M/S ALANKIT ASSIGNMENTS LTD v. UNION OF INDIA AND ANR

13. Learned Counsel for the Petitioner Company forcefully contends that the Impugned Letter is ex-facie arbitrary as it is not grounded in any reasoning. He submits that the Impugned Letter does not make any reference to the terms and conditions of the RFP and therefore gives no indication to the Petitioner Company regarding the reasons for its exclusion despite its qualification at the technical evaluation stage.

14. Learned Counsel further argues that the actions of the Respondents, culminating in the issuance of the Impugned Letter, violates the principle of audi alteram partem as the Petitioner Company was not issued any showcause notice or granted an opportunity of hearing before being excluded from consideration for the Subject Tender.

15. As the clarifications sought by the MEA related to M/s Alankit Ltd and one Mr. Alok Kumar Agarwal, during the course of the hearing, this Court put a question to the Learned Counsel for the Petitioner regarding the relationship between the Petitioner Company and M/s. Alankit Ltd. and the relationship between the Petitioner Company and Mr. Alok Kumar Agarwal.

16. Learned Counsel for the Petitioner clarified that the Petitioner Company and M/s. Alankit Ltd. are separate legal entities that are both part of the Alankit Group of Companies. Learned Counsel further stated that while Mr. Ankit Agarwal is presently the director of the Petitioner Company and the managing director of M/s Alankit Ltd., his father i.e., Mr. Alok Kumar Agarwal, was previously a director of the Petitioner Company but is no longer a director nor occupies any leadership position in the Petitioner Company. Learned Counsel reiterated that there are no pending criminal proceedings against the Petitioner Company or its director, Mr. Ankit Agarwal. In light of the aforesaid, Learned Counsel argues that the pendency of any prosecution proceedings against either M/s Alankit Ltd. or Mr. Alok Kumar Agarwal cannot therefore justify the exclusion of the Petitioner Company from the Subject Tender.

17. Per Contra, Learned Counsel for the MEA submits that the Petitioner Company was rightfully excluded from consideration for the Subject Tender, in accordance with the terms stipulated in the RFP. In this regard, Learned Counsel brings the attention of the Court to the relevant provisions of the RFP which read as follows: “Chapter III: Instructions to Bidders

(ii) The Organisation profile (Annex-I) in soft copy, as required in Chapter IV (below), should be sent immediately to the Mission at email ID: <consl.riyadh@mea.gov.in> or <counsellor.riyadh@mea.gov.in>, for onward transmission to the Ministry of External Affairs, New Delhi for pre-verification purposes, without waiting for finalization/submission of completed tender documents by the bidding companies to the Mission. Bidding companies not cleared from security angle as decided by the Ministry of External Affairs, New Delhi (hereinafter referred to as 'MEA') will not be eligible to participate in this tender or award of contract.

(iv) Bidding companies not fulfilling the Mandatory Eligibility

(iv) The Bidding Company must certify that the company and its subsidiaries/partners are not involved in any unlawful or illegal activity including but not limited to human trafficking, anti-Indian activities, hawala, tax evasion, financial fraud, corporate malpractices, etc. The bidder must certify that it has no outstanding criminal or civil liabilities in Saudi Arabia or elsewhere and provide information on any previous and current law enforcement cases or any other legal cases against them.”

18. Learned Counsel submits that in accordance with the aforesaid terms of the RFP, on receipt of organisational profiles of the bidding companies, a comprehensive pre-verification exercise lasting 2-3 months was undertaken by the MEA which continued simultaneously with the tender process. As a result of the pre-verification exercise undertaken by the MEA, a report in this regard was received by the MEA from the concerned authorities which indicated that there were cases pending against M/s. Alankit Ltd., and/or its directors with law enforcement authorities.

19. Learned Counsel explains that despite finding incriminating charges, before initiating any action against the Petitioner Company, the MEA sought clarifications from the Petitioner Company by way of Clarifications 1-3. He submits that upon receiving responses from the Petitioner Company, the CPV division of the MEA arrived at a conclusion that the Petitioner Company was suppressing material information from the MEA. Thereafter, this finding was communicated by the MEA to Respondent No. 2 and it was decided that the Petitioner Company should be excluded from the Subject Tender.

20. Learned Counsel for the MEA further submits that the MEA also sought additional confirmation of the pending cases against the Petitioner Company and/or its directors from the Directorate of Enforcement (the „ED‟). In this regard, Learned Counsel highlights letter dated 18.09.2023 received from the ED which reads as under: “2. In this regard, it is informed that the Prosecution Complaint dated 30.07.2021 against Alok Agarwal, Ex- Director of Alankit limited and Alankit Assignments Limited has been filed before the Hon’ble Special Court for PMLA cases under the Prevention of Money Laundering Act (PMLA), 2002 at New Delhi and Hon'ble Court has taken cognizance of the same.

3. It is further informed that Alok Kumar Agarwal, Alankit Limited and AlankitAssignments Limited DMCC among others are accused in the said Prosecution Complaint.

4. Investigation vis-a-vis Ankit Agrawal, present director in Alankit limited and Alankit Assignments Limited is underway.”

21. Given this context, Learned Counsel for the MEA vehemently argues that the Respondents acted strictly in accordance with the terms laid out in the RFP. He submits that due to the sensitive nature of the Subject Tender, a security clearance from the MEA was mandatory as specified by the RFP and in the absence of such clearance, the Petitioner Company was rightfully excluded from the Subject Tender vide the Impugned Letter.

22. We have heard the learned counsels for both parties and have carefully perused the record.

23. The issue for consideration herein is whether the issuance of the Impugned Letter by Respondent No. 2 was arbitrary and unjustified thereby warranting interference by this Court. At the outset, it is pertinent to reiterate that the scope of judicial review in contractual matters, particularly vis a vis interference in tender processes is limited and characterised by the exercise of judicial restraint. The settled position of law in this regard has been aptly summarised by the Apex Court in Silppi Constructions Contractors vs. Union of India, (2020) 16 SCC 489, as under:

24. In light of this position, it must be remembered that the Petitioner Company herein has the burden of establishing a clear-cut case of arbitrariness or irrationality in the issuance of the Impugned Letter to persuade this Court to interfere in the Subject Tender. To that extent, the case of the Petitioner Company is that the Impugned Letter is arbitrary as it lacks reason and was issued in violation of principles of natural justice. Relevant portions of the Impugned Letter reads as follows: “Please refer to the bid documents submitted by Mis Alankit Assignments Ltd. in response to the tender for outsourcing of consular, passport, and visa (CPV) services published by the Embassy.

2. The Competent Authority has decided to exclude Mis Alankit Assignments Limited from the tender process in Embassy of India, Riyadh and consulate General of India, Jeddah.

3. Therefore, it is requested to collect the financial bids and other documents submitted by your company, in person or through your authorised representative on any working day between 09:30 to 12:30 hrs.

4. Kindly acknowledge receipt of the mail.”

25. The first prong of the Petitioner‟s challenge is that the Impugned Letter is unreasoned and therefore bad in law. While a prima facie perusal of the Impugned Letter supports the contention of the Petitioner Company, a complete examination of the terms of the RFP and the communications between the Petitioner Company and the Respondents as extracted above reveals otherwise. The terms of the RFP as highlighted by the MEA clearly specify that bidding companies who are not granted a security clearance by the MEA will be ineligible to participate in the tender process or for award of contract. This must be read with Clause (iv) of the Mandatory Eligibility Criteria in the RFP which directs participating bidders to not only certify that they have no outstanding criminal and civil liabilities anywhere but to also provide information to Respondent No. 2 about any previous or current legal cases pending against them, their subsidiaries or their partners.

26. In accordance with these terms, a pre-verification exercise was conducted by the MEA and the report in this regard indicated that there were cases pending against M/s. Alankit Ltd. and/or its promoters with law enforcement agencies. Subsequently, when these findings were put to the Petitioner Company by way of Clarification 1 and 2 and responses were collected from the Petitioner Company, the MEA arrived at an opinion that the Petitioner Company was supressing relevant information. It was on this basis that the MEA denied security clearance to the Petitioner Company and therefore, the Petitioner Company was excluded from the Subject Tender. It is relevant to reiterate that the Apex Court in Silppi Constructions (supra) has held that the tendering authority is the best judge of the requirements of the tender and therefore courts must defer to their understanding in the absence of irrationality or perversity. In the considered opinion of this Court, this principle of deference to expert opinion must be heightened in cases like the present where the Subject Tender is of a sensitive nature and the public interest considerations are substantial. As the Respondents have established that their decision to exclude the Petitioner Company is based on a justified finding, this Court cannot sit in appeal over that decision. At any rate, such an exercise would be futile as the MEA has also brought on record the letter from the ED dated 18.09.2023 which confirms that criminal proceedings are pending against the Petitioner Company under the Prevention of Corruption Act, 2002 and investigation in this regard is underway against Mr. Ankit Agarwal.

27. In this context, the mere absence of reasons in the text of the Impugned Letter cannot lead to the conclusion that the same is unreasoned and unjustified. The Apex Court in Silppi Constructions (supra) has held that Courts, in their exercise of judicial review of tender matters, should not use a magnifying glass to make every small mistake appear to be a big blunder. The Respondents herein have been able to establish that their decision to exclude the Petitioner Company is fully supported by the terms of the RFP and therefore, this Court finds no fault on the part of the Respondents in issuing the Impugned Letter.

28. The Petitioner Company also contends that it cannot be excluded from the Subject Tender as it was already declared technically qualified. In this regard, it is pertinent to note that the RFP clearly stated that the exercise conducted by the MEA constitutes pre-verification for the purpose of participation in the tender process. The relevant clause of the RFP reads as follows: “Bidding companies not cleared from security angle as decided by the Ministry of External Affairs, New Delhi (hereinafter referred to as 'MEA') will not be eligible to participate in this tender or award of contract.”

29. The afore-extracted clause clearly states that a bidder not cleared by the MEA will not be eligible to participate in the tender or for the award of contract. Thus, it is evident from a reading of the clause that the stage of the tender would not impact the ouster of a bidder that fails to obtain security clearance. The MEA has stated that the process of verifying security credentials of the bidders required a significant amount of time and was therefore undertaken parallelly with the tender process. In this context, the contention furthered by the Petitioner Company is not only contrary to a plain reading of the RFP but would also entirely defeat the purpose of the clearance exercise and hence, is not acceptable to this Court.

30. The second prong of the Petitioner‟s challenge is that the Impugned Letter was issued in violation of the maxim of audi alteram partem. Firstly, it must be noted that the Petitioner Company, being a bidder participating in the Subject Tender was well aware of the terms of the RFP including Clause

(iv) of the Mandatory Eligibility Criteria which inter alia mandated disclosure of any pending criminal proceedings against the bidder. Despite this mandate, the Petitioner Company failed to provide such disclosure during submission of the technical bid.

31. Thereafter, by way of Clarification 1, the Petitioner Company was given explicit notice of the fact that the Respondent No. 2 had learnt of several cases pending M/s. Alankit Ltd. and/or its promoters i.e., a violation of Clause (iv) of the Mandatory Eligibility Criteria of the RFP. It is an admitted fact that Petitioner Company and M/s. Alankit Ltd are sister concerns, part of the Alankit Group of companies and that Mr. Ankit Agarwal serves as a Director for both the companies. However, in its response to Clarification 1, the Petitioner Company supressed information about the relationship between the two companies and furthermore, contrary to the factual position, stated that there are no cases/criminal proceedings pending against the Petitioner and Mr. Ankit Agarwal.

32. Subsequently, by way of Clarification 2, the Petitioner Company was asked to provide information about any cases pending against the promoters of the Alankit Group. In response, the Petitioner Company continued to suppress relevant information and failed to provide the clarifications sought by the Respondents. Therefore, on an examination of the totality of circumstances, it is evident that the Petitioner Company was given notice of their violation of the RFP and was subsequently given two opportunities to defend/explain itself on that charge. However, the Petitioner Company deliberately suppressed relevant information regarding the cases/criminal proceedings pending against it and Mr. Ankit Agarwal and by way of the present petition, the Petitioner Company now seeks assistance of the Court to benefit from its own wrong.

33. In light of the above, the Petitioner Company has failed to establish any arbitrariness or irrationality in the issuance of the Impugned Letter. At this stage, it is also important to emphasize the sensitive nature of the Subject Tender due to its considerable security implications. It must be remembered that judicial restraint while interfering with contract/tender matters involving State instrumentalities is premised on the paramount need to preserve the larger public interest. In this case, while an examination of the contentions raised by the Petitioner Company has shown that the Respondents have acted strictly in accordance with the terms of the RFP, the actions of the Respondents is also justified on grounds of overwhelming public interest. The Respondents have established that there are criminal proceedings pending against the Petitioner Company and in these circumstances, the Respondents cannot be faulted for excluding the Petitioner Company from the Subject Tender. Therefore, in considered opinion of this Court, no case of interference with the Impugned Letter is made out.

34. Accordingly, the writ petition is dismissed.

SATISH CHANDRA SHARMA, CJ SANJEEV NARULA, J. OCTOBER 12, 2023