Tenders – A notice inviting tender was issued by appellantBCCL for purposes of ‘Hiring of HEMM for removal of OB, extraction and transportation of coal with fire fighting.....’ – The appellant aimed of contracting firm which offered the lowest cost estimate for fulfilment of the tender work – The bidding was stated to be conducted online – When the auction proceeded, there were connectivity problems leading to failure in submission bids – In the interregnum, the last bid of Rs. 2345 crores made by respondent No. 1 at 12:33 p.m. went unresponded for thirty minutes and auction was automatically closed at 1:03 p.m. – Respondent no. 1 was declared lowest bidder – However, taking notice of technical issues, the auction was restarted at 2.30 p.m. and same was communicated to all bidders – Accordingly, various bids were received by many participants including respondent no. 1 – The auction proceeded to the extended time of 1 hour and 27 minutes – The LOA was issued to the successful bidder, i.e. respondent no. 6 – Respondent no. 1 filed writ petition for declaring that it was successful bidder and for quashing the LOA issued to respondent no. 6 – It was contended that there were lapses on the part of the appellant – The Single Judge of the High Court dismissed it – However, a Division Bench of the High Court held that there were procedural lapses and quashed the LOA issued by the appellant and directed reconduction of the auction – On appeal, held: The Division Bench of the High Court was cognizant of the principles surrounding scope of judicial review in tenders, however, it failed to effectively evaluate whether larger public interest was being affected – The interest of the respondent no.1 was purely private and monetary in nature – There are concurrent finding of the second Independent External Monitors, CERT-In, TCL, as well as the Central Vigilance Commission that the auction process was not afflicted by collusion, and confirmed the existence of connectivity problems which necessitated resumption of the auction process – Before resumption of auction process, it is clear that the message was communicated to all the bidders, stating that the auction process would be extended by a period equivalent to the time between closure of auction at 1:03 p.m. and resumption at 2.30 p.m. – Not only did such uniform communication put all bidders on an equal footing, but there was no possibility of any confusion given the clear wordings of the email – The minutes after the resumption of the auction process, bids started coming in and more than a dozen bids were received subsequently – Therefore, the impugned order of the Division Bench of the High Court is not correct in its conclusion that there were substantial procedural lapses on part of the appellant – Resultantly, the judgment of the Division Bench is set aside.
Disposing of the appeals, the Court
HELD: Maintainability of Writ Petition
1. The scope of judicial review in tenders has been explored in-depth in a catena of cases. It is settled that constitutional courts are concerned only with lawfulness of a decision, and not its soundness. Phrased differently, Courts ought not to sit in appeal over decisions of executive authorities or instrumentalities. Plausible decisions need not be overturned, and latitude ought to be granted to the State in exercise of executive power so that the constitutional separation of powers is not encroached upon. However, allegations of illegality, irrationality and procedural impropriety would be enough grounds for courts to assume jurisdiction and remedy such ills. This is especially true given our unique domestic circumstances, which have demonstrated the need for judicial intervention numerous times. Hence, it would only be the decision-making process which would be the subject of judicial enquiry, and not the end result (save as may be necessary to guide determination of the former). [Para 29][616C-E]
2. In cases where a constitutional right is infringed, writs would ordinarily be the appropriate remedy. In tender matters, such can be either when a party seeks to hold the State to its duty of treating all persons equally or prohibit it from acting arbitrarily; or when executive actions or legislative instruments are challenged for being in contravention to the freedom of carrying on trade and commerce. However, writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty. Hence, the persons seeking writ relief must also actively satisfy the Court that the right it is seeking is one in public law, and not merely contractual. In doing so, a balance is maintained between the need for commercial freedom and the very real possibility of collusion, illegality and squandering of public resources. [Para 32][617-C-E]
3. In the present case, although it is clear that the Division Bench of the High Court was cognizant of these principles surrounding scope of judicial review, however, it failed to effectively evaluate whether larger public interest was being affected. On the contrary, this Court feels that the interest of Respondent No. 1 was purely private and monetary in nature. [Para 36][618-G]
4. The first respondent has failed to demonstrate which public law right it was claiming. The main thrust of AMR-Dev Prabha's case has been on the fact that at 1:03PM on 05.05.2015 it was declared the lowest bidder (or L-1). However, being declared the L-1 bidder does not bestow upon any entity a public law entitlement to award of the contract. [Para 40][620-C]
Infirmities in the auction process
5. Having the benefit of a detailed inquiry report of the Central Vigilance Commission (“CVC”), this Court is of the firm opinion that both the appellant and Respondent No. 4 acted in a bona fide manner and as per their abilities. Even if it is true that BCCL could have assumed more responsibility and C1-India could have exercised a more proactive role in checking for internet issues, yet the possibility of improvement can’t be a ground for striking down an authority’s action. Additionally, no allegation of the decisions being accentuated by illegal gratification, or otherwise being fraudulent or contrary to a statute have either been clearly made or established. [Para 44][621-E-G]
6. This Court does not deem it necessary to venture into the existence of technical problems of limited bandwidth, for the same is a question of fact. However, given the concurrent finding of the second IEM, CERT-In, TCL, as well as the CVC, we feel that the Division Bench erred in holding that there were no technical difficulties. Furthermore, such a conclusion is at odds with subsequent occurrences. A finding that there were no internet problems implies that no other bidder deemed it appropriate to counter the bid of Rs 2345 crores offered by Respondent No. 1 at 12:33PM and that it was the competitively determined lowest price. However, it is obvious that minutes into the resumption of the auction process bids started coming in and more than a dozen bids were received subsequently, with the last bid of Rs 2043 crores having been made mere seconds before closure of the auction at 7:27PM. [Para 46][622-H; 623-A-B]
7. There is also no need to venture into questions concerning quantum of extension of time. It is clear that the same message was communicated by CI–India to all, stating that the auction process would be extended by a period equivalent to the time between closure of auction at 1:03PM and resumption at 2:30PM. Not only did such uniform communication put all bidders on an equal footing, but there was no possibility of any confusion given the clear wordings of the email. When it is not the case of Respondent No. 1 that they thought that auction would close at 7:35PM and hence they were taken by surprise at the early closure, nor did they in fact highlight or object to such interpretation over the course of the resumed auction process, the question is moot and a finding ought not to be given on it. [Para 49][623-G; 624-A-B]
Deference to authority’s interpretation
8. Lastly, this Court deems it necessary to deal with another fundamental problem. It is obvious that Respondent No. 1 seeks to only enforce terms of the NIT. Inherent in such exercise is interpretation of contractual terms. However, it must be noted that judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes. [Para 51][624-D-E]
9. In the present facts, it is clear that BCCL and C1-India have laid recourse to Clauses of the NIT, whether it be to justify condonation of delay of Respondent No. 6 in submitting performance bank guarantees or their decision to resume auction on grounds of technical failure. BCCL having authored these documents, is better placed to appreciate their requirements and interpret them. [Para 52][624-E-F]
10. The High Court ought to have deferred to this understanding, unless it was patently perverse or mala fide. Given how BCCL’s interpretation of these clauses was plausible and not absurd, solely differences in opinion of contractual interpretation ought not to have been grounds for the High Court to come to a finding that the appellant committed illegality. [Para 53][624-F-G]
Jagdish Mandal v. State of Orissa (2007) 14 SCC 517 : [2006] 10 Suppl. SCR 606; Maa Binda Express
Carrier v. North-East Frontier Railway (2014) 3 SCC
760 : [2013] 12 SCR 529; Shobikaa Impex (P) Ltd. v. Central Medical Services Society (2016) 16 SCC 233 : [2016] 5 SCR 319; Raunaq International Ltd. v. IVR Construction Ltd. (1999) 1 SCC 492 : [1998] 3 Suppl. SCR 421 – relied on.
RD Shetty v. International Airport Authority of India (1979) 3 SCC 489 : [1979] 3 SCR 1014; Tata Cellular v. Union of India (1994) 6 SCC 651 : [1994] 2 Suppl. SCR 122; Ram and Shyam Co v. State of Haryana (1985)
3 SCC 267 : [1985] 1 Suppl. SCR 541; Master Marine Services (P) Ltd v. Metcalfe & Hodg Kinson (P) Ltd. (2005) 6 SCC 138 : [2005] 3 SCR 666 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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