IMPORTANT POINT
Unless the interpretation of tender requirements by authorities is mala fide or perverse, or against public interest the constitutional Courts should not interfere.

Headnote:(a) Administration of justice – Mala fide – Contract – Bid of respondent 2 accepted as against that of the Appellant – Appellant alleging mala fide – Requests of appellant to modify clause 12. 1, extension of time to 08.07.2016 at 4 pm and again from 4 pm to 7 pm accepted – Appellant cannot allege mala fide in favour of respondent 2. (Para 23)
       (b) Contract matters – Eligibility criteria – Role of Court – Tests for validity of administrative actions – Wednesbury principle of reasonableness, and non-arbitrariness – Unless the interpretation of tender requirements by authorities is mala fide or perverse, constitutional Courts should not interfere. (Para 27)
       2016 (10) SCALE 50; (1994) 6 SCC 651; (2007) 14 SCC 517; (2005) 6 SCC 138; (2006) 11 SCC 548; (2012) 8 SCC 216; 2016 (8) SCALE 765; 2016 (10) SCALE 69; 2017 (1) SCALE 453; (1997) 1 SCC 738; (2001) 2 SCC 451 – Relied upon
       2016 (8) SCALE 99 : (2016) 8 SCC 622; (2014) 9 SCC 407; (2014) 207 DLT 1; 2011 (59) BLJR 183; AIR 1955 SC 74; (1986) 1 SCC 264; (1982) 1 SCC 125; AIR 1936 PC 253 – Referred
       (c) Contract matters – Eligibility – Clause 4.1 – Respondent 2 a Government company, is the owner of the subsidiaries companies having experience – Concept of “Government owned entity” – Cannot be construed narrowly – Such company would include its subsidiaries – Formation of joint venture or consortium not needed – Interpretation of 1st respondent not suffering from perversity, bias or mala fide, or against the public interest – Cannot be interfered. (Para 34)
       (1969) 3 All ER 855; (1976) 3 All ER 462; (1955) 1 WLR 352; (1988) 4 SCC 59; (1995) 1 SCC 478 – Referred
       Facts of the case:
       Nagpur Metro Rail Corporation Ltd., issued a Notice Inviting Tender (NIT) for the work of design, manufacture, supply, testing, commissioning of 69 passenger rolling stock (Electrical Multiple Units) and training of personnel at Nagpur Metro Rail Project.
       Three bidders submitted their bids. One was found technically disqualified and thus, only the appellant and the respondent No. 2 remained in contest.
       Upon opening of financial bid it was found that the appellant had given a bid of Rs. 852 crores whereas the bid of the respondent No. 2 was Rs. 851 crores. The Director Level Tender Committee of the 1st respondent agreed with the report of the tender evaluation committee and recommended to accept the lowest offer of respondent No. 2 and the work order was to be issued after compliance of certain technical requirements.
       Before issue of work order, the appellant filed Writ Petition before the High Court contending that respondent No. 2 was not technically qualified and, therefore, its financial bid could not have been opened.
       The High Court dismissed the Writ Petition.
       The High Court dismissed the application for review with costs of Rs. 1 lakh (Rupees One Lakh).
       Finding of the Court:
       Impugned decision does not warrant any interference.
       Result: Appeals dismissed.

JUDGMENT :

Dipak Misra, J.

Nagpur Metro Rail Corporation Ltd., the 1st respondent herein, issued a Notice Inviting Tender (NIT) on 25.01.2016 for the work of design, manufacture, supply, testing, commissioning of 69 passenger rolling stock (Electrical Multiple Units) and training of personnel at Nagpur Metro Rail Project. The said project is being funded by KfW Development Bank, Germany. As per the clause ITS 35.8 at all stages of bid evaluation and contract, award would have to be subject to no-objection from KfW Development Bank.

2. In response to the said NIT, three bidders submitted their bids. One was found technically disqualified and thus, only the appellant and the respondent No. 2 remained in contest. Upon opening of financial bid on 29.09.2016, it was found that the appellant had given a bid of Rs. 852 crores whereas the bid of the respondent No. 2 was Rs. 851 crores. The Director Level Tender Committee of the 1st respondent agreed with the report of the tender evaluation committee and recommended to accept the lowest offer of respondent No. 2 and the work order was to be issued after compliance of certain technical requirements. Before issue of work order, the appellant filed Writ Petition No. 5818 of 2016 before the High Court contending that respondent No. 2 was not technically qualified and, therefore, its financial bid could not have been opened.

3. It was contended by the appellant herein before the High Court that Clause 26 of the tender document prevented a person from getting any information about the technical qualification of the competitor, till the contract is awarded, which is arbitrary, unreasonable and violative of Article 14 of the Constitution; that the respondent No. 2 is not having the requisite experience as required under the NIT, for it does not meet the eligibility criteria on its own, but was relying on the experience of its subsidiary.

4. The Division Bench rejected the contention to go into the legality or otherwise of clause 26 observing that the appellant had participated in the tender bid knowing very well that such a clause existed and it was not open to it to contend that the said clause is onerous and lacks transparency and, therefore, violative of Article 14 of the Constitution; and it had challenged the same only after it is found that its financial bid was higher than that of respondent No. 2. It further observed that the matter would have been different had the appellant, immediately after the tender notice was published, challenged the said condition after NIT was issued. The High Court placing reliance upon the decisions in New Horizons Ltd. v. Union of India, (1995) 1 SCC 478 Tata Cellular v. Union of India, (1994) 6 SCC 651 Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium), 2016 (8) SCALE 99 : (2016) 8 SCC 622 and Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., 2016 (8) SCALE 765 dismissed the writ petition. Be it noted, though the High Court felt that it could have non-suited the writ petitioner only on the ground that it had participated in the tender process knowing fully well that stipulation in nature of the clause 26.1 existed, yet proceeded to address the controversy and directed the owner to produce the record solely for the further purpose of being satisfied as to whether the decision making process by the employer/owner is legally valid or not and further to examine as to whether the decision arrived at by the owner that the respondent No. 2, the lowest bidder, possessed requisite experience. After perusing the entire documents on record, the High Court came to hold that:-

“15. It is to be noted that the tender evaluation committee consists of Chief Project Manager/RS, General Manager/Procurement, Chief Project Manager/Signaling and the General Manager/Finance. The said Committee has evaluated the documents with regard to the technical qualification of the petitioner as well as respondent no.2. The Committee has noted that respondent no.2 was

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2017 Supreme(SC) 456

IMPORTANT POINTUnless the interpretation of tender requirements by authorities is mala fide or perverse, or against public interest the constitutional Courts should not interfere.

Cases Referred (20)

IMPORTANT POINT
Unless the interpretation of tender requirements by authorities is mala fide or perverse, or against public interest the constitutional Courts should not interfere.