Kumar Infratrade Enterprises Private Limited v. Indian Railway Catering and Tourism Corporation Limited & Ors.

3. Mr. Ajit Kumar Sinha, learned Senior Counsel appearing for the Petitioner, submits at the outset that the audited financial statements submitted by the Petitioner were in accordance with Annexure-8 of the tender document. He states that the tender document initially noted that statements of the FYs 2016-2017, 2017-2018, 2018-2019, 2019-2020 and 2020-2021 were to be provided. As the Petitioner had commenced its business in the year 2017, the turnover for the FY 2016-2017 was nil. However, Mr. Sinha argues, as Corrigendum-01 dated 29.07.2022 provided the option for the statements of the FY 2021-2022 to be included as well, the Petitioner had consequently filed its audited financial statement for the FY 2021-2022.

4. The learned Senior Counsel submits that with the filing of audited financial statement for the FY 2021-2022, the statement for the year 2016-2017 should have been disregarded, and that IRCTC‟s disqualification of the Petitioner on the sole basis of the fact that the statement of the Petitioner for the FY 2016-2017 showcased nil was mala fide. He relies upon the result dated 22.09.2022 issued by IRCTC which indicates that the EMD of the Petitioner had been received and that the status of the Petitioner was that it was “In The Race”. Mr. Sinha argues that once IRCTC has announced that the Petitioner is in the race, i.e. qualified and not disqualified, then IRCTC is estopped from issuing a communication unilaterally disqualifying the Petitioner. He states that legitimate expectation had accrued in favour of the Petitionerby way of the result dated 22.09.2022.

5. Mr. Sinha for the Petitioner further submits that the decision taken by IRCTC reeks of mala fide, arbitrariness, and unreasonableness, and therefore, as per settled law, this Court retains its jurisdiction to intervene in the instant matter. The learned Senior Counsel cites Poddar Steel Corporation v. Ganesh Engineering Works and Ors., (1991) 3 SCC 273, to submit that minor technical irregularities can be waived if the condition that is be deviated from is non-essential in nature or an ancillary/subsidiary requirement. He further relies on Rashmi Metaliks Limited and Anr. v. Kolkata Metropolitan Development Authority and Ors., (2013) 10 SCC 95, to argue that the Supreme Court had allowed the appeal of the Petitioner-bidder therein against its disqualification for failing to submit its income tax return on the ground that the requirement for income tax return did not assume an essential character.

6. Per contra, Mr. Harshit Agarwal, learned Counsel for the IRCTC, submits that the tender in question had been floated on www.tenderwizard.com which allowed for day-to-day updates to be issued to the bidders, including notices, corrigenda, etc. Any change made to the tender document would be intimated to the registered bidders via a system generated email. He states that the initial unchanged tender document enumerated certain requirements pertaining to the annual turnover of the bidder.

7. Mr. Agarwal submits that a pre-bid meeting had been organised on 26.07.2022, however, the Petitioner had raised no issues or queries with regard to the prescribed minimum eligibility criteria. Thereafter, Corrigendum-01 dated 29.07.2022 was issued which revised the tender document and stipulated another option that could be exercised by the bidder to showcase its annual turnover However, when a Road Show-cum-pre-bid meeting was held on 04.08.2022, the Petitioner did not present any query with regard to the minimum eligibility criteria, despite being aware of the fact that the same stood revised. Mr. Agarwal further states that 30.09.2022 was the last date for filing of balance sheet for the FY 2021-2022 and that nothing had prevented the Petitioner from doing so at an earlier date.

8. The Counsel for IRCTC argues that a perusal of the documents submitted by the Petitioner reveals that the tax audit had been completed on 05.09.2022 and that the balance sheet for the FY 2021-2022 had been signed by the Board on 05.09.2022 itself. He states that the Petitioner is misleading the Court by alleging that the Income Tax Return had been filed on 30.09.2022 only when, in fact, what was required to be filed was the audited balance sheet for the FY 2021-2022 that had been available to the Petitioner prior to the date of submission of bid, i.e. 06.09.2022. He states that the Petitioner particularly submitted its bid as per Option 1 and not Option 2.

9. The learned Counsel appearing for IRCTC submits that being classified as “In The Race” does not inhere a vested right of qualification for the financial bid in the Petitioner. He states that it simply implies that the Tender Opening Committee had conducted its evaluation with regard to the existence of the required documents and the deposit of the EMD, however, no scrutiny of the documents in question had taken place by the Tender Screening Committee and the Tender Evaluation Committee. He states that thereafter, the process of downloading and printing of the documents, as well as the preparation of the report commenced on 22.09.2022 and concluded on 07.10.2022, and the documents were then sent by the Tender Screening Committee to the Tender Evaluation Committee for a strict scrutiny of the documents submitted.

10. The learned Counsel submits that the Petitioner willingly and knowingly did not exercise Option-2, and that they were aware that their turnover for the FY 2016-2017 was nil which entailed disqualification. He argues that the aim of the Petitioner is to only scuttle the entire tender process, and that a response was issued to the letter dated 21.10.2022 by way of letter dated 04.11.2022 wherein IRCTC examined the request of the Petitioner and provided reasons for rejecting the same.

11. Mr. Agarwal, in conclusion, relies upon N.G. Projects Limited v. Vinod Kumar Jain and Ors., (2022) 6 SCC 127, to submit that the scope of interference in tender matters is limited, and that just because the view of the Technical Evaluation Committee is not to the liking of the Petitioner, it would not warrant for interference in a grant of contract to a successful bidder. Further reliance has been placed on a judgement dated 16.10.2020 of this Court in E-Netspider India v. Union of India and Anr., W.P.(C) 7955/2020, to state that a person who participates in a tender cannot turn around and challenge the clauses of the very same tender.

12. Heard Mr. Ajit Kumar Sinha, learned Senior Counsel appearing for the Petitioner, Mr. Harshit Agarwal, learned Counsel appearing for IRCTC, and perused the material on record.

13. Before we delve into whether Courts can intervene in contractual matters, it would be prudent to briefly recall the relevant clauses of Tender No.: 2022/IRCTC/BNR/RANCHI and PURI authored by IRCTC that govern the instant matter. Clause 4 of the tender document stipulates the minimum eligibility criteria as per which the bidder is required to possess a minimum aggregate turnover of Rs. 33 crores from the business of operating and maintaining hotel(s) in any three financial years of the previous five financial years, i.e. 2016-2017, 2017-2018, 2018-2019, 2019-2020, and 2020-2021(hereinafter referred to as “Option 1”). This requirement was revised vide Corrigendum-01 dated 29.07.2022 which, in addition to Option 1, allowed the bidder to provide its financial statements for the financial years 2017-2018, 2018-2019, 2019-2020, 2020-2021 and 2021-2022 (hereinafter referred to as “Option 2”). The one constant in this requirement was that the turnover of the bidder could not be nil (zero) in any of the five financial years. Point No.3 under Note of Clause 4 categorically notes that non-submission of any of the documents listed in the „minimum eligibility criteria‟ would lead to the summary rejection of the offer with no further correspondence being made in this regard.

14. In the instant matter, in accordance with Annexure 8 of the tender document which provides the format for the certificate of break-up of annual turnover that must be submitted to prove that one satisfies the minimum eligibility criteria with respect to their annual turnover, the Petitioner submitted the same which has been reproduced hereinabove. A perusal of this break-up of annual turnover submitted by the Petitioner explicitly notes that though the aggregate sale turnover of the Petitioner is Rs. 82,18,23,527/-, the annual turnover of the Petitioner for the FY 2016-2017 is nil. It is the contention of the Petitioner that, with the issuance of Corrigendum-01 dated 29.07.2022, the Petitioner had the option of submitting its financial statement for FY 2021-2022, however, the same could not be filed as last date of acknowledgement as per the Income Tax Department was 30.09.2022 and the bid of the Petitioner had been submitted on 06.09.2022-07.09.2022. It has further been stated that vide Corrigendum-05, the date and time for submission of e-tender was extended to 22.09.2022. In summary, the Petitioner has contended that their request for their financial statements for FY 2021-2022 should be considered in consonance with the revised minimum eligibility requirements.

15. This Court, at the outset, is of the opinion that the arguments advanced by the Petitioner do not hold any water and are liable to be dismissed. The “annual turnover” aspect of Clause 4: Minimum Eligibility Criteria, duly amended by Corrigendum-01 dated 29.07.2022, provides two options to all bidders to showcase their annual turnover. The requirement that remains constant even after amendment is that the turnover for any financial year cannot be nil under any circumstances. However, a bare glance through the Annual Turnover Certificate dated 31.08.2022 submitted by the Petitioner indicates that the Petitioner has exercised Option 1 and the annual turnover for the FY 2016-2017 is nil. This is an undisputed fact.

16. If the party issuing the tender is punctiliously and rigidly enforcing conditions and stipulations in a tender document, and the bidder does not strictly comply with the requirements, then it is open to the party issuing the tender to decline consideration of a part for the contract [Refer to G.J. Fernandez v. State of Karnataka and Ors., (1990) 2 SCC 488]. The relevant paragraphs in the Judgement delineating the said observations are reproduced as under:

15. Thirdly, the conditions and stipulations in a tender notice like this have two types of consequences. The first is that the party issuing the tender has the right to punctiliously and rigidly enforce them. Thus, if a party does not strictly comply with the requirements of para III, V or VI of the NIT, it is open to the KPC to decline to consider the party for the contract and if a party comes to court saying that the KPC should be stopped from doing so, the court will decline relief. The second consequence, indicated by this Court in earlier decisions, is not that the KPC cannot deviate from these guidelines at all in any situation but that any deviation, if made, should not result in arbitrariness or discrimination. It comes in for application where the non-conformity with, or relaxation from, the prescribed standards results in some substantial prejudice or injustice to any of the parties involved or to public interest in general. For example, in this very case, the KPC made some changes in the time frame originally prescribed. These changes affected all intending applicants alike and were not objectionable. In the same way, changes or relaxations in other directions would be unobjectionable unless the benefit of those changes or relaxations were extended to some but denied to others. The fact that a document was belatedly entertained from one of the applicants will cause substantial prejudice to another party who wanted, likewise, an extension of time for filing a similar certificate or document but was declined the benefit. It may perhaps be said to cause prejudice also to a party which can show that it had refrained from applying for the tender documents only because it thought it would not be able to produce the document by the time stipulated but would have applied had it known that the rule was likely to be relaxed. But neither of these situations is present here. Shri Vaidyanathan says that in this case one of the applicants was excluded at the preliminary stage. But it is not known on what grounds that application was rejected nor has that party come to court with any such grievance. The question, then, is whether the course adopted by the KPC has caused any real prejudice to the appellant and other parties who had already supplied all the documents in time and sought no extension at all? It is true that the relaxation of the time schedule in the case of one party does affect even such a person in the sense that he would otherwise have had one competitor less. But, we are inclined to agree with the respondent's contention that while the rule in Ramana case [(1990) 2 SCC 486] will be readily applied by courts to a case where a person complains that a departure from the qualifications has kept him out of the race, injustice is less apparent where the attempt of the applicant before court is only to gain immunity from competition. Assuming for purposes of argument that there has been a slight deviation from the terms of the NIT, it has not deprived the appellant of its right to be considered for the contract; on the other hand, its tender has received due and full consideration. If, save for the delay in filing one of the relevant documents, MCC is also found to be qualified to tender for the contract, no injustice can be said to have been done to the appellant by the consideration of its tender side by side with that of the MCC and in the KPC going in for a choice of the better on the merits. The appellant had no doubt also urged that the MCC had no experience in this line of work and that the appellant was much better qualified for the contract. The comparative merits of the appellant vis-a-vis MCC are, however, a matter for the KPC (counselled by the TCE) to decide and not for the courts. We were, therefore, rightly not called upon to go into this question.”

17. The Supreme Court has consistently observed that essential clauses of a tender should be enforced strictly and that no deviation is permissible under the law. In Poddar Steel Corporation v. Ganesh Engineering Works and Ors. (supra), the Supreme Court noted that requirements in a tender notice can be classified into two categories – those which lay down the essential conditions of eligibility and those which are merely ancillary or subsidiary with the main object to be achieved by the condition. The relevant paragraph stating the same has been reproduced as under:

18. Taking the aforementioned judicial pronouncements into consideration, the Petitioner‟s contention that the deviation on the part of the Petitioner was a minor technical irregularity cannot be countenanced as the condition was essential in nature. Clause 4 of the tender document notes, without any exceptions, that the financial statement of the Petitioner for any financial year should not show nil. Moreover, the Petitioner was required to exercise either Option 1 or Option 2. In these circumstances, the Petitioner, who exercised Option 1 at the first instance, cannot request for an opportunity to exercise Option 2 at a later instance. It cannot seek exemptions from application of the said clause when it is applicable to every other entity bidding for the tender. Moreover, even if the Petitioner had exercised Option 2, there was nothing cogent that prevented the Petitioner from providing its statement for the Financial Year 2021-22 before the submission of its bid. Furthermore, it is not the case of the Petitioner that the conditions have been devised in such a way to favour a particular bidder or that the tender conditions must be assailed. They are applicable to every bidder across the board.

19. In fact, the Supreme Court in Meerut Development Authority v. Association of Management Studies, (2009) 6 SCC 171, had remarked that bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of bids. Further, it was noted that no bidder is entitled as a matter of right to insist the authority inviting tenders to enter into further negotiations unless the terms and conditions of the tender document provided for such negotiations. The relevant portion of the said Judgement delineating is as follows:

20. Flowing from the above, it is reiterated that as the Petitioner had already exercised Option 1 while submitting its certificate of break-up of annual turnover which included its financial statement for the FY 2016-2017. The Petitioner, having once exercised its Option 1, cannot at a later stage seek for an opportunity to exercise Option 2. Allowing this discretion to the Petitioner would entail placing other bidders on an unequal plane and according special treatment to the Petitioner. As has been submitted in the Counter Affidavit of IRCTC, multiple pre-bid meetings had been conducted by IRCTC for addressing clarifications and queries of the bidders. Had the Petitioner faced any confusion with regard to the submission of its annual turnover statements of which it was aware, the Petitioner could have posed its queries during the course of these pre-bid meetings.

21. Additionally, the learned Senior Counsel appearing for the Petitioner has relied upon result dated 22.09.2022 published by IRCTC wherein the status of the Petitioner is noted as “In The Race”. It has been contended that “In The Race” denotes that the Petitioner was qualified for the financial bid, and therefore, IRCTC cannot now turn around and disqualify the Petitioner. This submission of the Petitioner does not hold any merit in the eyes of this Court.

22. The Counter Affidavit on behalf of IRCTC is on record and the process for evaluation of a technical bid has been comprehensively described. The portion of the Counter Affidavit demonstrating the same has been reproduced as under for ease of comprehension: “15. At this juncture, it is relevant to set out the process of technical bid and the same is as under: a) The tender was floated online through the portal of www.tenderrwizard.com and bids in this case were called under the two –part bid system. Part A Technical and Part-B Financial. The bidders submit their bids in two parts online. b) Since, the tender was floated online through the portal of www.tenderrwizard.com, the technical bids are opened online by the Tender the Tender Opening Committee by affixing its digital signatures. At stage, what is verified online and through the auto mode/software is whether the bidder has uploaded the documents and Earnest Money Deposit (EMD) or not and nothing further is done. At that stage the documents are not checked. The Tender Opening Committee opens the technical bids on the date and time specified. In fact, the documents uploaded by the bidder on the portal of tenderwizard.com are not even downloaded by the Tender Opening Committee. The bidder whose bids are successfully submitted on the portal are classified to be „in the race‟ subject to scrutiny of documents and evaluation of bid documents/bid by the Screening Committee and therefore by Tender Evaluation Committee. Therefore, the phrase „in the race‟ only signifies that the bidder had complied in filing of documents and EMD and is eligible for evaluation of its technical bid documents by the Screening Committee and thereafter by Tender Evaluation Committee.

(c) Perusal of Annexure- P[8] filed by the petitioner confirms the above position in as much as the “status” of every bidder who had uploaded the documents and deposited EMD was declared to be „in the race‟. However, those bidders who had either failed to submit the form or had withdrawn their bid were disqualified automatically with the remarks “disqualified- Auto” on the opening of bid by the Tender Opening Committee. Therefore, the portal will only auto check whether the bidder has uploaded the documents and deposited/submitted Earnest Money Deposit (EMD).

(d) Thereafter, the documents are downloaded and printed by the screening committee of IRCTD. In the present case, the process of downloading and printing of documents and preparation of report on the same by the screening committee commenced on 22.09.2022 and concluded on 07.10.2022. The Screening committee thereafter sent the documents of bidders alongwith the report of the Tender Evaluation Committee who then further scrutinize the documents and also peruse the report. (e) The Tender Evaluation Committee carry out detailed scrutiny and study of the documents filed by the bidder to verify whether the documents filed by the bidder are in conformity with the minimum eligibility criteria and terms and conditions set out in the tender. Therefore, it is at this stage that documents are studied by the said committee and only then it can be ascertained if the bidder meets the minimum eligibility criteria. It is only thereafter that the Tender Evaluation Committee forms a final opinion and declare as to whether the technical bid of the bidder has qualified or not. The Tender Evaluation Committee concluded scrutiny of documents on 20.10.2022. (f) The aforesaid procedure has been adopted by the respondent to ensure full proof scrutiny of technical bid and give fair and equal treatment to all bidders. This process cannot conclude immediately on the opening day of technical bid at a click of a button and is tedious exercise which entails time and effort.”

23. A reading of the aforementioned portion reveals that there are three committees, i.e. Tender Opening Committee, Tender Screening Committee and the Tender Evaluation Committee. The Tender Opening Committee merely opens the technical bids on the date and time specified without even downloading the documents. The bids which are successfully submitted on the portal are classified to be “in the race”, and then these bids are subjected to scrutiny by the Tender Screening Committee and thereafter the Tender Evaluation Committee. The phrase “in the race” merely signifies that bidder has complied with the filing of documents and the EMD, and thus, is eligible for evaluation by the other two committees. Those who have failed to submit the form, EMD or have withdrawn their bid are disqualified automatically with the remarks “Disqualified-Auto”. The documents are then downloaded and printed by the Tender Screening Committee with a report being prepared on the same, and then the documents are sent to the Tender Evaluation Committee who then further scrutinize the documents and peruse the report of the Tender Screening Committee. This Tender Evaluation Committee, after conducting a detailed study of the documents and ascertaining whether the minimum eligibility criteria has been satisfied by the bidder, forms a final opinion with regard to the qualification of the bidder.

24. In the instant case, the result dated 22.09.2022 merely portrayed that the documents of the Petitioner, along with the EMD, had been submitted. The Tender Screening Committee then downloaded and printed the documents as well as prepared a report; the process commenced on 22.09.2022 and concluded on 07.10.2022. Thereafter, having studied the documents, the final opinion of the Tender Evaluation Committee was rendered vide impugned Communication dated 20.10.2022.While it is settled law that failure to consider and give due weight to the mere reasonable or legitimate expectation may render a decision arbitrary, however, this legitimate expectation is not, by itself, a distinct enforceable right. Further, whether or not the expectation of the claimant is reasonable or legitimate is a question of fact in each case [Refer to Food Corporation of India v. M/s Kamdhenu Cattle Feed Industries, (1993) 1 SCC 71]. In the instant case, as has been discussed hereinabove, the facts and circumstances reveal that no expectation, let alone a right, had accrued in favour of the Petitioner. The reliance of the Petitioner on the result dated 22.09.2022 is misplaced as by no stretch of imagination can the inference be drawn that the Petitioner had qualified for the financial bid.

25. Having arrived at the conclusion that the decision of IRCTC to disqualify the Petitioner on grounds of non-compliance with the minimum eligibility criteria was not arbitrary and that the Petitioner had no legitimate expectation to qualification for the financial bid, this Court deems it appropriate to delve into whether this Court can exercise its power of judicial review in the instant. It has been consistently observed by the Supreme Court that the scope of intervention in matters of this nature is extremely limited, and that Courts may only interfere in an administrative decision if, and only if, the same is arbitrary, irrational, unreasonable, mala fide or biased. In the absence of these situations, Courts must not countenance interference with the decision merely at the behest of an unsuccessful bidder.

26. The aforementioned observed was made by the Supreme Court in the case of Tata Cellular v. Union of India, (1994) 6 SCC 651, and the relevant portion of the judgement delineating the same has been reproduced as follows:

27. The Supreme Court has further held that power of judicial review should not be permitted to be invoked to protect private interests at the cost of public interest, or to decide contractual disputes. This was observed by the Supreme Court in the Central Coalfields Limited and Anr. v. SLL-SML (Joint Venture Consortium) and Ors., (2016) 8 SCC 622. The paragraphs of the said Judgement stating the aforementioned is as under:

“22. … Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”;

(ii) Whether public interest is affected.

28. The aforesaid judicial pronouncements portray that the scope of interference by way of judicial review in tender matters is extremely limited, and can only be justified if done to rectify patent arbitrariness, unreasonableness, mala fides, or bias, in the administrative decision. In the absence of the same, Courts must stay its hands and should not interfere, even if a procedural aberration or error in assessment or prejudice to the tenderer is made out. In the matter herein, there is explicit non-compliance on the part of the Petitioner of the minimum eligibility criteria as has been set in Clause 4 of the tender document. The Petitioner was categorically required to exercise either Option 1 or Option 2 while submitting its certificate of break-up of turnover. Having exercised Option 1 and demonstrated its financial statement for the FY 2016-2017 as nil which was prohibited as per the Clause, the Petitioner cannot at this juncture seek for its statement for the FY 2021-2022 to be considered instead, and thereby, be given special treatment by IRCTC. Even assuming that the Petitioner had resorted to Option No.2, there was nothing which prohibited the Petitioner to file an audited balance sheet for the Financial Year 2021-22 which was available with the Petitioner prior to the date of submission of bid, i.e. 06.09.2022, and the same is evident from the documents filed in the Court. We find force in the submission of the learned Counsel for the IRCTC in this regard.

29. In light of the foregoing, this Court refuses to exercise its jurisdiction under Article 226 of the Constitution in the instant matter. Accordingly, the petition is dismissed, along with the pending application(s), if any.

SATISH CHANDRA SHARMA, C.J. SUBRAMONIUM PRASAD, J NOVEMBER 23, 2022