M/S Sam Built Well Pvt. Ltd. vs Deepak Builders

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal No. 21858 OF 2017 (Arising out of Special Leave Petition (Civil) No.22055 of 2017)

M/s Sam Built Well Pvt. Ltd. … Appellant

Versus

Deepak Builders & Ors. … Respondents

JUDGMENT

R.F. Nariman, J.

1. Leave granted.

2. The present appeal involves a notice inviting tenders

(NIT) dated 16th March, 2017 by which the director of the

Institute of Nano Science and Technology, Mohali, invited

Signature Not Verified percentage rate composite bids from eligible firms/contractors Digitally signed by VISHAL ANAND Date: 2017.12.14 16:01:46 IST Reason: in a two bid system for construction of the Institute of Nano

1 Science and Technology Campus at Knowledge City, Sector 81,

Mohali, consisting of research, academic and administrative

buildings together with hostel, residential, amenity and utility

buildings. The estimated cost of the said project was Rs.162.18

crores, with earnest money payable being Rs.1.72 crores. The

period of completion was stated to be 20 months and the last

date for submission of tender was 10 th April, 2017. Clause 8 of

the said NIT is important and states as under:

“8. Contractors/bidders who fulfill the following minimum criteria shall be eligible to apply. Joint ventures/consortium are not accepted.

(a) Should have satisfactorily completed the works as mentioned below during the last date of submission of bids.

(i) Three similar completed works each costing not less than Rs.64.9 crores, or

(ii) Two similar completed works each costing not less than Rs.97.3 crores,

(iii) One similar completed work of aggregate cost not less than Rs.129.7 crores.

Similar work shall mean work of “construction of institutional/educational buildings campus with minimum five storeys RCC framed structure building including electrical, plumbing, fire fighting, HVAC 2 works under composite contract executed in India in a single contract.”

3. Several persons submitted their bids, including

Respondent No.1, who claimed that it had done “similar work”

as follows:

Sr. Name of Completion Current cost Remarks No. work date after addition of 7% per annum 1 Construction 31.03.2016 Rs. 97.76 Cr. It has of District Current basement Administrative enhanced value plus 5 complex at as per clause storeys RCC Sector-76, 2.2.4 framed SAS Nagar, structure Rs. 97.76 cr x Mohali 107% = Rs.104.60 Cr.

2. Construction 05.10.2011 Rs.62.65 cr. It has of Office Current basement Building of enhanced value plus six Punjab Mandi as per clause storeys RCC Board, 2.2.4 framed Phase-11, SA structure Rs. 62.25cr x Nagar, Mohali 114% =70.96cr.

3 3 Construction 16.03.2015 Rs.172.32 cr It has height of Jang-e- of 42 meters Azadi i.e. more Memorial than 8 Project at storeys RCC Kartarpur, framed Jalandhar structure (Phase-1) 4 Construction 23.12.2015: Work of Phase 2 It has of Judicial 14 courts out for remaining basement Court of 25 courts courts in plus 5 Complex at were progress. Work of storeys RCC Sector 76, inaugurated Rs. 75.28 cr. was framed SAS Nagar, on 23rd Dec., completed upto structure Mohali 2015 and are 31.03.2017 and functioning balance work in from the progress building. Work of Phase 2 for remaining courts in progress. 5 Total Value Rs.423.16 Cr.

4. Pre-bid meetings were conducted in March, 2017 and

ultimately Respondent No.1 submitted its tender on 7 th April,

2017. 5 out of 16 bidders, who initially came forward,

participated in the tender process. Admittedly, a technical 4 evaluation report dated 24th April, 2017 stated that the eligibility

criteria contained in Clause 8 of the NIT was not met by

Respondent No.1. This was reiterated by two other expert

bodies, namely, Tata Consultancy Services and the Building

Works Committee of the Institute. Respondent No.2 then

addressed a letter to Respondent No.1 informing it about its

ineligibility. On 3rd May, 2017, Respondent No.1 filed a Writ

Petition which was dismissed by the learned Single Judge

stating that “similar work”, which requires to be considered

under Clause 8 of the NIT, would be work which involves not

only construction of administrative blocks, but also several

other buildings. Looking at the four projects, the last of which

was admittedly kept out of consideration, it was found that none

of the work could be said to be “similar” in nature and referring

to the fact that three specialists had stated that Respondent

No.1 was ineligible, the Court adopted the hands-off posture,

considering the limited parameters of judicial review. However,

by the impugned judgment dated 4 th August, 2017, the Division

Bench of the High Court allowed the appeal of Respondent 5 No.1 and set aside the judgment of the learned Single Judge

stating that though there was no malafides in the present case,

the judgment of the learned Single Judge was incorrect and

that, therefore, Respondent No.1 was clearly eligible. The

appeal was then disposed of by directing Respondent No. 2 to

consider Respondent No.1’s bid, along with other eligible bids,

and award the contract after assessing the bids on all

permissible criteria.

5. Pursuant to the said judgment, we have been informed

that the tender was ultimately awarded on 20 th August, 2017 to

Respondent No.1, inter alia, for the reason that Respondent

No.1 quoted a figure of roughly 4 to 5 crores less than that of

the Appellant. Further, even though we are in December,

2017, the Appellant has, admittedly, not yet left the site of

construction and resultantly Respondent No.1 has not yet

commenced work.

6. Dr. A.M. Singhvi, learned senior counsel appearing on

behalf of the Appellant, has taken us through three expert

6 committee reports in the present case. According to the

learned senior counsel, it is incorrect to state that the National

Building Code of India, 2016, which is framed by the Bureau of

Industrial Costs and Prices, does not apply to the facts of the

present case inasmuch as the special conditions of the tender

specifically make the said Code applicable and that, therefore,

the expert committee reports based, inter alia, on the provisions

of the Code, cannot be interfered with. Also, according to the

learned senior counsel, the learned Single Judge correctly

appreciated that in tender matters, judicial review is very limited

and argued before us that the Division Bench, while setting

aside the judgment of the learned Single Judge, has not kept in

view the parameters of judicial review of tenders. Equally,

according to the learned senior counsel, it being clear that there

are no malafides or perversity involved, it would not be possible

for a Writ Court, sitting in judicial review, to interfere with the

tender process as has been done by the Division Bench.

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7. Per contra, Shri Mukul Rohatgi, learned senior counsel

appearing for Respondent No.1, supported the impugned

judgment and stated that the National Building Code of India

was only made applicable in so far as safety aspects of the

buildings are concerned. This being the case, according to

him, all the expert committee reports in relying upon the

provisions of the said Code could not have done so. Also,

according to him, one look at the three projects that have been

carried out by Respondent No.1 would show that they are all

projects consisting of buildings which have basement plus 5 or

more storeys and that, therefore, it is clear that they were

“similar works” within the meaning of the expression contained

in Clause 8 of the NIT, as these were nothing other than

institutional buildings that were constructed by Respondent

No.1.

8. Dr. Singhvi, in rejoinder, stated that none of the three

works could possibly be called “similar work” because an entire

complex had to be constructed, and similar work was also

8 defined to mean, “construction of institutional/educational

buildings campus with minimum five storeys RCC framed

structure building…”. According to the learned senior counsel,

one building, albeit of 5 storeys or more, would not suffice.

9. Having heard learned counsel for both parties, it is

important to set out the parameters for judicial review in cases

like the present one. In a similar case, namely, Afcons

Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016)

16 SCC 818 at 825-26, paragraph 4.2(a) of Section III of the

tender conditions in that case again spoke of a certain minimum

number of “similar contracts” as previous work experience.

The question before this Court was whether an inter-state high

speed railway project could be similar to metro civil construction

work. After laying down the parameters of judicial review and

referring to various judgments for the same, this Court held:

“15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this 9 understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.

16. In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders.

This was certainly not the case either before the High Court or before this Court.”

10. In Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272 at

288, this Court referred to various judgments, including the

judgment in Afcons Infrastructure Ltd. (supra), and concluded

as follows:

“26. We respectfully concur with the aforesaid statement of law. We have reasons to do so. In the present scenario, tenders are floated and offers are invited for highly complex technical subjects. It requires understanding and appreciation of the nature of work and the purpose it is going to serve. 10 It is common knowledge in the competitive commercial field that technical bids pursuant to the notice inviting tenders are scrutinised by the technical experts and sometimes third-party assistance from those unconnected with the owner's organisation is taken. This ensures objectivity. Bidder's expertise and technical capability and capacity must be assessed by the experts. In the matters of financial assessment, consultants are appointed. It is because to check and ascertain that technical ability and the financial feasibility have sanguinity and are workable and realistic. There is a multi-prong complex approach; highly technical in nature. The tenders where public largesse is put to auction stand on a different compartment. Tender with which we are concerned, is not comparable to any scheme for allotment. This arena which we have referred requires technical expertise. Parameters applied are different. Its aim is to achieve high degree of perfection in execution and adherence to the time schedule. But, that does not mean, these tenders will escape scrutiny of judicial review. Exercise of power of judicial review would be called for if the approach is arbitrary or mala fide or procedure adopted is meant to favour one. The decision-making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents 11 relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints.”

11. We have already noticed that three expert committees

have scrutinized Respondent No.1’s tender and found

Respondent No.1 to be ineligible. The impugned judgment of

the Division Bench of the High Court expressly states that no

malafides are involved in the present case. Equally, while

setting aside the judgment of the learned Single Judge, the

Division Bench does not state that the three expert committees

have arrived at a perverse conclusion. To merely set aside the

judgment of the learned Single Judge and then jump to the

conclusion that Respondent No.1’s tender was clearly eligible,

would be directly contrary to the judgments aforestated. Not

having found malafides or perversity in the technical expert

reports, the principle of judicial restraint kicks in, and any

appreciation by the Court itself of technical evaluation, best left

to technical experts, would be outside its ken. As a result, we

find that the learned Single Judge was correct in his reliance on

12 the three expert committee reports. The Division Bench, in

setting aside the aforesaid judgment, has clearly gone outside

the bounds of judicial review. We, therefore, set aside the

judgment of the Division Bench and restore that of the learned

Single Judge.

12. Dr. Singhvi, learned senior counsel appearing for the

Appellant, has stated that the Appellant is willing to match the

offer of Respondent No.1. We record the aforesaid statement

and order that the tender awarded to Respondent No.1 dated

20th August, 2017, based upon the Division Bench judgment,

must be set aside, and the award of the tender to the Appellant

must be restored. We hasten to add that it will be open to

Respondent No.2 to accept Dr. Singhvi’s offer that the project

will be executed at the amount indicated by Respondent No.1.

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13. The appeal is allowed in the aforesaid terms with no order

as to costs.

…………………………..J. (R.F. Nariman)

…………………………..J. (Navin Sinha) New Delhi;

December 14, 2017.

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