Banshidhar Construction Pvt. Ltd vs Bharat Coking Coal Limited

2024 INSC 757 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 11005 OF 2024 (@ SPECIAL LEAVE PETITION (CIVIL) NO. 17383/2024)

BANSHIDHAR CONSTRUCTION PVT. LTD. APPELLANT(S)

VERSUS

BHARAT COKING COAL LIMITED & OTHERS RESPONDENT(S)

JUDGMENT

BELA M. TRIVEDI, J.

1. Leave granted.

2. The short question that falls for consideration before this Court is

whether the Respondent Bharat Coking Coal Limited (BCCL) was

justified in rejecting the Technical bid of the Appellant, while accepting

the Technical bid of the Respondent no. 8 - Company, and declaring it

to be successful bidder, though the Respondent no. 8 had not complied

with the mandatory requirement of submitting the important documents

Signature Not Verified relating to the qualification criteria as contained in Clause 10 of the Digitally signed by VISHAL ANAND Date: 2024.10.04 11:25:24 IST Reason: Notice Inviting Tender (NIT) dated 16.08.2023, and thereby had failed

to qualify the Eligibility criteria laid down therein? 1

3. The Appellant-Banshidhar Construction Private Limited has assailed the

Judgment and Order dated 18.07.2024 passed by the High Court of

Jharkhand at Ranchi in Writ Petition (Civil) No. 2896 of 2024, whereby

the High Court has dismissed the said writ petition, confirming the

impugned decision dated 06.05.2024 of the Technical Bid Committee of

the Respondent-BCCL rejecting the Technical bid of the Appellant.

4. The Respondent no.1- BCCL is a subsidiary of Coal India Limited and

the Respondent Nos. 2-7 are the authorities/employees of the BCCL.

On 16.08.2023 the Respondent no. 1 floated a Tender bearing

reference No. NIT no. BCCL/CMC/MDO-RS/SIMLABAHAL/

BASTACOLLA Area/2023/318 for the project to “Re-open, salvage,

rehabilitate, develop, construct and operate for excavation I extraction

of coal from Amalgamated East Bhuggatdih Simlabahal Coal Mine and

delivery thereof to the Authority at Bastacolla Area of BCCL” on revenue

sharing basis, for a period of twenty-five years. The Appellant-company

vide Board Resolution dated 07.11.2023 resolved to authorise its

Director Lalti Devi for the purpose of participating in the said Tender and

also executed a Power of Attorney in the prescribed format in her favour.

The said Power of Attorney was notarized on 14.11.2023. Accordingly,

2 the Appellant participated in the said Tender by submitting its bid on

29.11.2023.

5. The Technical bids of the said Tender were opened on 04.12.2023 and

after the evaluation of the same, the Appellant was declared to be

technically disqualified on 06.05.2024. As per the Tender Summary

Reports dated 07.05.2024, the Technical bid of the Appellant was stated

to have been rejected on the ground that it did not comply with the

Clause 10 of NIT (Part I/Cover I other important documents (OID) Point

No. 02 Appendix II (Power of Attorney for signing of bid.)

6. The Financial bids of the two technically qualified bidders were opened

on 07.05.2024 and the Respondent no. 8-Company was declared to be

the successful bidder. The Appellant being aggrieved by the said

decision of the respondent-BCCL, had filed the Writ Petition before the

High Court, which has been dismissed by the High Court vide the

impugned order.

7. On 23.08.2024 the Court had issued Notices to the Respondents and

the learned counsel appearing for Respondents on caveat, had orally

assured the Court that they shall not proceed further with the project in

question. In order to have clarity on the decision taken by the Tender

Recommendation Committee of the BCCL on 06.05.2024, we had 3 called for the original file in respect of the entire tender proceedings from

the Respondents nos.1 to 7 vide the order dated 17.09.2024 and the

same was produced for our perusal.

SUBMISSION BY THE LEARNED ADVOCATES: -

8. Learned Senior Advocate Mr. Ravi Shankar Prasad appearing for the

Appellant vehemently submitted that the reason for rejecting the

Appellant’s Technical bid was grossly arbitrary and discriminatory in as

much as not only the bid of Respondent No. 8 was accepted though it

was not accompanied by important documents, but it was allowed to

subsequently file the said documents to make up the lack of eligibility.

He further submitted that the Appellant had complied with all the

conditions of the NIT, however The Technical bid of the Appellant was

rejected on the extraneous ground by the Technical Bid Committee of

the Respondent-BCCI that the bid documents were signed on

13.11.2023, and other documents including Power of Attorney were

notarized on 14.11.2023. According to him the bid documents were

uploaded/filed on 29.11.2023 i.e. within the stipulated time, which

complied with all the mandatory requirements of Clause 10 of the NIT.

Mr. Prasad has relied upon various decisions of this Court to submit that

the decision of the Government and its instrumentalities must not only 4 be tested by the application of Wednesbury principle of reasonableness

but also must be free from arbitrariness. Invoking the Public Trust

Doctrine, Mr. Prasad lastly submitted that Appellant’s bid was much

more competitive and favourable (Rs. 700 crores approx.) to the

Respondent BCCL, and by allotting the tender to the Respondent no. 8

which even otherwise was ineligible, a commensurate loss was caused

to the public through the Respondent BCCL.

9. However, the learned Solicitor General Mr. Tushar Mehta, learned

senior counsel Mr. Anupam Lal Das and Mr. Vikramjit Banerjee, ASG

appearing for Respondent no. 1 to 7 justifying the decision of Tender

Evaluation Committee rejecting the Technical Bid of the Appellant,

submitted that the Power of Attorney was dated 07.11.2023, which was

notarized on 14.11.2023, whereas the mandatory bid documents were

executed on 13.11.2023, which was not in consonance with clause 10

Part I/Cover 1 (OID) of NIT. According to them, the mandatory bid

documents were executed on 13.11.2023, when the Executant had no

authority to execute the said bid documents. A person submitting the

bid was required to have a valid Power of Attorney in his favour at least

on the date on which he was signing and executing the bid documents,

and therefore the Appellant did not meet with the Eligibility criteria

5 prescribed under the terms of the NIT. They further submitted that

during the course of evaluation the Respondent BCCL could seek

shortfall documents from the Bidders, but could not permit them to

replace the bid documents. So far as Respondent no.8 - Company was

concerned, the Tender Committee had sought clarification on

09.04.2024 regarding the Audited Annual Reports, which approach and

methodology of the Committee was consistent with the other bidders

also who were similarly situated as the Respondent no. 8. The learned

Counsels also submitted that as per the settled legal position the project

being infrastructure project and of national importance, and the scope

of judicial review in the matter of award of Contracts being very limited,

the Court may not interface with the same, even if the Court finds that

there was total arbitrariness or that the tender was granted in a malafide

manner. The ld. Counsels have relied upon catena of decisions to

buttress their submissions, which shall be dealt with hereinafter as may

be necessary.

10. The learned senior counsel Mr. Balbir Singh appearing for Respondent

no. 8 while adopting the submissions made on behalf of Respondent

nos. 1 to 7 submitted that the Respondent no. 8 was declared as

successful bidder on 10.06.2024 and thereafter the Respondent no.1-

6 BCCL and M/s. Simlabahal Coal Mines Private Limited (a Special

Purpose Vehicle constituted by the respondent no. 8-company) have

also entered into a Coal Mining Agreement dated 27.06.2024. He further

submitted that there was no pleading of malafide raised in the Appeal

by the Appellant and as per the settled legal position, the Courts should

not use magnifying glass while scanning the decision-making process

of the authorities to make small mistake to appear like a big blunder.

ANALYSIS: -

11. The undisputed facts as discernible from the pleadings and the

documents on record and from the submissions made by the learned

Counsels for the parties are that the Notice Inviting Tender for the

project in question was issued by the Respondent BCCL on 16.08.2023,

in response to which, the Appellant and the Respondent No.8 had

submitted their respective bid documents. The Appellant Company vide

the Board Resolution dated 07.11.2023 had authorised its Director Lalti

Devi for the purpose of participating in the tender and a Power Of

Attorney dated 07.11.2023 was executed in her favour. The said Power

Of Attorney was notarised before the Notary on 14.11.2023. It is also

not disputed that the Appellant submitted/uploaded the bid documents

on 29.11.2023, that is before the last date of submission, 01.12.2023. It 7 is also not disputed that the Technical bids were opened on 04.12.2023

and the Appellant was declared technically disqualified on 06.05.2024.

The extract of Tender Summary Report dated 07.05.2024 stated in the

Column ‘Remarks’ that the Appellant ‘Did not comply with Clause No.

10 of NIT (Part I/ Cover I Other Important Documents (OID) Point No.

02 Appendix II (Power of attorney for signing of bid).”

12. It is also not disputed that the Respondent No.8 had not submitted the

scanned copies of the Audited balance sheets required to be submitted

as per Clause 10 of the NIT in relation to the financial capacity, while

submitting/ uploading the tender documents and that it was only when

a clarification was sought from the Respondent No.8 about the shortfall

of documents, the said Audited balance sheets were submitted on

17.04.2024, after the Technical bids were opened on 04.12.2023. It is

further not disputed that the Financial bids of the eligible two technically

qualified bidders were opened on 07.05.2024 and the Respondent No.8

Company was found to be the successful bidder.

13. In the instant case the entire controversy centres around the

interpretation of the Clause 10 of the NIT dated 16.08.2023, hence the

same is reproduced for the sake of convenience.

8 “10. For substantiating the Financial Capacity, the Bidders are required to furnish the following information online:

(a) Value of Net Worth (to be submitted in Indian Rupees and in the format provided at Annex III of Appendix I of RFB);

(b) Value of Total Income in the last 3 (three) financial years as chosen by the Bidder (to be submitted in Indian Rupees and in the format provided at Annex III of Appendix I of RFB);

(c) Membership number of the chartered accountant£, where applicable;

and

(d) Scanned copies of the documents as specified in Paragraph 10 of the NIT, in relation to the Financial Capacity.

Note: In case the Bidder is a Consortium, the aforesaid certificates and information shall be submitted in respect of all the Members and the Financial Capacity of the Consortium will be assessed by adding the information so furnished.

Bidders shall submit the information in an objective manner confirmed by the uploaded documents. The documents related to the information furnished online, based on which the auto evaluation takes place, will only be considered. If a Bidder uploads any other document, it will not be given any cognizance.

A scanned copy of the following documents shall be submitted online by the Bidders in support of the information / declaration furnished by the Bidder at the time of submission of their Bids:

Sl. No. Submission of Scanned copy of documents (self-

documents certified and notarized/ certified® ) related to to be uploaded by Bidders in qualification support of information / criteria declaration furnished online by the Bidder against each qualification criteria (CONFIRMATORY DOCUMENT)

1. Bidder’s Copy of the Bidder’s Covering Letter, Covering Letter acceptance of the Bid conditions and and acceptance making commitments on the Bidder’s

of bid conditions letter head as per proforma (provided at Appendix I of RFB)

9 Note: In case the Bidder is a Consortium, the above documents are to be signed by all the Members.

2. Financial i) Certificate having UDIN number Capacity specifying the Net Worth of the Bidder as at the close of the latest financial year among the 3 (three) financial years as chosen by the Bidder, from a chartered accountant based on the financial statements audited by statutory auditor∞ exhibiting the information submitted by the Bidder and confirming that the methodology adopted for calculating the Net Worth conforms to the provisions of the Bidding Documents;

ii) Certificate having UDIN number specifying the average Total Income of the Bidder during the last 3 (three) financial years, as chosen by the Bidder, from a chartered accountant based on the financial statements audited by statutory auditor∞ exhibiting the information submitted by the Bidder online and also specifying the methodology adopted for calculating the average Total Income;

iii) Audited annual reports of the Bidder for the last 3 (three) financial years, as chosen by the Bidder, comprising of the audited balance sheets and profit and loss accounts of the Bidder.

iv) A duly filled in Annex III (provided at Appendix I of RFB).

Notes:

i. For the purpose of Financial Capacity, the Bidder can choose any 3 (three) financial years from the 4 (four) immediately

10 completed consecutive financial years as on the date of invitation of Bids. However, the 3 (three) financial years chosen by the Bidder shall be the same for each Member (in case of Consortium) and the Associate(s), whose Financial Capacity is furnished and relied upon by the Bidder.

ii. In case the Bidder is a Consortium, the above documents are to be submitted in respect of all the Members.

iii. The Bidder shall submit the documents reflecting the Net Worth of the Associate(s) whose Technical Capacity and/or Financial Capacity is furnished and relied upon.

3. Integrity Duly signed and witnessed integrity pact pact as per proforma provided at Appendix VIII of RFB.

Note: In case the Bidder is a Consortium, the integrity pact is to be signed by all the Members.

______________________

∞In jurisdictions that do not have statutory auditors, the firm of auditors which audits the annual accounts of the Bidder may provide the certificates required under this RFB. £Any approximate equivalent of a chartered accountant may provide the

relevant certificates required under this RFB. Jurisdictions which do not have a license/ certification/ membership requirement for accountants to describe themselves or to practice as chartered accountants (or any approximate equivalent), any qualified accountant may provide the certificates required under this RFB.

® For a power of attorney executed and issued overseas, the document will also have to be legalised by the Indian Embassy and notarised in the jurisdiction where the power of attorney is being issued. However, the

11 power of attorney provided by Bidders/ Members from countries that have signed the Hague Convention, 1961 are not required to be legalised by the Indian Embassy if it carries a conforming Apostille certificate.

4. Authorization for a) If the Bidder itself is the DSC Digital Signature holder bidding online, then self-

Certificate declaration of the Bidder to this effect;

(“DSC”) or b) If the DSC holder is bidding online on behalf of the bidder then the power of attorneyβ granted by the Bidder, evidencing authorization granted to the DSC holder to submit the Bid on behalf of the Bidder.

5. Undertaking in An undertaking is to be given by the Support of the Bidder as per the format given at authenticity of Enclosure I of this NIT, confirming the submitted genuineness of the information information and furnished online, authenticity of documents and scanned copy of documents other uploaded and such other commitments declarations.

Note: In case the Bidder is a Consortium, the undertaking is to be signed by all the Members. (Original undertaking shall be submitted as per the provisions of NIT)

6.Any other document to support the qualification information as submitted by the Bidder online.

Note: Only one file in .pdf format can be uploaded against each qualification criteria. Any additional/ other relevant documents to support the information/declaration furnished by Bidder online against qualification criteria may also be added by the Bidder in the same file (in .pdf format) to be uploaded against respective qualification criteria.

12 Part-1/Cover-1-Other Important Documents ("OID”)

Sl. No. Criteria Scanned copy of documents (self-certified and notarized/ certified® ) to be uploaded by Bidder in support of information/ declaration furnished online by the Bidder against each criteria (CONFIRMATORY DOCUMENT)

1. Legal status of Documents to be submitted as the Bidder applicable:

1. Affidavit or any other document to prove the proprietorship/ individual status of the Bidder (applicable only where the Bidder is an individual or sole proprietor);

2. Partnership deed/ agreement containing name of partners and Certificate of Incorporation (applicable only where the Bidder is a partnership firm or a limited liability partnership);

3. Memorandum and Articles of Association with certificate of incorporation containing name of Bidder or any similar charter/ constitutional documents (applicable where the Bidder is a company);

4. Appropriate documents as applicable for any other Bidder not mentioned above.

5. Annex I (Appendix I of RFB) duly filled in and uploaded

6. In case of Consortium:

(i) Details of all Member(s) as at 1/2/3 (as applicable) above,

(ii) Joint Bidding Agreement as per format provided at Appendix IV of RFB:

(iii) Annex I (Appendix I of RFB) duly filled in and uploaded;

(iv) Annex IV (Appendix I of RFB) duly filled in and uploaded

13

7. An undertaking in the format given in Enclosure-III with respect to the ultimate beneficial ownership of the Bidder/Members, in light of the General Financial Rules, 2017 read with the OM No. F. No. 6/18/2019-

PPD dated 23rd July 2020 the Consolidated FDI Policy (effective from 15th October 2020) and the Press Note No. 3 (2020 Series) dated 17th April 2020 issued by the Department for Promotion of Industry and Internal Trade (FDI Policy Section), Ministry of Commerce and Industry, Government of India, each as amended or supplemented from time to time.

8. GST registration certificate.

2. Power of As per the format annexed as attorneyβ Appendix II (as applicable) and Appendix III (in case the Bidder is a Consortium)

3. Mandate Form Copy of mandate form duly filled in as for Electronic per proforma provided at Enclosure II Fund Transfer of this NIT

4. Any other document to support the qualification information as submitted by the Bidder online.

14. It is pertinent to note that the Request For Bid (RFB) annexed to the

NIT, contained “Instructions to Bidders” in Section II thereof. The Clause

2.1.6 of the said Instructions stated that non-compliance with any of the

bidding instructions may lead to rejection of the Bid. Further, Clause

2.2.5 thereof specifically stated that the Bidder shall furnish the requisite

documents listed in Paragraphs 9 and Paragraphs 10 of NIT.

14

15. From the bare perusal of the afore stated Clause 10, it clearly transpires

that the Bidders were required to furnish the information and the

scanned copies of the documents relating to qualification criteria

particularly to substantiate their Financial capacity. For the purpose of

substantiating Financial Capacity, the Bidders were obliged to submit

the scanned copies (self-certified and notarised/certified) of the Audited

Annual Reports for the last three financial years as chosen by the

Bidder, comprising of the audited balance sheets and profit and loss

accounts of the Bidder, along with other documents as stated therein.

This was the mandatory requirement of the NIT, the same being related

to the qualification criteria as also transpiring from Clause 2.2.5 of the

RFB.

16. Admittedly, the Respondent No.8 had not submitted the scanned

copies of its audited Annual Reports for the last three financial years, at

the time of submitting/uploading the bid documents, before the last date

fixed i.e 01.12.2023 and the same were submitted on 17.04.2024 only

when the clarification was sought from the Respondent No.8, after the

Technical bids were opened on 04.12.2023.

17. When the Technical bid of the Appellant was rejected by the

Respondents on 06.05.2024 on the ground that it did not comply with 15 the Clause 10 of the NIT namely Part I/ Cover I Other Important

Documents (OID) Point No. 02 Appendix II (Power of attorney for

signing of bid), there was no justification on the part of the Respondent

authorities for accepting the Technical bid of the Respondent No.8,

which clearly was not in compliance with the same mandatory Clause

10 of NIT. The Respondent BCCL has miserably failed to justify as to

how the Technical bid of the Respondent no.8 was accepted when it

had not submitted the requisite important documents related to the

qualification criteria as mentioned in Clause 10 of the NIT.

18. A lame submission was made on behalf of the Respondent BCCL that

the Tender Evaluation Committee could call for the shortfall of

documents and could not allow replacement of the documents, and that

the Respondent no.8 was asked to submit the shortfall documents only.

We are neither impressed nor can accept the said submissions. Further,

apart from the fact that the Technical bid of the Respondent no.8

deserved to be rejected at the threshold for non-compliance of Clause

10 of NIT, there was also no legal and justifiable reason for rejecting the

Technical bid of the Appellant. Admittedly when the tender documents

were submitted by the Appellant, the Power Of Attorney authorising the

concerned signatory to act on behalf of the Appellant was duly

16 notarised. Merely because the bid documents were signed on

13.11.2023 by the authorized signatory Ms. Lalti Devi on the basis of

the Power of Attorney executed in her favour on 07.11.2023, and the

said Power Of Attorney was notarised on 14.11.2023, it could not be

said that the said representative of the Appellant Company did not

possess the requisite authority to submit the documents on the day

when the bid documents were submitted, nor could it be said that there

was any non-compliance of the mandatory requirement of the Clause

10 of the NIT as sought to be projected by the Respondent BCCL. It was

nowhere stated in the NIT that the Power Of Attorney had to be

notarised before signing the bid documents. As per Part-1/Cover I of

Clause 10 of NIT, pertaining to the other important documents, the only

requirement was to furnish the scanned copies of documents (self

certified and notarised/certified) to be uploaded by the bidder in support

of the information/declaration furnished online by the Bidder against

each criteria, and against the criteria for Power Of Attorney, it was stated

that it should be as per the format annexed. The Power Of Attorney

submitted by the Appellant was as per the format and duly notarised on

14.11.2023, and all the requisite documents along with notarised POA

were submitted before the last date fixed for submission.

17

19. It would be apposite to note that as per Section 2 of the Power Of

Attorney Act, 1882, the donee of a power-of-attorney may, if he thinks

fit, execute or do any instrument or thing in and with his own name and

signature, and his own seal, where sealing is required, by the authority

of the donor of the power; and every instrument and thing so executed

and done, shall be as effectual in law as if it had been executed or done

by the donee of the power in the name, and with the signature and seal,

of the donor thereof. In the instant case, the POA was duly executed in

favour of the donee, the signatory of the documents, and was duly

notarised before its submission along with other important documents

required to be submitted as per the NIT by the Appellant, before the last

date of submission fixed by the Respondent BCCL. Hence, there was

no legal or justifiable ground to reject the Technical bid of the Appellant.

20. Thus, the said action of the Respondent BCCL in rejecting the Technical

bid of the Appellant on absolutely extraneous ground and accepting the

Technical bid of the Respondent no.8 though submitted in utter non-

compliance of the mandatory requirement of Clause 10 of the NIT, and

subsequently calling upon the Respondent no.8 to furnish the shortfall

of documents after the opening of technical bids of the Bidders, was

totally arbitrary and illegal.

18

21. There cannot be any disagreement to the legal proposition propounded

in catena of decisions of this Court relied upon by the learned counsels

for the Respondents to the effect that the Court does not sit as a Court

of Appeal in the matter of award of contracts and it merely reviews the

manner in which the decision was made; and that the Government and

its instrumentalities must have a freedom of entering into the contracts.

However, it is equally well settled that the decision of the government/

its instrumentalities must be free from arbitrariness and must not be

affected by any bias or actuated by malafides. Government bodies being

public authorities are expected to uphold fairness, equality and public

interest even while dealing with contractual matters. Right to equality

under Article 14 abhors arbitrariness. Public authorities have to ensure

that no bias, favouritism or arbitrariness are shown during the bidding

process and that the entire bidding process is carried out in absolutely

transparent manner.

22. At this juncture, we may reiterate the well-established tenets of law

pertaining to the scope of judicial intervention in Government contracts.

19

23. In Sterling Computers Limited vs. M/s. M & N Publications Limited

and Others1, this Court while dealing with the scope of judicial review

of award of contracts held: -

“18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the “decision making process”. In this connection reference may be made to the case of Chief Constable of the North Wales Police v. Evans [(1982) 3 All ER 141] where it was said that: (p. 144a) “The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court.”

By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans [(1982) 3 All ER 141] the courts can certainly examine whether “decision-making process” was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.”

24. In Tata Cellular vs. Union of India2, this Court had laid down certain

priniciples for the judicial review of administrative action.

“94. The principles deducible from the above are:

(1) The modern trend points to judicial restraint in administrative action.

1 (1993) 1 SCC 445 2 (1994) 6 SCC 651

20 (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

Based on these principles we will examine the facts of this case since they commend to us as the correct principles.”

25. It has also been held in ABL International Limited and Another vs.

Export Credit Guarantee Corporation of India Limited and Others3,

as under: -

“53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution.”

3 (2004) 3 SCC 553

21

26. In Jagdish Mandal vs. State of Orissa and Others4, this Court after

discussing number of judgments laid down two tests to determine the

extent of judicial interference in tender matters. They are: -

“22. (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.

If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.”

27. In Mihan India Ltd. vs. GMR Airports Ltd. and Others5, while

observing that the government contracts granted by the government

bodies must uphold fairness, equality and rule of law while dealing with

the contractual matters, it was observed in Para 50 as under: -

“50. In view of the above, it is apparent that in government contracts, if granted by the government bodies, it is expected to uphold fairness, equality and rule of law while dealing with contractual matters. Right to equality under Article 14 of the Constitution of India abhors arbitrariness. The transparent bidding process is favoured by the Court to ensure that constitutional requirements are satisfied. It is said that the constitutional guarantee as provided under Article 14 of the Constitution of India demands the State to act in a fair and

4(2007) 14 SCC 517 5(2022) SCC Online SC 574

22 reasonable manner unless public interest demands otherwise. It is expedient that the degree of compromise of any private legitimate interest must correspond proportionately to the public interest.”

28. It was sought to be submitted by the learned Counsels for the

Respondents relying upon the observations made in Central Coalfields

Limited and Another vs. SLL-SML (Joint Venture Consortium) and

Others6, that whether a term of NIT is essential or not is a decision

taken by the employer which should be respected. However, in the said

judgment also it is observed that if the employer has exercised the

inherent authority to deviate from the essential term, such deviation has

to be made applicable to all the bidders and potential bidders. It was

observed in Para 47 and 48 as under: -

“47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] the terms of NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular [Tata Cellular v. Union of India, (1994) 6 SCC 651] there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision-making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision “that no responsible authority acting reasonably and in accordance with relevant law could have reached” as held

6 (2016) 8 SCC 622 23 in Jagdish Mandal [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] followed in Michigan Rubber [Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216].

48. Therefore, whether a term of NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] . However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.”

29. The submissions made by the learned Counsels for the Respondents

that the project in question being Infrastructure project and also one of

the Mega projects, this Court may not interfere more particularly in view

of the fact that agreement has already been entered into between the

Respondent BCCL and the Special Purpose Vehicle of the Respondent

no.8, cannot be accepted, when we have found that the impugned

decision of the Respondent BCCL was grossly arbitrary, illegal,

discriminatory and violative of Article 14 of the Constitution of India. As

held earlier, the Government bodies/ instrumentalities are expected to

act in absolutely fair, reasonable and transparent manner, particularly in

the award of contracts for Mega projects. Any element of arbitrariness

24 or discrimination may lead to hampering of the entire project which

would not be in the public interest.

30. In that view of the matter, the impugned decision of the Respondent –

BCCL dated 06.05.2024 rejecting the Technical bid of the Appellant and

further declaring the Respondent no.8 as successful bidder is set aside.

Any action/ process undertaken or agreement entered into pursuant to

the said decision also stand set aside. It shall be open for the

Respondent – BCCL to initiate fresh tender process for the Project and

to process the same in question in accordance with law.

31. The Appeal is allowed accordingly.

.......……..…..................................J. [BELA M. TRIVEDI]

..………..…..................................J. [SATISH CHANDRA SHARMA]

NEW DELHI;

OCTOBER 04th , 2024

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