1. Tender for municipal solid waste collection — Technical and financial evaluation by expert — Award of contract challenged by unsuccessful bidder — High Court set aside award. (Para 2 , 4 )
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2018 Supreme(SC) 252
SUPREME COURT OF INDIA
Ranjan Gogoi, R. Banumathi, Mohan M. Shantanagoudar, JJ.
MUNICIPAL CORPORATION, UJJAIN & ANR. – Appellants
Versus
BVG INDIA LIMITED AND ORS. – Respondents
CIVIL APPEAL NO. 3330 OF 2018 (Arising out of SLP (Civil) No. 11967 of 2016) WITH Civil Appeal No. 3331 of 2018 arising out of SLP (C) No. 17201 of 2016 & Civil Appeal No. 3332 of 2018 arising out of SLP (C) No. 30776 of 2016
Decided On : 27-03-2018
Important Points
IMPORTANT POINTS
The decision making process in awarding Government contract must be free from arbitrariness, and mala fides.
In awarding Government contract due importance has to be given to quality. Contract cannot be given to a bidder merely on lower financial bid.
Power of judicial review cannot be invoked to protect private interest by ignoring public interest.
No bidder can be permitted to alter or supplement the bid document.
The decision making process in awarding Government contract must be free from arbitrariness, and mala fides.
In awarding Government contract due importance has to be given to quality. Contract cannot be given to a bidder merely on lower financial bid.
Power of judicial review cannot be invoked to protect private interest by ignoring public interest.
No bidder can be permitted to alter or supplement the bid document.
Subject
Administrative Law - Government Contracts & Tenders
Act Referred
Headnote
(a) Administration of justice – Judicial review – Government contract – Tender – Decision making process – Wednesbury principle of reasonableness – Must be free from arbitrariness, and mala fides – Element of public law or public interest – A reasonable decision made in accordance with law not affecting public interest, should not be interfered under Article 226, Constitution of India. (Para 6, 7, 9, 10, 11, 21)
(1994) 6 SCC 651; (2005) 6 SCC 138; (1993) 1 SCC 445; (1999) 1 SCC 492; (2000) 2 SCC 617; (1995) 2 SCC 754; (1993) 2 SCC 299; (1996) 5 SCC 65; (2005) 4 SCC 456; (2006) 11 SCC 548; (1996) 2 SCC 405; (2016) 8 SCC 622; (2016) 16 SCC 818; (2007) 14 SCC 517; (2009) 6 SCC 171 – Relied upon
(b) Solid Waste Management Rules, 2016 – Rule 22 – Technical bid and financial bid – Corporation allotting 80% marks for technical bid and 20% for financial bid – Due importance to quality – Contract could not be given to a bidder merely on lower financial bid. (Para 26, 33)
(1971) 3 SCC 153; (1979) 3 SCC 489; (1996) 2 SCC 405; (2016) 8 SCC 622; (1993) 1 SCC 445; (2016) 16 SCC 818 – Relied upon
(c) Constitution of India – Article 226 – Power of judicial review cannot be invoked to protect private interest by ignoring public interest – In absence of allegations of bias or mala fide, High Court ought not to go into merits of the decision as an appellate authority – No interference warranted. (Para 35, 39)
(1994) 6 SCC 651 – Relied upon
(d) Constitution of India – Article 226 – A certificate, not a part of bid document, submitted before High Court for the first time – High Court relying upon it –No bidder can be permitted to alter or supplement the bid document – High Court evaluating technical eligibility on its own as appellate authority – Not justified. (Para 41, 42)
Facts of the case:
Ujjain Municipal Corporation had issued Notice Inviting Tender for the appointment of an agency to carry out “Municipal Solid Waste Door to Door Collection and Transportation” for a period of 10 years in the city of Ujjain.
The Municipal Corporation had appointed a technical expert in Waste Management Solution viz. M/s Eco Save System Pvt. Ltd. for scrutinising and evaluating the technical & financial bids. The last date of submission of tender was 21.05.2015. However, a corrigendum was issued and the date of submitting online tenders was extended up to 01.06.2015. The opening of the technical bid was fixed for 02.06.2015 and the opening of the financial bid on 04.06.2015. Three bidders remained for consideration of the award of tender by the Municipal Corporation.
On a final analysis based on technical and financial weighted scores, Global Waste Management Cell Pvt. Ltd. got first rank (L1 bidder) amongst the three bidders by getting the highest score. Hence, it was awarded the contract. Such award of contract was questioned by the unsuccessful bidder (B.V.G. India Limited, L2 bidder) before the High Court by filing the Writ Petition, which came to be allowed by the impugned judgment.
Finding of the Court:
Neither the decision-making process nor the decision is arbitrary or irrational.
Result: Appeals allowed.
Legal Category Hierarchy
Table of Contents
2. Whether High Court can question expert's technical evaluation — Whether independent bidder can rely on third-party qualifications — Whether court can independently re-evaluate bids as an appellate authority. (Para 5 , 23 , 24 , 25 )
3. Judicial review examines decision-making process, not soundness — Courts lack expertise to substitute administrative decisions — Public interest and technical competence outweigh lowest financial bid. (Para 6 , 7 , 8 , 9 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 26 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 )
4. Judicial review of tender awards is limited to checking for arbitrariness, mala fides, or irrationality; courts cannot act as appellate authorities to re-evaluate technical merits. (Para 50 )
5. High Court judgment set aside — Appeals allowed — Original contract award upheld. (Para 51 , 52 )
6. What is the scope of judicial review regarding the award of government contracts?
Judicial review focuses on the decision-making process to prevent arbitrariness, mala fides, or irrationality. Courts do not sit as appellate authorities to check if a decision is sound or to substitute their own expertise for that of administrative experts. (Para 6 , 7 , 8 , 17 , 19 , 20 , 21 , 50 )
7. Can a bidder who declares they are submitting a bid independently rely on the technical qualifications of a third party?
No. A bidder who expressly declares they are submitting a bid independently, without partners, consortiums, or joint ventures, cannot rely upon the technical qualifications of any third party for their qualification. (Para 40 , 44 , 50 )
8. Can a constitutional court independently re-evaluate technical and financial bids of tenderers?
No. Courts lack the necessary expertise to correct administrative decisions on technical qualifications. Unless there is evidence of mala fides, perversity, or arbitrariness, courts must exercise judicial restraint and defer to the expert's evaluation. (Para 7 , 17 , 29 , 34 , 39 , 50 )
9. Must a government contract always be awarded to the lowest bidder (L1)?
Not necessarily. The government has the right to choose the best person or quotation. In complex technical projects, quality and technical competence (weighted scores) may take precedence over the lowest financial bid to safeguard public interest. (Para 6 , 26 , 33 , 34 , 48 )
JUDGMENT
MOHAN M. SHANTANAGOUDAR, J.
Leave granted.
2. The Order dated 07.04.2016 passed by the High Court of Madhya Pradesh, Bench at Indore, allowing the Writ Petition No. 4676 of 2015 filed by B.V.G. India Limited, Pune (respondent no.1 in the civil appeal arising out of SLP(C) No. 11967 of 2016), consequently setting aside the contract awarded in favour of Global Waste Management Cell Private Limited (respondent no. 3 in the civil appeal arising out of SLP(C) No. 11967 of 2016) by Ujjain Municipal Corporation for door to door collection and transportation of Municipal Solid Waste, is the subject matter of these appeals.
3. Heard Shri Vikas Singh, learned senior counsel appearing for Municipal Corporation, Shri Shyam Divan and Shri Guru Krishnakumar, learned senior counsel representing Global Waste Management Cell Private Limited, Shri Kailash Vasdev, learned senior counsel for M/s Eco Save Systems Private Limited (Technical Expert) and Shri Gourab Banerji, learned senior counsel for BVG India Limited.
4. Brief facts leading to these appeals are as under:
Ujjain Municipal Corporation (Appellant in civil appeal arising out of SLP(C) No. 11967 of 2016) had issued Notice Inviting Tender (for short, “NIT”) dated 01.05.2015 for the appointment of an agency to carry out “Municipal Solid Waste Door to Door Collection and Transportation” for a period of 10 years in the city of Ujjain. The tender notice was for inviting online bids from the eligible bidders following a two envelope system i.e. one for technical bid and another for financial bid.
The Municipal Corporation had appointed a technical expert in Waste Management Solution viz. M/s Eco Save System Pvt. Ltd. (respondent no. 2 in the civil appeal arising out of SLP(C) No. 11967 of 2016) for scrutinising and evaluating the technical & financial bids. The last date of submission of tender was 21.05.2015. However, a corrigendum was issued and the date of submitting online tenders was extended up to 01.06.2015. The opening of the technical bid was fixed for 02.06.2015 and the opening of the financial bid on 04.06.2015. Three bidders remained for consideration of the award of tender by the Municipal Corporation. The technical bids of the parties were analysed thoroughly by the technical expert and marks were awarded as per the specifications of the NIT.
Clause 1 of the eligibility criteria of the NIT provided that the company must have been registered five years prior to 01.05.2010. Clause 9 of the eligibility criteria of the NIT permitted a consortium of two members, but with the distinct experience requirement on the subject matter. Article III of the NIT specified that technical eligibility would have a weightage of 80% and weightage for financial score was 20%. The marks obtained in the technical evaluation would contribute to 80% and financial evaluation would contribute to 20% of the final marks for deciding the L1 bidder. The technical parameters which were required to be measured were also indicated in Article III of the NIT. The financial bids of only those bidders who secured at least 60% marks in the technical evaluations would be opened.
The tender was to be awarded based on the final score arrived at by taking the total of the weighted scores of technical and financial evaluations as per the criteria mentioned in the NIT at Article III. Respondent no.1 scored low on technical evaluation inasmuch as it got 58.94 in the weighted score, whereas the successful bidder i.e. respondent no. 3 got a weighted technical score of 67.36. On a final analysis based on technical and financial weighted scores, Global Waste Management Cell Pvt. Ltd. got first rank (L1 bidder) amongst the three bidders by getting the highest score. Hence, it was awarded the contract. Such award of contract was questioned by the unsuccessful bidder (B.V.G. India Limited, L2 bidder) before the High Court by filing the Writ Petition, which came to be allowed by the impugned judgment.
During the pendency of
