Pragati Engineers v. Government of NCT Delhi

1. It is stipulated in the NITS of Specialized E&M original Works and other original E&M Works, where ever required, that the lowest tenderer is submit, along with the performance guarantee after the acceptance of tender, an undertaking from the OEM regarding: (a) Authorization certificate. (b) The OEM is unconditionally support the lowest tenderer technically throughout the execution of contract as well as for Maintenance/ Comprehensive Maintenance Contract for the useful life of the system, and

(c) OEM provides all the spares required for healthy functioning of the equipment for at least seven years from the date of supply of equipment.”

6. Mr. Khera vehemently submits that the specifications provided and the conduct of Respondent No.1 demonstrate arbitrariness and mala fide, and are meant to favour only a specific entity. He states that, in such circumstances, the Court must exercise its jurisdiction to intervene and ensure that public interest remains intact by maintaining the competitiveness of the bid.

7. Per contra, Mr. Sameer Vashisht, learned Additional Standing Counsel (ASC) for GNCTD, submits that the bid of the Petitioner had been declared unresponsive vide Order dated 13.10.2022 for the reason that the Petitioner had failed to fulfil the mandatory eligibility criteria. He states that Clause 18 of the tender document enumerates the list of documents that have to be scanned and uploaded within the period of bid submission, failing which the bids shall be rejected. Highlighting Clauses 18 (xi) and 18 (xii), the learned ASC states that a scanned copy of the Authorization Certificate from OEM/Authorized dealer, as well as an undertaking from the OEM of Audio Video Conferencing system of specified makes prescribed in the NIT that full support shall be extended for proper maintenance of equipment with technical staff and spare parts being made available for up to a minimum of & years after the defective liability period, need to be scanned and uploaded during the time of submission of bid. He further that the tender document categorically notes that if any of the documents that have been mentioned under Clause 18 are not uploaded with the bid, then the bidder may be treated as cancelled.

8. Mr. Vashisht argues that Clause 22 of the terms and conditions of the NIT, as relied upon by the Petitioner is misplaced to the extent that the said Clause is a part of the eligibility criteria and it merely denotes that the successful bidder is required to upload the documents in question again after the acceptance of the bid. He submits that Clause 18 is pertinent in view of the fact that the entity that wishes to bid for the tender must necessarily have an association with the OEM/authorized dealer of specified makes as listed in the NIT. Mr. Vashisht concludes his arguments on the note that the financial bid of the Petitioner had not been opened in light of the fact that the Petitioner’s technical bid had been rejected. Further, as the bids were submitted online and the National Informatics Centre controlled the online bidding system, Respondent No.1 could not access the same.

9. Heard Mr. Anil Khera, learned Senior Counsel for the Petitioner, Mr. Sameer Vashisht, learned ASC for GNCTD, and perused the material on record.

10. At the outset, in accordance with settled law, this Court is refraining from examining the terms and conditions of the tender in question, and this Court is inclined to agree with submissions of the learned ASC on the point that the Petitioner was mandated to submit the Authorization Certificate from the OEM as per Clause 19 of the tender document. It would be prudent at this juncture to reproduce the relevant extract from the tender document showcasing the same:

11. As can be discerned from Clause 18, certain documents are required by the bidder to be scanned and uploaded within the period of bid submission, failing which the bids would stand rejected. Sub-sections (xi) and (xii) explicitly note that a scanned copy of the Authorization Certificate from the OEM/Authorized dealer, and an undertaking from the OEM would need to be compulsorily uploaded. A bold Note in Clause 18 states that if any of the documents are not uploaded with the bid, then the bidder must be treated as cancelled. In view of this, there is hardly any scope for ambiguity in interpreting the minimum eligibility criteria that was sought to be fulfilled by a potential bidder and how the Petitioner herein was found wanting of the same. Furthermore, though the documents were to be submitted during the time of acceptance of tender– an aspect that is mentioned in the CPWD Works Manual and the tender document in question, there is nothing that prevents the tendering authority from requesting for the documents at the time of submission of the bid as well. In fact, it is settled law that the author of the tender is the best interpreter of the tendering document and is well versed with the requirements necessitated for the successful performance of a project. Courts must be circumspect in assigning a construction to the words in a document that would render the words used by the author of the document meaningless or futile or reduce to silence any part of the document to make it altogether inapplicable [Refer to Ramana Dayaram Shetty v. International Airport Authority of India and Ors., (1979) 3 SCC 489, Afcons Infrastructure Limited v. Nagpur Metro Rail Corporation Limited and Anr., (2016) 16 SCC 818 and Agmatel India Private Limited v. Resoursys Telecom and Ors., (2022) 5 SCC 362].

12. Having arrived at the inference that the Petitioner had erred in its submission of bid documents and that its disqualification was justified, it is imperative for this Court to analysise the law pertaining to judicial review of tender matter. The jurisprudence that has evolved over the past two decades dictates that in matters pertaining to commercial contracts, there ought to be minimal interference with the State’s decisions. It is only in cases of illegality, procedural irregularity, mala fides, or manifest arbitrariness that Courts may exercise its jurisdiction under Article 226 of the Constitution of India and interfere in the contractual matter.

13. The Supreme Court in N.G. Projects Limited v. Vinod Kumar Jain and Ors., (2022) 6 SCC 127, while examining the challenge of the Respondent No.1 therein to the finding of the Technical Evaluation Committee that its bid was unresponsive, observed that Court does not have the expertise to examine the terms and conditions of the present day economic activities of the State and that any contract of public service should not be interfered with lightly. All High Courts were also cautioned by the Supreme Court to refrain from issuing interim orders that may have had the potential of derailing the entire process of services meant for larger public good. The relevant portion of the said Judgment has been reproduced as under:

14. The landmark judgement which holds the field and is a seminal precedent in matters of this nature is Tata Cellular v. Union of India, (1994) 6 SCC 651wherein the Supreme Court had succinctly observed that Courts must not countenance interference with the decision of the tendering authority merely at the behest of an unsuccessful bidder in respect of a technical or procedural violation. Reproduction of the relevant portion of the said Judgement is as follows:

77. The duty of the court is to confine itself to the question of legality. Its concern should be:

1. Whether a decision-making authority exceeded its powers?

2. Committed an error of law,

3. committed a breach of the rules of natural justice,

4. reached a decision which no reasonable tribunal would have reached or,

5. abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:

(i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.

(ii) Irrationality, namely, Wednesbury unreasonableness.

(iii) Procedural impropriety.

The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind [(1991) 1 AC 696], Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, “consider whether something has gone wrong of a nature and degree which requires its intervention”.”

15. It is clear from the foregoing analysis that a considerable latitude of administrative discretion is exercised by the State in the award of government contracts by the process of inviting tender. Though this discretion of the State is subject to judicial review, however, this review is limited to the analysis if such exercise of the discretion is illegal or arbitrary. What must primarily be borne in mind that matters relating to tenders or award of contract are essentially commercial in nature, and if a decision communicated in relation to the same is bona fide and is in public interest, then Courts must not, in exercise their power under Article 226. In the instant case, what is evident from the arguments advanced and the material on record is that it is a matter of a disgruntled bidder who has failed to qualify for the financial bid on the ground of not fulfilling the essential requirements as enumerated in the bid document. When viewed from this prism, this Court finds no reason to intervene in the tendering process and substitute the tendering authority’s opinion with its own.

16. In light of the foregoing, this Court refrains from exercising its jurisdiction in the instant matter, and therefore, the writ petition is dismissed, along with the pending application(s), if any.

SATISH CHANDRA SHARMA, C.J. SUBRAMONIUM PRASAD, J DECEMBER 05, 2022 Rahul/RR