1. Tender for institutional campus construction — Dispute over eligibility based on similar work experience criteria — Challenge to technical evaluation findings. (Para 2 , 3 , 4 )
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2017 Supreme(SC) 1185
SUPREME COURT OF INDIA
R.F. Nariman, Navin Sinha, JJ.
M/s Sam Built Well Pvt. Ltd. – Appellant
Versus
Deepak Builders & Ors. – Respondents
Civil Appeal No. 21858 OF 2017 (Arising out of Special Leave Petition (Civil) No.22055 of 2017)
Decided On : 14-12-2017
IMPORTANT POINT
Appreciation of technical evaluation should be best left to technical experts. Would be outside jurisdiction of the court.
Headnote:Administrative of justice – Judicial review of contractual matters – NIT and award of contract – Division Bench of the High Court even though not finding mala fides or perversity in technical expert committee reports setting aside the same and holding respondent 1 eligible – Appreciation of technical evaluation should be best left to technical experts – Would be outside jurisdiction of the court – Award of tender to appellant restored. (Para 11, 12)
Facts of the case:
By a notice inviting tenders (NIT) dated 16th March, 2017 the director of the Institute of Nano Science and Technology, Mohali, invited percentage rate composite bids from eligible firms/contractors in a two bid system for construction of the Institute of Nano Science and Technology Campus at Knowledge City, Sector 81, Mohali, consisting of research, academic and administrative buildings together with hostel, residential, amenity and utility buildings. The estimated cost of the said project was Rs.162.18 crores, with earnest money payable being Rs.1.72 crores. The period of completion was stated to be 20 months and the last date for submission of tender was 10th April, 2017.
A technical evaluation report stated that the eligibility criteria contained in Clause 8 of the NIT was not met by Respondent No.1. Respondent No.2 then addressed a letter to Respondent No.1 informing it about its ineligibility.
Respondent No.1 filed a Writ Petition which was dismissed by the Single Judge.
However, by the impugned judgment the Division Bench of the High Court allowed the appeal of Respondent No.1. The appeal was then disposed of by directing Respondent No. 2 to consider Respondent No.1’s bid, along with other eligible bids, and award the contract after assessing the bids on all permissible criteria.
Pursuant to the said judgment the tender was ultimately awarded to Respondent No.1.
Finding of the Court:
Division Bench of the High Court went beyond its jurisdiction.
Result: Appeal allowed. Award of tender to appellant restored.
Legal Category Hierarchy
Table of Contents
2. Whether technical evaluation of similar work experience is subject to judicial review and whether specific building projects satisfy the criteria for an institutional campus. (Para 6 , 7 , 8 )
3. Courts must defer to the employer's interpretation of tender documents and technical expert evaluations unless there is evidence of mala fides or perversity. (Para 9 , 10 , 11 )
4. Judicial review of tender technical evaluations is limited to checking for mala fides or perversity; courts cannot substitute their own technical interpretation for that of experts. (Para 9 , 10 , 11 )
5. Appeal allowed — Division Bench judgment set aside — Single Judge's judgment restored — Tender award to the ineligible bidder set aside. (Para 11 , 12 , 13 )
6. What is the scope of judicial review in the evaluation of tenders?
Judicial review is limited. Constitutional courts must defer to the employer's understanding and interpretation of tender documents unless there is mala fide or perversity in the application of the tender conditions. (Para 9 , 10 )
7. To what extent can courts interfere with technical evaluations performed by experts in tender processes?
Courts should exercise restraint and avoid performing their own technical evaluations or comparisons. Technical capability and capacity must be assessed by experts, and such findings are generally outside the court's ken. (Para 10 , 11 )
8. Under what specific conditions is the court justified in interfering with a tender award decision?
Interference is warranted only if the approach is arbitrary, mala fide, or the procedure adopted is intended to favor a particular bidder. (Para 10 )
JUDGMENT
R.F. Nariman, J.
1. Leave granted.
2. The present appeal involves a notice inviting tenders (NIT) dated 16th March, 2017 by which the director of the Institute of Nano Science and Technology, Mohali, invited percentage rate composite bids from eligible firms/contractors in a two bid system for construction of the Institute of Nano Science and Technology Campus at Knowledge City, Sector 81, Mohali, consisting of research, academic and administrative buildings together with hostel, residential, amenity and utility buildings. The estimated cost of the said project was Rs.162.18 crores, with earnest money payable being Rs.1.72 crores. The period of completion was stated to be 20 months and the last date for submission of tender was 10th April, 2017. Clause 8 of the said NIT is important and states as under:
“8. Contractors/bidders who fulfill the following minimum criteria shall be eligible to apply. Joint ventures/consortium are not accepted.
(a) Should have satisfactorily completed the works as mentioned below during the last date
of submission of bids.
(i) Three similar completed works each costing not less than Rs.64.9 crores, or
(ii) Two similar completed works each costing not less than Rs.97.3 crores,
(iii) One similar completed work of aggregate cost not less than Rs.129.7 crores.
Similar work shall mean work of “construction of institutional/educational buildings campus with minimum five storeys RCC framed structure building including electrical, plumbing, fire fighting, HVAC works under composite contract executed in India in a single contract.”
3. Several persons submitted their bids, including Respondent No.1, who claimed that it had done “similar work” as follows:
| Sr. No. | Name of work | Completion date | Current cost after addition of 7% per annum | Remarks |
| 1. | Construction of District Administrative complex at Sector-76, SAS Nagar, Mohali | 31.03.2016 | Rs. 97.76 Cr. Current enhanced value as per clause 2.2.4 Rs. 97.76 cr x 107% = Rs.104.60 Cr. | It has basement plus 5 storeys RCC framed structure |
| 2. | Construction of Office Building of Punjab Mandi Board, Phase-11, SA Nagar, Mohali | 05.10.2011 | Rs.62.65 cr. Current enhanced value as per clause 2.2.4 Rs. 62.25cr x 114% =70.96cr. | It has basement plus six storeys RCC framed structure |
| 3. | Construction of Jang-e- Azadi Memorial Project at Kartarpur, Jalandhar (Phase-1) | 16.03.2015 | Rs.172.32 cr | It has height of 42 meters i.e. more than 8 storeys RCC framed structure |
| 4. | Construction of Judicial Court Complex at Sector 76, SAS Nagar, Mohali | 23.12.2015: 14 courts out of 25 courts were inaugurated on 23rd Dec., 2015 and are functioning from the building. Work of Phase 2 for remaining courts in progress. | Work of Phase 2 for remaining courts in progress. Work of Rs. 75.28 cr. was completed upto 31.03.2017 and balance work in progress | It has basement plus 5 storeys RCC framed structure |
| 5. | Total Value | Rs.423.16 Cr. |
4. Pre-bid meetings were conducted in March, 2017 and ultimately Respondent No.1 submitted its tender on 7th April, 2017. 5 out of 16 bidders, who initially came forward, participated in the tender process. Admittedly, a technical evaluation report dated 24th April, 2017 stated that the eligibility criteria contained in Clause 8 of the NIT was not met by Respondent No.1. This was reiterated by two other expert bodies, namely, Tata Consultancy Services and the Building Works Committee of the Institute. Respondent No.2 then addressed a letter to Respondent No.1 informing it about its ineligibility. On 3rd May, 2017, Respondent No.1 filed a Writ Petition which was dismissed by the learned Single Judge stating that “similar work”, which requires to be considered under Clause 8 of the NIT, would be work which involves not only construction of administrative blocks, but also several other bui
