative decisions can only be challenged on the "Wednesbury" principle of unreasonableness, i.e., if no sensible person would have made such a decision. 8. Quashing tender awards at an advanced stage of project execution may be against public policy, considering the time and resources already invested.
Fact of the Case:
MTNL invited global tenders for the supply of Wireless in Local Loop (WILL) technology. FIL, a Japanese company, and respondents 1 to 3, Korean and Indian companies, submitted bids. The Tender Evaluation Committee (TEC) initially found FIL ineligible due to lack of supporting documents for their claimed supply of one lakh lines of the technology. However, the competent authority, considering FIL's technical capabilities and provenness, directed them to provide clarification under clause 24 of the tender notice. FIL responded with a letter and a certificate from the Myanmar Post and Communication Ministry. Subsequently, FIL was found qualified for opening of their financial bid, which was the lowest. MTNL awarded the contract to FIL, but respondents 1 to 3 challenged the award, alleging that FIL was ineligible and unfit to bid.
Finding of the Court:
The court held that the competent authority's decision to seek clarification from FIL under clause 24 of the tender notice was bonafide and on legitimate considerations. It was not arbitrary or unreasonable. The court also noted that the respondents did not challenge FIL's inclusion for financial bid opening despite knowing about the alleged deficiency. The court further observed that quashing the tender award at an advanced stage of project execution, considering the time and resources already invested, would be against public policy.
Issues: 1. Whether the competent authority could ask for clarification under clause 24 of the tender notice. 2. Whether the court should interfere in the award of contract in the absence of mala fides or bias.
Ratio Decidendi: 1. Clause 24 of the tender notice allowed MTNL to seek clarification from bidders to assist in bid evaluation and comparison, as long as it did not alter the quoted price. 2. The competent authority's decision to seek clarification was based on valid considerations, such as FIL's technical capabilities and provenness, and was not arbitrary or unreasonable. 3. The court should not interfere in the award of contract in the absence of mala fides or bias against the decision-making authority.
Final Decision: The court allowed both appeals, set aside the impugned judgment and order of the learned Single Judge, and dismissed the writ petition filed by the respondents with no order as to costs.
( 1 ) THE above appeal is directed against the judgement dated 17th September, 1999 passed by learned Single Judge of this Court partially allowing the writ petition of appellants and quashing the Letter of Intent dated 3rd June. 1999 issued by Mahanagar Telephone, Nigam Limited (for short MTNL), respondent no. 1 in favour of the respondent no. 2fujitsu India Ltd. (for short Fil), Judge this Court, allowing the writ petition of respondents 1 to 3 herein, quashing the Letter of Intent dated 3rd June, 1999 issued by Mahanagar Telephone Nigam Limited (for short MTNL), respondent no. 4, in LPA 444/99 and appellant in LPA 457/99, in favour of the appellant. Fujitsu India Ltd. (for short FIL), and directing the MTNL to take fresh steps for award of the contract, as it may deem fit and appropriate, in accordance with law.
( 2 ) FACTS giving rise to these appeals briefly are that LG Information and Communications Ltd. a Korean Company, its collaborating concern in India M/s Escorts Communications Limited and their authorised representative Mr. Rajinder Sharma, respondents no. 1 to 3, filed a writ, challenging the letter of intent dated 3rd June. 1999 issued by MTNL to FIL for supply of Wireless in Local Loop system (WILL) of CDMA ISA-95 Technology (for short the Technology) on the ground that they were ineligible and unfit to bid for the tender as its bid was not responsive as per terms contained in paras 3,9. 2, and 13 of MTNL s Notice Inviting Tender (for short NIT), which prescribed eligibility and qualifications of a bidder and that the required documents were not enclosed along with the bid. It was alleged that as per the terms of NIT the bidder was required to enclose documents establishing supply of the said technology (at least one lakh lines) and also satisfactory feed back certificate of after sales service of at least two major customers: that NIT terms further prescribed that the bidders who do not fulfil the above requirements would not be considered and that their bid would be liable to be rejected; that FIL did not furnish along with their bid any document showing such supply or the performance certificate thus their bid was ex-facie unresponsive and liable to be rejected. The Tender Evaluation Committee (for short TEC) of the MTNL found FIL to be ineligible, however, MTNL arbitrarily over-ruled their rejection and awarded tender to FIL in flagrant breach of the eligibility criteria and after obtaining from them a letter dated 12th April, 1999 along with a certificate, from the Union of Myanmar certifying the supply of the said technology; that MTNL acted arbitrarily and the award speaks of unreasonableness and smacks favouritism; and that MTNL ought to have rejected the bid of FIL in terms of clause 26 of the NIT.
( 3 ) IN reply MTNL submitted that they had invited sealed global tender bids in two parts. (Techno-commercial and financial), from reputed manufacturers or suppliers, of WILL CDMA IS-95-A technology with at least two years standing and adequate financial strength on turn-key basis to carry out survey, design, supply of equipment, install, test commission and make over the systems to MTNL. Subsequent annual maintenance support was also a part of the scope of the said tender. As many as nine bidders submitted their bids in two parts (1)techno-commercial/unpriced bid and, (ii) financial/priced bid by the closing date of the tender. For the purpose of selection of the supplier, a Tender Evaluation Committee (TEC) was constituted to facilitate. aid and to recommend to the Competent Authority for selecting the best equipment at the competitive price. Firstly, the techno- commercial/unpriced bids of all the nine bidders were opened on 12-10-1998 in the presence of their representatives. The TEC started the evaluation of the techno-commercial/unpriced bids and took about four months to complete its recommendations. Thereafter these recommendations were sent to the competent authority,. Chairman-cum
