Supreme Court of India
MUNICIPAL CORPORATION, UJJAIN & ANR.versusBVG INDIA LIMITED AND ORS.
- Citation
- 2018 INSC 268
- Decided
- 27 March 2018
- Disposal
- Appeal(s) allowed
- Bench
- RANJAN GOGOI
Holding
The High Court’s interference was unwarranted; the technical expert’s decision was lawful, and a bidder cannot rely on third‑party experience certificates when it has declared an independent bid.
Summary
The Ujjain Municipal Corporation issued a two‑envelope tender for a 10‑year door‑to‑door municipal solid‑waste collection contract. Global Waste Management Cell Private Limited (GWMC) obtained the highest technical‑financial score (84.36) and was awarded the contract. Unsuccessful bidder BVG India Ltd. challenged the award in the High Court, which set aside the contract, increasing BVG's technical marks and rejecting the expert’s evaluation. On appeal, the Supreme Court held that the High Court could not interfere with the technical expert’s qualitative assessment absent bias, mala‑fide or arbitrariness, that a bidder declaring an independent bid cannot rely on a third‑party’s experience certificate, and that the High Court erred in re‑calculating financial scores and in increasing marks for responsiveness. Consequently, the Supreme Court set aside the High Court order, restored the award to GWMC, and allowed the appeals.
Issues considered
- The scope of judicial review over a technical expert’s evaluation of bidders’ qualifications, especially when non‑performance factors are considered.
- Whether a bidder who declares an independent bid can rely on the technical experience of a third party for qualification.
- Whether the High Court may independently re‑evaluate technical and financial bids as an appellate authority.
Legislation cited
- Solid Waste Management Rules, 2016s. Rule 22
Subjects
tendersjudicial reviewtechnical evaluationpublic interestmunicipal solid wastecontract awardbiasmala fideshow‑cause noticesfinancial bid evaluation
Judgment
[2018] 6 S.C.R. 861 861
MUNICIPAL CORPORATION, UJJAIN & ANR. A
v.
BVG INDIA LIMITED AND ORS.
(Civil Appeal No. 3330 of 2018)
MARCH 27, 2018 B
[RANJAN GOGOI, R. BANUMATHI AND
MOHAN M. SHANTANAGOUDAR, JJ.]
Tenders – Appellant-Corporation issued NIT for appointment
of agency to carry out “Municipal Solid Waste Door to Door
C
Collection and Transportation” – Bids were invited following a two
envelope system i.e. a technical bid and a financial bid – Technical
bids of the parties were analysed thoroughly by a technical expert
and marks were awarded as per specifications of the NIT –
Global Waste Management Cell Private Limited (GWMC) scored
highest marks based on technical and financial weighted scores D
and hence was awarded the contract – Aggrieved, the unsuccessful
bidder (respondent no.1) filed writ petition – High Court allowed
the same and set aside the contract awarded in favour of GWMC –
On appeal, held: As a decision was qualitatively arrived at by the
technical expert respondent no.2, the High Court need not have
E
gone into the merits of such decision as an appellate authority,
especially when there was no bias or malafide – There was no
illegality, arbitrariness, irrationality or unreasonableness on the
part of the expert body while in action – Moreover, the decision
was taken keeping in mind the public interest and work experience
of the successful bidder – In absence of any document evidencing F
the experience in the field in question in favour of respondent no.1,
the High Court was not right in increasing the marks under the
head of number of years of experience and expertise – High Court
was also not justified in increasing the marks for responsiveness,
as respondent no.1 had suppressed the fact that it had received
G
show cause notices from various municipal corporations and thus,
High Court ignored the element of public interest involved in the
matter – Further, the method for evaluation of the financial bid as
applied by the High Court was also not proper and was illogical,
which led to unreasonableness and travesty of justice – Solid Waste
Management Rules, 2016 – r.22. H
861
862 SUPREME COURT REPORTS [2018] 6 S.C.R.
A Tenders – Judicial review of administrative decisions – Held:
The judicial review of administrative action is intended to prevent
arbitrariness – The purpose of judicial review of administrative
action is to check whether the choice or decision is made lawfully
and not to check whether the choice or decision is sound – If the
process adopted or decision made by the authority is not mala fide
B
and not intended to favour someone; if the process adopted or
decision made is neither so arbitrary nor irrational that under the
facts of the case it can be concluded that no responsible authority
acting reasonably and in accordance with relevant law could have
reached such a decision; and if the public interest is not affected,
C there should be no interference u/Art.226 – Constitution of India –
Art.226.
Tenders – Whether under the scope of judicial review, the
High Court could ordinarily question the judgment of the expert
consultant on the issue of technical qualifications of a bidder when
D the consultant takes into consideration various factors including
the basis of non-performance of the bidder – Held: Under the scope
of judicial review, the High Court could not ordinarily interfere
with the judgment of the expert consultant on the issues of
technical qualifications of a bidder when the consultant takes into
consideration various factors including the basis of non-
E performance of the bidder – The power of judicial review can be
exercised only if there is unreasonableness, irrationality or
arbitrariness and in order to avoid bias and mala fides.
Tenders – Whether a bidder who submits a bid expressly
declaring that it is submitting the same independently and without
F any partners, consortium or joint venture can rely upon the
technical qualifications of any third party for its qualification –
Held: No.
Tenders – Whether the High Court can independently
evaluate the technical bids and financial bids of the parties, as an
G appellate authority, for coming to the conclusion – Held: It is not
open to the Court to independently evaluate the technical bids and
financial bids of the parties as an appellate authority for coming to
its conclusion inasmuch as unless the thresholds of mala fides,
intention to favour someone or bias, arbitrariness, irrationality or
perversity are met, where a decision is taken purely on public
H interest, the Court ordinarily should exercise judicial restraint.
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 863
Allowing the appeals, the Court A
HELD: 1. Evaluating tenders and awarding contracts are
essentially commercial transactions/contracts. If the decision
relating to award of contract is in public interest, the Courts will
not, in exercise of the power of judicial review, interfere even if a
procedural aberration or error in awarding the contract is made B
out. The power of judicial review will not be permitted to be
invoked to protect private interest by ignoring public interest.
Attempts by unsuccessful bidders with an artificial grievance and
to get the purpose defeated by approaching the Court on some
technical and procedural lapses, should be handled by Courts
with firmness. The exercise of the power of judicial review should C
be avoided if there is no irrationality or arbitrariness. In the
matter on hand, there is no illegality, arbitrariness, irrationality
or unreasonableness on the part of the expert body while in action.
So also, there is no bias or mala fides either on the part of the
corporation or on the part of the technical expert while taking D
the decision. Moreover, the decision is taken keeping in mind
the public interest and the work experience of the successful
bidder. [Para 35] [889-C-F]
2. Global Waste Management Cell Private Limited
(GWMC) secured the highest score, i.e., 84.36, it emerged as
E
the overall eligible bidder for awarding the project as per the
terms of NIT. Consequently, it was declared L 1 as per the terms
of the NIT. As a decision was qualitatively arrived at by the
technical expert respondent no. 2, the High Court need not have
gone into the merits of such decision as an appellate authority,
especially when there was no bias or mala fide. [Para 39] [892-A- F
C]
3. The bidder was required to set out details of any other
company/firm involved as a consortium member to which
respondent no.1 replied in the negative, which means no other
company/firm was involved as a consortium member with G
respondent no.1 in the process in question. In other words,
respondent no.1 submitted the bid on its own unaccompanied by
any of the consortium member. Despite the same, respondent
no.1 furnished the experience certificate of a third party.
Therefore, reliance placed by the respondent no.1 on the
purported experience certificate issued in the name of third party H
864 SUPREME COURT REPORTS [2018] 6 S.C.R.
A would not come to the help of the respondent no.1 to show its
work experience. The PCMC Certificate neither shows three
years’ experience of respondent no.1 nor that respondent no.1
was carrying out garbage/waste collection of more than 300 MT
per day. Since respondent no.1 has categorically mentioned in
its bid under the column “basic information about tenderer” that
B
no other company (either joint venture or consortium) is involved
with it, respondent no.1 could not have relied upon the purported
experience certificate issued in the name of third party. Other
certificates submitted by the respondent no.1 also did not satisfy
the eligibility requirement. [Para 40] [892-C-H]
C 4. Moreover, the certificate dated 21.4.2015 relied upon
by the High Court in the impugned judgment was not part of the
original bid document submitted by respondent no.1 and it was
submitted before the High Court for the first time in the writ
petition. Since such certificate was not part of the original bid
D document, the High Court was not correct in relying upon such
certificate produced by respondent no.1 for the first time before
it. The Courts will not permit any of the participants in the tender
process to alter or supplement the bid document. In the absence
of any document evidencing the experience in the field in question
in favour of respondent no.1, the appellants are justified in
E contending that the High Court is not correct in increasing the
marks from 5 to 7 under the head of number of years of
experience and expertise. So also, the High Court was not correct
in increasing the marks from 10 to 15 so far as the quantity of
municipal solid waste handled per day through door to door
F collection is concerned. [Para 41] [893-A-C]
5.1 The High Court was also not justified in increasing the
marks for responsiveness from 5 to 10. The High Court could
not have increased the marks for responsiveness as respondent
no.1 had suppressed the fact that it had received show cause
G notices from BBMP and other municipal corporations.
[Para 42][893-F-G]
5.2 It was clearly stated in the NIT that the tenderer was
required to reveal the show-cause notices against it. Despite the
specific column pertaining to the same in the bid document,
H
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 865
respondent no.1 had left the said column blank. Once there is a A
specific clause requiring the mentioning of the show-cause notices
for the breach of contract, it was incumbent upon the tenderer to
provide accurate information. The respondent no.1 had
suppressed 73 show cause notices issued against it by BBMP
and District Panchayat, Dadra and Nagar Haveli, Silvasa in respect
B
of the work relating to solid waste management. Despite
suppression by the respondent no.1, the technical expert from
its own sources gathered information and found that 73 show cause
notices were issued by the BBMP and others against respondent
no.1, which reveal that respondent no.1 had not shown due
diligence in the work of door to door collection of solid waste. C
Hence, the conclusion reached by the High Court that it was not
open for the technical committee to suo motu take into
consideration the afore-mentioned 73 show cause notices issued
against the respondent no.1 while evaluating the technical bid is
not correct. The due diligence and experience of the expert
D
consultant ought to have been appreciated by the High Court
keeping in mind the object to which bids were invited. 73 show
cause notices issued to respondent no.1 establish that respondent
no.1 did not have a good track record and therefore such notices
were necessarily taken into consideration by the technical expert.
In all fairness, respondent no.1 ought to have disclosed these E
factors in its bid. In view of the same, the High Court was not
justified in increasing the marks for responsiveness from 5 to
10. [Para 44] [894-D-E; 895-A-E]
6. The authority concerned is in the best position to find
out the best person or the best quotation depending on the work F
to be entrusted under the contract. If a bidder had faced a
number of show-cause notices from various municipal
corporations in the matter of non-performance of door to door
collection of garbage etc., the Court cannot compel the authority
to choose such undeserving person/company to carry out the
work. Ultimately, the public interest must be safeguarded. The G
public would be directly interested in the timely fulfilment of the
contract so that the services become available to the public
expeditiously and effectively. The public would also be
interested in the quality of work undertaken. Poor quality of work
H
866 SUPREME COURT REPORTS [2018] 6 S.C.R.
A or goods can lead to tremendous public hardship and substantial
financial outlay either in correcting mistakes or in rectifying
defects or even at times in re-doing the entire work. Lethargy or
tardiness in collecting door to door garbage on a day-to-day
basis would definitely lead to increase collection of garbage on
the roads and public properties, which leads to health hazards
B
and also reduces the cleanliness of the city. Since the public is
directly interested and would be affected if the work entrusted is
not carried out appropriately, and as the technical expert has found
that respondent no.1 would not be a suitable company to be
entrusted the work inasmuch as it had faced 73 show-cause
C notices from different Municipal Corporations, the High Court
could not have interfered with the decision taken by the
authority. The High Court has ignored the element of public
interest involved in the matter. [Para 48] [896-G-H; 897-A-D]
Karnataka State Industrial Investment & Development
D Corporation Limited v. Cavalet India Ltd. & Ors. (2005)
4 SCC 456 : [2005] 2 SCR 1183 ; B.S.N. Joshi and
Sons Ltd. v. Nair Coal Services Ltd. (2006) 11 SCC
548 : [2006] 8 Suppl. SCR 11 ; Delhi Science Forum v.
Union of India (1996) 2 SCC 405 : [1996] 2 SCR 767;
Montecarlo Ltd. v. NTPC Ltd. (2016) 15 SCC 272 :
E [2016] 8 SCR 224 – relied on.
Tata Cellular v. Union of India (1994) 6 SCC
651 : [1994] 2 Suppl. SCR 122; Master Merin Services
(P) Ltd. v. Metcalfe & Hodgkinson (2005) 6 SCC 138 :
[2005] 3 SCR 666 ; Sterling Computers Ltd. v. M & N
F Publications Ltd. (1993) 1 SCC 445 : [1993] 1 SCR
81 ; Raunaq International Limited v. I.V.R. Construction
Limited (1999) 1 SCC 492 : [1998] 3 Suppl. SCR 421 ;
Air India Limited v. Cochin International Airport Limited
(2000) 2 SCC 617 : [2000] 1 SCR 505 ; U.P. Financial
G Corporation. v. Naini Oxygen & Acetylene Gas Ltd.
(1995) 2 SCC 754 : [1993] 2 SCR 149 ; U.P. Financial
Corporation v. Gem Cap (India) Pvt. Ltd. & Ors. (1993)
2 SCC 299 : [1993] 2 SCR 149 ; Karnataka State
Financial Corporation v. Micro Cast Rubber & Allied
H
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 867
Products (P) Ltd. & Ors. (1996) 5 SCC 65 : [1996] 3 A
Suppl. SCR 40 ; Central Coalfields Ltd. v. SLL-SML
(Joint Venture Consortium) (2016) 8 SCC 622 :
[2016] 4 SCR 890 ; Afcons Infrastructure Ltd. v. Nagpur
Metro Rail Corporation Ltd. and Ors. (2016) 16 SCC
818 ; Jagdish Mandal v. State of Orissa and Ors. (2007)
B
14 SCC 517 : [2006] 10 Suppl. SCR 606; Meerut
Development Authority v. Assn. of Management Studies
(2009) 6 SCC 171 ; Trilochan Mishra Etc v. State of
Orissa & Ors (1971) 3 SCC 153 ; Ramana Dayaram
Shetty v. International Airport Authority of India
(1979) 3 SCC 489 : [1979] 3 SCR 1014 – referred to. C
Case Law Reference
[1994] 2 Suppl. SCR 122 referred to Para 6
[2005] 3 SCR 666 referred to Para 7
[1993] 1 SCR 81 referred to Para 8 D
[1998] 3 Suppl. SCR 421 referred to Para 11
[2000] 1 SCR 505 referred to Para 12
[1993] 2 SCR 149 referred to Para 13
[1996] 3 Suppl. SCR 40 referred to Para 14 E
[2005] 2 SCR 1183 relied on Para 15
[2006] 8 Suppl. SCR 11 relied on Para 16
[1996] 2 SCR 767 relied on Para 18
F
[2016] 4 SCR 890 referred to Para 19
(2016) 16 SCC 818 referred to Para 20
[2006] 10 Suppl. SCR 606 referred to Para 20
(2009) 6 SCC 171 referred to Para 20
G
(1971) 3 SCC 153 referred to Para 27
[1979] 3 SCR 1014 referred to Para 28
[2016] 8 SCR 224 relied on Para 29
H
868 SUPREME COURT REPORTS [2018] 6 S.C.R.
A CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3330
of 2018.
From the Impugned Judgment and order dated 07.04.2016 of the
High Court of Madhya Pradesh, Bench at Indore in Writ Petition No.4676
of 2015
B WITH
Civil Appeal Nos.3331 and 3332 of 2018.
Vikash Singh, Shyam Divan, Guru Krishnakumar, Gourab Banerji,
Kailash Vasdev, Sr. Advs., Mishra Saurabh, Ankit Kr. Lal, Devadatt
C Kamat, Rajesh Inamdar, Aditya Bhat, Javedur Rahman, Gautam Talukdar,
Nitin S. Tambwekar, Seshatalpa Sai Bandaru, Sahil Tagotra,
Ms. R. Chattarjee, Sanjay K. Shandilya, Apoorva Agrawal, Umrao Singh,
Mushtaq Ahmad, Advs. for the appearing parties.
The Judgment of the Court was delivered by
D MOHAN M. SHANTANAGOUDAR, J. 1. Leave granted.
2. The Order dated 07.04.2016 passed by the High Court of
Madhya Pradesh, Bench at Indore, allowing the Writ Petition No. 4676
of 2015 filed by B.V.G. India Limited, Pune (respondent no.1 in the civil
appeal arising out of SLP(C) No. 11967 of 2016), consequently setting
E aside the contract awarded in favour of Global Waste Management Cell
Private Limited (respondent no. 3 in the civil appeal arising out of SLP(C)
No. 11967 of 2016) by Ujjain Municipal Corporation for door to door
collection and transportation of Municipal Solid Waste, is the subject
matter of these appeals.
F 3. Heard Shri Vikas Singh, learned senior counsel appearing for
Municipal Corporation, Shri Shyam Divan and Shri Guru Krishnakumar,
learned senior counsel representing Global Waste Management Cell
Private Limited, Shri Kailash Vasdev, learned senior counsel for M/s
Eco Save Systems Private Limited (Technical Expert) and Shri Gourab
Banerji, learned senior counsel for BVG India Limited.
G
4. Brief facts leading to these appeals are as under:
Ujjain Municipal Corporation (Appellant in civil appeal arising out
of SLP(C) No. 11967 of 2016) had issued Notice Inviting Tender (for
short, “NIT”) dated 01.05.2015 for the appointment of an agency to
H
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 869
[MOHAN M. SHANTANAGOUDAR, J.]
carry out “Municipal Solid Waste Door to Door Collection and A
Transportation” for a period of 10 years in the city of Ujjain. The tender
notice was for inviting online bids from the eligible bidders following a
two envelope system i.e. one for technical bid and another for financial
bid. The Municipal Corporation had appointed a technical expert in Waste
Management Solution viz. M/s Eco Save System Pvt. Ltd. (respondent
B
no. 2 in the civil appeal arising out of SLP(C) No. 11967 of 2016) for
scrutinising and evaluating the technical & financial bids. The last date
of submission of tender was 21.05.2015. However, a corrigendum was
issued and the date of submitting online tenders was extended up to
01.06.2015. The opening of the technical bid was fixed for 02.06.2015
and the opening of the financial bid on 04.06.2015. Three bidders C
remained for consideration of the award of tender by the Municipal
Corporation. The technical bids of the parties were analysed thoroughly
by the technical expert and marks were awarded as per the specifications
of the NIT.
Clause 1 of the eligibility criteria of the NIT provided that the D
company must have been registered five years prior to 01.05.2010.
Clause 9 of the eligibility criteria of the NIT permitted a consortium of
two members, but with the distinct experience requirement on the subject
matter. Article III of the NIT specified that technical eligibility would
have a weightage of 80% and weightage for financial score was 20%.
The marks obtained in the technical evaluation would contribute to 80% E
and financial evaluation would contribute to 20% of the final marks for
deciding the L1 bidder. The technical parameters which were required
to be measured were also indicated in Article III of the NIT. The financial
bids of only those bidders who secured at least 60% marks in the technical
evaluations would be opened. F
The tender was to be awarded based on the final score arrived at
by taking the total of the weighted scores of technical and financial
evaluations as per the criteria mentioned in the NIT at Article III.
Respondent no.1 scored low on technical evaluation inasmuch as it got
58.94 in the weighted score, whereas the successful bidder i.e. respondent G
no. 3 got a weighted technical score of 67.36. On a final analysis based
on technical and financial weighted scores, Global Waste Management
Cell Pvt. Ltd. got first rank (L1 bidder) amongst the three bidders by
getting the highest score. Hence, it was awarded the contract. Such
award of contract was questioned by the unsuccessful bidder (B.V.G.
H
870 SUPREME COURT REPORTS [2018] 6 S.C.R.
A India Limited, L2 bidder) before the High Court by filing the Writ Petition,
which came to be allowed by the impugned judgment.
During the pendency of these matters, on 26.04.2016, this Court
granted an interim order in favour of the successful bidder, namely
respondent no. 3, staying the operation of the impugned order of the
B High Court, consequent upon which the successful bidder was awarded
the contract and is discharging the duties assigned.
5. The questions involved in these appeals are:
(a) Whether under the scope of judicial review, the High Court
could ordinarily question the judgment of the expert consultant
C on the issue of technical qualifications of a bidder when the
consultant takes into consideration various factors including the
basis of non-performance of the bidder;
(b) Whether a bidder who submits a bid expressly declaring that it
is submitting the same independently and without any partners,
D consortium or joint venture can rely upon the technical
qualifications of any third party for its qualification;
(c) Whether the High Court is justified in independently evaluating
the technical bids and financial bids of the parties, as an appellate
authority, for coming to the conclusion?
E
6. The principles which have to be applied in judicial review of
administrative decisions, especially those relating to acceptance of tender
and award of contract, have been considered in great detail by this Court
in Tata Cellular v. Union of India, (1994) 6 SCC 651, wherein this
Court observed that the principles of judicial review would apply to the
F exercise of contractual powers by Government bodies in order to prevent
arbitrariness or favouritism. However, there are inherent limitations in
exercise of that power of judicial review. The Government is the guardian
of the finances of the State. It is expected to protect the financial interest
of the State. The right to refuse the lowest or any other tender is always
available to the Government. But, the principles laid down in Article 14
G
of the Constitution have to be kept in view while accepting or refusing a
tender. There can be no question of infringement of Article 14 if the
Government tries to get the best person or the best quotation. The right
to choose cannot be considered to be an arbitrary power. Of course, if
the said power is exercised for any collateral purpose, the exercise of
H that power will be struck down.
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 871
[MOHAN M. SHANTANAGOUDAR, J.]
7. The modern trend points to judicial restraint in administrative A
action. The Court does not sit as a Court of Appeal but merely reviews
the manner in which the decision was made. 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. The
B
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 a quasi-administrative sphere.
However, the decision must not only be tested by the application of the
Wednesbury principle of reasonableness, but must also be free from
arbitrariness and not affected by bias or actuated by mala fides. (See C
the judgment in the case of Master Merin Services (P) Ltd. v. Metcalfe
& Hodgkinson (2005) 6 SCC 138).
8. In Sterling Computers Ltd. v. M & N Publications Ltd. (1993)
1 SCC 445, this Court held as under:
“18. While exercising the power of judicial review, in respect of D
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: E
(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 F
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 G
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”.
H
872 SUPREME COURT REPORTS [2018] 6 S.C.R.
A 19. If the contract has been entered into without ignoring the
procedure which can be said to be basic in nature and after an
objective consideration of different options available taking into
account the interest of the State and the public, then Court cannot
act as an appellate authority by substituting its opinion in respect
of selection made for entering into such contract. But, once the
B
procedure adopted by an authority for purpose of entering into a
contract is held to be against the mandate of Article 14 of the
Constitution, the courts cannot ignore such action saying that the
authorities concerned must have some latitude or liberty in
contractual matters and any interference by court amounts to
C encroachment on the exclusive right of the executive to take such
decision.”
9. In Raunaq International Limited v. I.V.R. Construction
Limited, (1999) 1 SCC 492, this Court dealt with the matter in some
detail and held in (para 9) as under:
D “9…..In arriving at a commercial decision considerations which
are of paramount importance are commercial considerations.
These would be :
(1) the price at which the other side is willing to do the work;
E (2) whether the goods or services offered are of the requisite
specifications;
(3) whether the person tendering has the ability to deliver the
goods or services as per specifications. When large works
contracts involving engagement of substantial manpower or
F requiring specific skills are to be offered, the financial ability of
the tenderer to fulfil the requirements of the job is also important;
(4) the ability of the tenderer to deliver goods or services or to do
the work of the requisite standard and quality;
(5) past experience of the tenderer and whether he has
G successfully completed similar work earlier;
(6) time which will be taken to deliver the goods or services; and
often
(7) the ability of the tenderer to take follow up action, rectify
defects or to give post contract services.”
H
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 873
[MOHAN M. SHANTANAGOUDAR, J.]
Whenever the State or public body or the Agency of the State A
enters into such contract, an element of public law or public interest may
be involved even in such a commercial transaction. In that very judgment,
i.e., Raunaq International Limited (supra), the elements of public
interest are also noted. It is held thus:
“10. What are these elements of public interest? (1) Public money
B
would be expended for the purposes of the contract; (2) The goods
or services which are being commissioned could be for a public
purpose, such as, construction of roads, public buildings, power
plants or other public utilities. (3) The public would be directly
interested in the timely fulfilment of the contract so that the
services become available to the public expeditiously. (4) The public C
would also be interested in the quality of the work undertaken or
goods supplied by the tenderer. Poor quality of work or goods can
lead to tremendous public hardship and substantial financial
outlay either in correcting mistakes or in rectifying defects or even
at times in redoing the entire work - thus involving larger outlays
D
or public money and delaying the availability of services, facilities
or goods, e.g. a delay in commissioning a power project, as in the
present case, could lead to power shortages, retardation of
industrial development, hardship to the general public and
substantial cost escalation.
11. When a writ petition is filed in the High court challenging the E
award of a contract by a public authority or the State, the court
must be satisfied that there is some element of public interest
involved in entertaining such a petition. If, for example, the
dispute is purely between two tenderers, the court must be very
careful to see if there is any element of public interest involved in F
the litigation. A mere difference in the prices offered by the two
tenderers may or may not be decisive in deciding whether any
public interest is involved in intervening in such a commercial
transaction. It is important to bear in mind that by court
intervention, the proposed project may be considerably delayed
thus escalating the cost far more than any saving which the court G
would ultimately effect in public money by deciding the dispute in
favour of one tenderer or the other tenderer. Therefore, unless
the court is satisfied that there is a substantial amount of public
interest, or the transaction is entered into mala fide, the court
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A should not intervene under Article 226 in disputes between two
rival tenderers.”
10. The judicial review of administrative action is intended to
prevent arbitrariness. The purpose of judicial review of administrative
action is to check whether the choice or decision is made lawfully and
B not to check whether the choice or decision is sound. If the process
adopted or decision made by the authority is not mala fide and not
intended to favour someone; if the process adopted or decision made is
neither so arbitrary nor irrational that under the facts of the case it can
be concluded that no responsible authority acting reasonably and in
accordance with relevant law could have reached such a decision; and
C if the public interest is not affected, there should be no interference
under Article 226.
11. It is well settled that the award of contract, whether it is by a
private party or by a public body or by the State, is essentially a
commercial transaction. In arriving at a commercial decision, the
D considerations which are of paramount importance are commercial
considerations. These would include, inter alia, the price at which the
party is willing to work; whether the goods or services offered are of the
requisite specifications; and whether the person tendering the bid has
the ability to deliver the goods or services as per the specifications. It is
E also by now well settled that the authorities/State can choose its own
method to arrive at a decision and it is free to grant any relaxation for
bona fide reasons, if the tender conditions permit such a relaxation. The
State, its corporations, instrumentalities and agencies have a public duty
to be fair to all concerned. Even when some defect is found in the
decision-making process, the Court must exercise its discretionary power
F under Article 226 with great caution and should exercise them only in
furtherance of public interest and not merely on the making out of a
legal point. The court should always keep the larger public interest in
mind in order to decide whether its intervention is called for or not. Only
when it comes to a conclusion that overwhelming public interest
G requires interference, the Court should interfere. (See the judgment in
the case of Air India Limited v. Cochin International Airport
Limited (2000) 2 SCC 617).
12. In U.P. Financial Corporation. v. Naini Oxygen &
Acetylene Gas Ltd. (1995) 2 SCC 754, this Court held that it was not a
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[MOHAN M. SHANTANAGOUDAR, J.]
matter for the courts to decide as to whether the Financial Corporation A
should invest in the defaulting unit, to revive or to rehabilitate it and
whether even after such investment the unit would be viable or whether
the Financial Corporation should realise its loan from the sale of the
assets of the Company. The Court observed that a Corporation being an
independent autonomous statutory body having its own constitution and
B
rules to abide by, and functions and obligations to discharge, it is free to
act according to its own right in the discharge of its functions. The views
it forms and the decisions it takes would be on the basis of the information
in its possession and the advice it receives and according to its own
perspective and calculations. In such a situation, more so in commercial
matters, the Courts should not risk their judgment for the judgments of C
the bodies to which that task is assigned. The Court further held that:
“Unless its action is mala fide, even a wrong decision taken by it
is not open to challenge. It is not for the courts or a third party to
substitute its decision, however more prudent, commercial or
businesslike it may be, for the decision of the Corporation. Hence, D
whatever the wisdom (or the lack of it) of the conduct of the
Corporation, the same cannot be assailed for making the
Corporation liable.”
13. In U.P. Financial Corporation v. Gem Cap (India) Pvt.
Ltd. & Ors. (1993) 2 SCC 299, it was observed that the High Court E
while exercising its jurisdiction under Article 226 of the Constitution cannot
sit as an appellate authority over the acts and deeds of the corporation
and seek to correct them, and that the doctrine of fairness, evolved in
administrative law, was not supposed to convert the writ Courts into
appellate authorities over administrative authorities. It is further observed
by this Court that fairness is not a one way street, and fairness required F
of the corporation cannot be carried to the extent of disabling it from
recovering what is due to it.
14. In Karnataka State Financial Corporation v. Micro Cast
Rubber & Allied Products (P) Ltd. & Ors. (1996) 5 SCC 65 the issue
was whether the financial corporation was wrong in rejecting the offer G
given by the borrower which, after proper evaluation, was considered
lower than the offer made by the purchasers. This Court, while upholding
the action of the financial corporation, held that the action of the said
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876 SUPREME COURT REPORTS [2018] 6 S.C.R.
A financial corporation should not be interfered with if it has acted broadly
in consonance with the guidelines.
15. In Karnataka State Industrial Investment & Development
Corporation Limited v. Cavalet India Ltd. & Ors. (2005) 4 SCC 456,
this court after taking into consideration various questions on various
B subjects laid down the following legal principles, viz.-
“(i) The High Court while exercising its jurisdiction under Article
226 of the Constitution does not sit as an appellate authority over
the acts and deeds of the Financial Corporation and seek to correct
them. The doctrine of fairness does not convert the writ courts
C into appellate authorities over administrative authorities.
(ii) In a matter between the Corporation and its debtor, a
writ court has no say except in two situations:
(a)There is a statutory violation on the part of the
Corporation, or
D
(b) Where the Corporation acts unfairly i.e. unreasonably.
(iii) In commercial matters, the courts should not risk their
judgments for the judgments of the bodies to which that task is
assigned.
E (iv) Unless the action of the Financial Corporation is mala
fide, even a wrong decision taken by it is not open to challenge. It
is not for the courts or a third party to substitute its decision,
however, more prudent, commercial or businesslike it may be, for
the decision of the Financial Corporation. Hence, whatever the
wisdom (or the lack of it) of the conduct of the Corporation, the
F
same cannot be assailed for making the Corporation liable.
(v) In the matter of sale of public property, the dominant
consideration is to secure the best price for the property to be
sold and this could be achieved only when there is maximum public
participation in the process of sale and everybody has an
G opportunity of making an offer.
(vi) Public auction is not the only mode to secure the best
price by inviting maximum public participation, tender and
negotiation could also be adopted.
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(vii) The Financial Corporation is always expected to try and A
realise the maximum sale price by selling the assets by following
a procedure which is transparent and acceptable, after due
publicity, wherever possible and if any reason is indicated or cause
shown for the default, the same has to be considered in its proper
perspective and a conscious decision has to be taken as to whether
B
action under Section 29 of the Act is called for. Thereafter, the
modalities for disposal of the seized unit have to be worked out.
(viii) Fairness cannot be a one-way street. The fairness
required of the Financial Corporations cannot be carried to the
extent of disabling them from recovering what is due to them.
While not insisting upon the borrower to honour the commitments C
undertaken by him, the Financial Corporation alone cannot be
shackled hand and foot in the name of fairness.
(ix) Reasonableness is to be tested against the dominant
consideration to secure the best price.
D
16. Likewise, in B.S.N. Joshi and Sons Ltd. v. Nair Coal Services
Ltd. (2006) 11 SCC 548, this Court while summarising the scope of
judicial review and the interference of superior courts in the matter of
award of contracts, observed thus:
“65. We are not oblivious of the expansive role of the superior E
courts in judicial review.
66. We are also not shutting our eyes towards the new
principles of judicial review which are being developed; but the
law as it stands now having regard to the principles laid down in
the aforementioned decisions may be summarised as under: F
(i) if there are essential conditions, the same must be
adhered to;
(ii) if there is no power of general relaxation, ordinarily
the same shall not be exercised and the principle of strict
compliance would be applied where it is possible for all the G
parties to comply with all such conditions fully;
(iii) if, however, a deviation is made in relation to all the
parties in regard to any of such conditions, ordinarily again a
power of relaxation may be held to be existing;
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878 SUPREME COURT REPORTS [2018] 6 S.C.R.
A (iv) the parties who have taken the benefit of such relaxation
should not ordinarily be allowed to take a different stand in
relation to compliance with another part of tender contract,
particularly when he was also not in a position to comply with
all the conditions of tender fully, unless the court otherwise
finds relaxation of a condition which being essential in nature
B
could not be relaxed and thus the same was wholly illegal and
without jurisdiction;
(v) when a decision is taken by the appropriate authority
upon due consideration of the tender document submitted by
all the tenderers on their own merits and if it is ultimately found
C that successful bidders had in fact substantially complied with
the purport and object for which essential conditions were laid
down, the same may not ordinarily be interfered with;
(vi) the contractors cannot form a cartel. If despite the same,
their bids are considered and they are given an offer to match
D with the rates quoted by the lowest tenderer, public interest
would be given priority;
(vii) where a decision has been taken purely on public interest,
the court ordinarily should exercise judicial restraint.”
E 17. In Tata Cellular (supra), this Court referred to the limitations
relating to the scope of judicial review of administrative decisions and
exercise of powers in awarding contracts, by observing in para 94 thus:
“(1) The modern trend points to judicial restraint in
administrative action.
F (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
G 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
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[MOHAN M. SHANTANAGOUDAR, J.]
award the contract is reached by process of negotiation through A
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 B
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.
C
(6) Quashing decisions may impose heavy administrative
burden on the administration and lead to increased and unbudgeted
expenditure.”
In that very judgment, this Court proceeded to observe that there
are inherent limitations in the exercise of the power of judicial review of D
contractual powers. This Court observed that the duty to act fairly will
vary in extent, depending upon the nature of the cases to which the said
principle is sought to be applied. The State has the right to refuse the
lowest or any other tender, provided that it tries to get the best person or
the best quotation.
E
18. This Court in Delhi Science Forum v. Union of India (1996)
2 SCC 405 observed in para 13 as follows:
“13…..While exercising the power of judicial review even in
respect of contracts entered on behalf of the Government or
authority, which can be held to be State within meaning of Article F
12 of the Constitution courts, have to address while examining the
grievance of any petitioner as to whether the decision has been
vitiated on one ground or the other. It is well-settled that the onus
to demonstrate that such decision has been vitiated because of
adopting a procedure not sanctioned by law, or because of bad
faith or taking into consideration factors which are irrelevant, is G
on the person who questions the validity thereof. This onus is not
discharged only by raising a doubt in the mind of the court, but by
satisfying the court that the authority or the body which had been
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880 SUPREME COURT REPORTS [2018] 6 S.C.R.
A vested with the power to take decision has adopted a procedure
which does not satisfy the test of Article 14 of the Constitution or
which is against the provisions of the statute in question or has
acted with oblique motive or has failed in its function to examine
each claim on its own merit on relevant considerations. Under the
changed scenarios and circumstances prevailing in the society,
B
courts are not following the rule of judicial self-restraint. But at
the same time all decisions which are to be taken by an authority
vested with such power cannot be tested and examined by the
court. The situation is all the more difficult so far as the commercial
contracts are concerned. Parliament has adopted and resolved a
C national policy towards liberalisation and opening of the national
gates for foreign investors…….”
(emphasis supplied)
19. In Central Coalfields Ltd. v. SLL-SML (Joint Venture
Consortium) (2016) 8 SCC 622, it was observed as follows:
D
“38. In G.J. Fernandez v. State of Karnataka [(1990) 2 SCC 488]
both the principles laid down in Ramana Dayaram Shetty (1979)
3 SCC 489 were reaffirmed. It was reaffirmed that the party
issuing the tender (the employer) “has the right to punctiliously
and rigidly” enforce the terms of the tender. If a party approaches
E a court for an order restraining the employer from strict
enforcement of the terms of the tender, the court would decline to
do so. It was also reaffirmed that the employer could deviate
from the terms and conditions of the tender if the “changes affected
all intending applicants alike and were not objectionable”.
F Therefore, deviation from the terms and conditions is permissible
so long as the level playing field is maintained and it does not
result in any arbitrariness or discrimination in Ramana Dayaram
Shetty sense.
47. The result of this discussion is that the issue of the acceptance
G 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 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 there must be judicial restraint in
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[MOHAN M. SHANTANAGOUDAR, J.]
interfering with administrative action. Ordinarily, the soundness A
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
B
with relevant law could have reached” as held in Jagdish Mandal
followed in Michigan Rubber.”
(emphasis supplied)
20. This Court also made an observation on judicial interference
in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. C
and Ors. (2016) 16 SCC 818, as hereunder:
“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 D
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 E
interfering with the interpretation given.”
Similar observations were made in the cases of Jagdish Mandal
v. State of Orissa and Ors. (2007) 14 SCC 517, and Meerut
Development Authority v. Assn. of Management Studies (2009) 6
SCC 171. F
21. Thus, only when a decision making process is so arbitrary or
irrational that no responsible authority proceeding reasonably or lawfully
could have arrived at such decisions, power of judicial review can be
exercised. However, if it is bona fide and in public interest, the Court
will not interfere in the exercise of power of judicial review even if there G
is a procedural lacuna. The principles of equity and natural justice do
not operate in the field of commercial transactions. Wherever a decision
has been taken appropriately in public interest, the Court ordinarily should
exercise judicial restraint. When a decision is taken by the concerned
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882 SUPREME COURT REPORTS [2018] 6 S.C.R.
A authority upon due consideration of the tender document submitted by
all tenderers on their own merits and it is ultimately found that the
successful bidder had in fact substantially complied with the purpose
and object for which the essential conditions were laid down, the same
may not ordinarily be interfered with.
B 22. As mentioned supra, the Ujjain Municipal Corporation with
the object of keeping Ujjain city clean wanted to appoint a suitable agency
for “municipal solid waste door to door collection and transportation”.
In that regard, NIT was issued. There cannot be any dispute that
urbanization contributes to enhanced municipal solid waste generation;
unscientific handling of municipal solid waste degrades the urban
C environment and causes health hazards. Various studies have been
conducted in respect of municipal solid waste management in urban
India, and reports have been filed. Despite the same, municipalities are
finding it difficult for proper management of municipal solid waste.
Municipal solid waste management, a critical element towards sustainable
D metropolitan development, comprises segregation, storage, collection,
relocation, carriage, processing and disposal of solid waste to minimize
its adverse impact on the environment. Unmanaged, municipal solid
waste becomes a factor for the propagation of innumerable ailments.
Each of the leading municipal corporations/municipalities in India is trying
its best to minimize the adverse impact on the environment through
E planning of its own to manage the solid waste. Certain cities started
door to door collection of solid waste through agencies appointed by
them. The studies made so far disclose that most cities in India cannot
claim 100% segregation of waste at the dwelling unit and on an average
only 70% waste collection is observed, while the remaining 30% is again
F mixed up and lost in the urban environment. Be that as it may, the waste
collected will have to be scientifically processed. Environment
friendliness, cost effectiveness, and acceptability to the local community
are major attributes to achieve an efficient solid waste management
system. Waste produced by houses is usually transferred into communal
bins. Street sweepings also find their way to community bins. These
G community waste bins are also used by other essential commercial sectors
in the vicinity of disposal bins along with household wastes except where
some commercial complexes or industrial units engage municipal
authorities for the transfer of their waste to disposal sites on payment.
Keeping in mind the adverse impact of health hazards in case the
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MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 883
[MOHAN M. SHANTANAGOUDAR, J.]
municipal solid waste is not managed properly, the municipal corporation A
might plan to float tenders to appoint an agency for municipal solid waste
door to door collection and transportation. Necessarily, while choosing
the appropriate agency, the afore-mentioned object has to be kept in
mind by the municipal corporation. So also, it is the duty of the Courts to
keep such factors in mind while deciding the subject matter of allocation
B
of contract by the municipal corporation.
The Solid Waste Management Rules, 2016 (hereinafter referred
to as the ‘2016 Rules’) apply to every urban local body etc., and the
areas under the control of Indian Railways, airports, airbases, ports,
harbours etc. They are also applicable to the notified industrial townships,
places of pilgrims, religious and historical importance as may be notified C
by respective State Governments from time to time. Rule 22 of the
2016 Rules mandate the time frame for implementation. It is specified
under Rule 22 of the 2016 Rules that necessary infrastructure for
implementation of these rules shall be created by the local bodies and
other concerned authorities by directly or engaging agencies within the D
time frame specified in the said rules. The rule further mandates that
the local bodies and other concerned authorities shall ensure door to
door collection of segregated waste and its transportation in covered
vehicles to processing or disposal facilities. This task has to be completed
within two years from the date of coming into force of the Rules. Prior
to these Rules, Schedule II to the Municipal Solid Waste (Management E
and Handling) Rules, 2000 provided that the municipality shall undertake
the house-to-house collection of municipal solid wastes through community
bin collection, house-to-house collection, or collection on regular pre-
informed timings and scheduling by using the bell-ringing of a musical
vehicle without exceeding the permissible noise levels. F
23. Shri Vikas Singh, representing the Municipal Corporation
contends, that the High Court has erred on four points, (i) Pimpri
Chinchwad Municipal Corporation (PCMC) Certificate submitted by
BVG India Limited (appellant before the High Court) has been relied
upon by the High Court erroneously inasmuch as the purported experience G
certificate is not that of BVG India Limited but the same was of BVG
Kshitij Waste Management Services Private Limited and no information
whatsoever was given of the relationship/linkage of BVG Kshitij Waste
Management Services Private Limited with BVG India Limited; (ii) the
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884 SUPREME COURT REPORTS [2018] 6 S.C.R.
A High Court itself has acted as an appellate authority in evaluating the
tenders and has erred in increasing the marks for responsiveness from 5
to 10; (iii)method and formulae for evaluation of financial bid has been
wrongly applied by the High Court; and (iv) The High Court has wrongly
recorded that the Mira Bhayander certificate produced by the successful
bidder, namely, Global Waste Management Cell Private Limited, was
B
subsequent to technical evaluation. Shri Shyam Divan and Shri Guru
Krishnakumar, appearing on behalf of the appellants, while supporting
the arguments of Shri Vikas Singh, vehemently contended that the High
Court practically has stepped into the shoes of the technical expert for
coming to a different conclusion by allotting marks inconsistent with the
C spirit of the tender document and the established principle followed by
the experts in the field in such matters.
24. Per contra, Shri Gourab Banerji, learned senior counsel argued
in support of the judgment of the High Court and contended that the
High Court is justified in correcting the errors committed by the technical
D expert while rejecting the bid of BVG India Limited.
Shri Gourab Banerji, relying upon the financial bid submitted by
BVG India Limited, which is the lowest one, contends that the bid of
BVG India Limited should have been accepted by the committee
inasmuch as the said bid if accepted would safeguard the financial interest
E of the corporation. In other words, he submits that the work to be carried
out, if assigned to BVG, India Limited would be carried out at cheaper
rates as compared to the successful bidder.
25. Shri Kailash Vasdev, arguing on behalf of technical expert,
contends that the expert has acted in fairest of fair manner and has kept
F in mind the public interest; one of the Directors of respondent no.2 is an
Agro-Environment Scientist and has 22 years of experience in the field
of Municipal Solid Waste Management Projects. The technical expert
provides Technical Consultancy to various Municipal Corporations all
over India, State Governments, Nodal Agencies etc. The technical expert
has already successfully commissioned over 77 Municipal Solid Waste
G Management assignments. The respondent has duly applied its mind
while evaluating the technical bids and financial bids. It has meticulously
and carefully considered all relevant aspects and given a report. There
are no allegations of mala fides or bias against the expert wherever it
has carried on its work as an expert. In the matter on hand also, the
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[MOHAN M. SHANTANAGOUDAR, J.]
expert has acted true to the office it held and has not acted contrary to A
the confidence reposed on it by the corporation and by parties.
26. The contentions of Shri Banerji cannot be accepted, because
the bid should be accepted not only based on the outcome of the financial
bid, but also based on the evaluation of the technical bid. Moreover, in
the matter on hand, the technical bid will have 80% marks whereas the B
financial bid will have 20% marks. This clearly shows that the municipal
corporation has given due importance to the quality and not the financial
aspect, keeping in mind the object for which bids are invited. A Constitution
Bench of this Court in Trilochan Mishra Etc v. State of Orissa & Ors
(1971) 3 SCC 153 held that the Government most certainly has a right to
enter into a contract with a person well known to it, and especially one C
who has faithfully performed its contracts in the past in preference to an
undesirable or unsuitable or untried person.
27. In Ramana Dayaram Shetty v. International Airport
Authority of India (1979) 3 SCC 489, this Court spoke of the
interpretation of essential conditions in a tender as follows: D
“7…It is a well settled rule of interpretation applicable alike to
documents as to statutes that, save for compelling necessity, the
Court should not be prompt to ascribe superfluity to the language
of a document “and should be rather at the outset inclined to suppose
every word intended to have some effect or be of some use”. To E
reject words as insensible should be the last resort of judicial
interpretation, for it is an elementary rule based on common sense
that no author of a formal document intended to be acted upon by
the others should be presumed to use words without a meaning.
The court must, as far as possible, avoid a construction which F
would render the words used by the author of the document
meaningless and futile or reduce to silence any part of the
document and make it altogether inapplicable….”
28. It may also be pertinent to note the judgment of this Court in
Delhi Science Forum (supra), where it observed as follows: G
“13…...The question of awarding licences and contracts does
not depend merely on the competitive rates offered; several factors
have to be taken into consideration by an expert body which is
more familiar with the intricacies of that particular trade. While
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886 SUPREME COURT REPORTS [2018] 6 S.C.R.
A granting licences a statutory authority or the body so constituted,
should have latitude to select the best offers on terms and conditions
to be prescribed taking into account the economic and social interest
of the nation. Unless any party aggrieved satisfies the court that
the ultimate decision in respect of the selection has been vitiated,
normally courts should be reluctant to interfere with the same.”
B
(emphasis supplied)
29. In Montecarlo Ltd. v. NTPC Ltd. (2016) 15 SCC 272, this
Court highlighted the freedom of the owner to decide in matters of tenders
as follows:
C “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. It is common knowledge in
D 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
E 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
F 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
G 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
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[MOHAN M. SHANTANAGOUDAR, J.]
the language of the tender document or subserves the purpose A
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
B
appreciating tender documents 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.”
(emphasis supplied)
C
30. In Central Coalfields (supra), the Court held that the
employer can decide to even deviate from the NIT:
“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 D
deviate from it provided the deviation is made applicable to all
bidders and potential bidders as held in Ramana Dayaram Shetty.
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 E
soundness of the decision cannot be questioned, otherwise this
Court would be taking over the function of the tender issuing
authority, which it cannot.”
(emphasis supplied)
F
31. The reason for allowing public authorities such wide leeway
in matters of contracts and tenders was elucidated in Sterling Computers
(supra). Therein, the Court observed as follows:
“12. At times it is said that public authorities must have the same
liberty as they have in framing the policies, even while entering
G
into contracts because many contracts amount to implementation
or projection of policies of the Government. But it cannot be
overlooked that unlike policies, contracts are legally binding
commitments and they commit the authority which may be held
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888 SUPREME COURT REPORTS [2018] 6 S.C.R.
A to be a State within the meaning of Article 12 of the Constitution
in many cases for years. That is why the courts have impressed
that even in contractual matters the public authority should not
have unfettered discretion. In contracts having commercial
element, some more discretion has to be conceded to the authorities
so that they may enter into contracts with persons, keeping an
B
eye on the augmentation of the revenue. But even in such matters
they have to follow the norms recognised by courts while dealing
with public property. It is not possible for courts to question and
adjudicate every decision taken by an authority, because many of
the Government Undertakings which in due course have acquired
C the monopolist position in matters of sale and purchase of products
and with so many ventures in hand, they can come out with a plea
that it is not always possible to act like a quasi-judicial authority
while awarding contracts. Under some special circumstances a
discretion has to be conceded to the authorities who have to enter
into contract giving them liberty to assess the overall situation for
D
purpose of taking a decision as to whom the contract be awarded
and at what terms. If the decisions have been taken in bona fide
manner although not strictly following the norms laid down by the
courts, such decisions are upheld on the principle laid down by
Justice Holmes, that courts while judging the constitutional validity
E of executive decisions must grant certain measure of freedom of
“play in the joints” to the executive.”
32. That the authorities should be given latitude in making a decision
on the offers was also observed in Sterling Computers (supra). Therein,
the Court observed that any judicial interference amounts to encroachment
F on the exclusive right of the executive to take a decision.
33. In the matter on hand, admittedly, the successful bidder was
more technically qualified and it got more marks. Normally, the contract
could be awarded to the lowest bidder if it is in the public interest. Merely
because the financial bid of BVG India Ltd. is the lowest, the requirement
G of compliance with the Rules and conditions cannot be ignored.
34. As rightly contended by respondent no. 3, a statutory authority
granting licences should have the latitude to select the best offer on the
terms and conditions prescribed. The technical expert in his report
categorically stated that, “All the above aspects demand high level of
H
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 889
[MOHAN M. SHANTANAGOUDAR, J.]
Technicalities and Expertise rather than just depending on lowest financial A
price quote for a material transport.” As clarified earlier, the power of
judicial review can be exercised only if there is unreasonableness,
irrationality or arbitrariness and in order to avoid bias and mala fides.
This Court in Afcons Infrastructure (supra) held the same in the
following manner:
B
“13. In other words, a mere disagreement with the decision making
process or the decision of the administrative authority is no reason
for a constitutional Court to interfere. The threshold of mala fides,
intention to favour someone or arbitrariness, irrationality or
perversity must be met before the constitutional Court interferes
with the decision making process or the decision.” C
35. Evaluating tenders and awarding contracts are essentially
commercial transactions/contracts. If the decision relating to award of
contract is in public interest, the Courts will not, in exercise of the power
of judicial review, interfere even if a procedural aberration or error in
awarding the contract is made out. The power of judicial review will not D
be permitted to be invoked to protect private interest by ignoring public
interest. Attempts by unsuccessful bidders with an artificial grievance
and to get the purpose defeated by approaching the Court on some
technical and procedural lapses, should be handled by Courts with
firmness. The exercise of the power of judicial review should be avoided E
if there is no irrationality or arbitrariness. In the matter on hand, we do
not find any illegality, arbitrariness, irrationality or unreasonableness on
the part of the expert body while in action. So also, we do not find any
bias or mala fides either on the part of the corporation or on the part of
the technical expert while taking the decision. Moreover, the decision is
taken keeping in mind the public interest and the work experience of the F
successful bidder.
36. As held in Tata Cellular (supra), the terms of the tender are
not open to judicial scrutiny as the invitation to tender is a matter of
contract. Decisions on the contract are made qualitatively by experts.
M/s Eco Save Systems Private Limited [respondent no.2 in Civil Appeal G
arising from SLP (C) No. 11967/2016] is a project consultant and technical
advisor of the Ujjain Municipal Corporation. It provides technical
consultancy and advisory services. The documents produced along with
the counter affidavit filed by respondent no.2 would show that respondent
H
890 SUPREME COURT REPORTS [2018] 6 S.C.R.
A no.2 is an expert in municipal solid waste management. It is brought to
our notice that respondent no.2 has developed a Detailed Project Report
(DPR) cum Master Plan of Ujjain City for up-gradation, systematization
and abidance of the Municipal Solid Waste Rules, 2000 for the period
2012 to 2042, and the Jawaharlal Nehru National Urban Renewal Mission
is stated to have sanctioned 35.88 crores for the purpose. There is no
B
dispute by any of the parties that respondent no.2 is an expert in municipal
solid waste management. We also hasten to add that there are no
allegations of bias or mala fides against the technical committee, though
grounds are taken by BVG India Limited before the High Court that the
decision of the expert committee is not proper.
C 37. In the subject NIT, out of the 9 eligibility criteria governing
capability, expertise and efficiency of tenderers, criteria 1 to 5 have a
graded marking system based on unit-measurement of municipal solid
waste quantities handled and the time period of such work, duly
supported by certificates mentioned in Annexure-7 of the tender
D document. All the participants in the tender process have followed the
said procedure for technical eligibility evaluation. The eligibility
parameters for the participants are prescribed in Article III of NIT and
criteria 6 and 7 mentioned therein are based on the submission of relevant
information, required data, write ups and disclosures proving the
tenderer’s expertise, experiences and responsiveness to the NIT. The
E eligibility criteria is based on “track record of good performance,
responsiveness for SWM tender obligations and free of backouts/defaults
during last 3 years”, for which details have to be furnished by the
participants in the process as per Annexures 12 and 13. Furthermore,
Annexure 13 is very specific regarding information on litigations, show-
F cause notices, delays, work suspension etc., and is required in the form
of an undertaking duly stamped on a Non-Judicial Stamp Paper of
Rs.100/-.
38. Records reveal that the evaluation of technical eligibility was
completed by the technical expert between 3.6.2015 and 6.6.2015 and
G copies were submitted to the Executive Engineer, Ujjain Municipal
Corporation. Thereafter, financial bids of all the three technical qualified
bidders were opened on 16.06.2015 and financial results were
communicated to the project consultant for further analysis. The final
scores dated 18.06.2015 arrived at by the technical expert of all the
three bidders are as under:
H
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 891
[MOHAN M. SHANTANAGOUDAR, J.]
1. Evaluation of Technical Bid: A
Sl. No. Name of Marks On After Rating as
Tenderer obtained 100% weightage Technical
out of 95 basis Factor of score TL
80%
1. M/s Global 80.00 84.21 67.36 TL1 B
Waste Mgt.
2. M/s BVG 70.00 73.68 58.94 TL2
India Ltd.
3. M/s Earth 65.00 68.42 54.73 TL3
Connect
Transway C
Evaluation of financial bid:
Sl.No. Parameters Tenderer: Tendererer: Tendererer:
M/s M/s BVG M/s Earth
Global India Ltd. Connect D
Waste Transway
Mgt.
1. Price quote 1710.00 1454.00 1978.00
Rs./NT of
MSW
2. Marks 17.00 20.00 14.67 E
obtained in
out of 20 max
2. Combined overall score:
F
Sl.No. Param eters Tenderer: T endererer: T endererer:
M/s M /s BVG M /s E arth
Global India Ltd. Connect
Waste T ransway
Mgt.
5. Combined 84.36 78.94 69.40
G
overall score
(Tech + Fin)
6. Highest L1 L2 L3
marks = L1
H
892 SUPREME COURT REPORTS [2018] 6 S.C.R.
A 39. Since Global Waste Management Cell Private Limited, i.e.,
Appellant in Civil Appeal arising from SLP (C) No. 11967 of 2016 secured
the highest score, i.e., 84.36, it emerged as the overall eligible bidder for
awarding the project as per the terms of NIT. Global Waste Management
Cell Private Limited has experience of 10 years and has demonstrated
an ability for good responsiveness to tender. Consequently, it was
B
declared L 1 as per the terms of the NIT. As a decision was qualitatively
arrived at by the technical expert respondent no. 2, the High Court need
not have gone into the merits of such decision as an appellate authority,
especially when there was no bias or mala fide.
40. It is necessary to note that in Annexure 1 to the NIT at serial
C no. 11, the bidder was required to set out details of any other company/
firm involved as a consortium member to which respondent no.1 – BVG
India Limited replied in the negative, which means no other company/
firm was involved as a consortium member with BVG India Limited in
the process in question. In other words, BVG India Limited submitted
D the bid on its own unaccompanied by any of the consortium member.
Despite the same, BVG India Limited (respondent no.1) furnished the
experience certificate of BVG Kshitij Waste Management Services
Private Limited. No information whatsoever was given of the
relationship/linkage of BVG Kshitij and respondent no.1 – BVG India
Limited. Therefore, reliance placed by the respondent no.1 on the
E purported experience certificate issued in the name of BVG Kshitij Waste
Management Services Pvt. Limited would not come to the help of the
respondent no.1 to show its work experience. The Pimpri Chinchwad
Municipal Corporation (PCMC) Certificate dated 24.10.2013 is in Marathi
and the same discloses that the work order was issued on 2.3.2012.
F The PCMC Certificate thus neither shows three years’ experience of
BVG India Limited nor that BVG India Limited was carrying out garbage/
waste collection of more than 300 MT per day. Since respondent no.1
has categorically mentioned in its bid under the column “basic information
about tenderer” that no other company (either joint venture or consortium)
is involved with BVG India Limited, respondent no.1 – BVG India Limited
G could not have relied upon the purported experience certificate issued in
the name of BVG Kshitij Waste Management Services Pvt. Ltd. Other
certificates submitted by the respondent no.1 also did not satisfy the
eligibility requirement.
H
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 893
[MOHAN M. SHANTANAGOUDAR, J.]
41. Moreover, the certificate dated 21.4.2015 relied upon by the A
High Court in paragraph 16 of the impugned judgment was not part of
the original bid document submitted by BVG India Limited and it was
submitted before the High Court for the first time as per annexure P6 of
the writ petition. Since such certificate was not part of the original bid
document, the High Court was not correct in relying upon such certificate
B
produced by BVG India Limited for the first time before it. The Courts
will not permit any of the participants in the tender process to alter or
supplement the bid document. In the absence of any document evidencing
the experience in the field in question in favour of BVG India Ltd., the
appellants are justified in contending that the High Court is not correct in
increasing the marks from 5 to 7 under the head of number of years of C
experience and expertise. So also, the High Court was not correct in
increasing the marks from 10 to 15 so far as the quantity of municipal
solid waste handled per day through door to door collection is concerned.
In para 26 of the impugned order, the High Court has evaluated technical
eligibility on its own as if the appellate authority and has increased the
D
marks of respondent no.1 for experience from 5 to 7 and for quantity
handled per day from 10 to 15, as mentioned supra. The High Court’s
observation in para 18 that the certificate issued by PCMC ought to
have been considered because it shows the collection of 335 MT per
day of municipal solid waste, appears to be incorrect in the light of our
discussion made in the afore-mentioned paragraphs. So far as the three E
documents relied upon by respondent no.1 in respect of CIDCO are
concerned, those documents do not state that BVG India Limited was
handling 300 MT per day municipal solid waste on door to door basis.
42. The High Court was also not justified in increasing the marks
for responsiveness from 5 to 10. The High Court relied upon the F
documents pertaining to BBMP and PCMC and has increased the marks
from 5 to 10. In our considered opinion, the High Court could not have
increased the marks for responsiveness as BVG India Limited had
suppressed the fact that it had received show cause notices from BBMP
and other corporations. The format of Annexure-13 on page 26 of the
NIT indicates that the fourth column is reserved for “nature of litigation” G
that the tenderer is or has been involved in. Point 4- of the same
Annexure-13 states as follows, “In how many of your MSW handling/
processing projects, show cause notices have been issued for breach of
contract:” BVG India Limited, while submitting Annexure-13, left the
H
894 SUPREME COURT REPORTS [2018] 6 S.C.R.
A litigation column blank, despite the fact that admittedly, 73 show-cause
notices were issued to it by the BBMP. The fact that these notices were
issued is not disputed by BVG India Limited. It instead claimed that the
issuance of show-cause notices does not form part of the litigation.
43. The technical expert, after an objective evaluation of the tender
B submitted by BVG India Limited, observed that BVG India Limited fell
under the “average category”. It noted thus:
vi) Responsiveness to tender and submissions:
The Tender submission by M/s BVG India is very poor, leaving
many annexures unfilled up and referring as “information given
C separately”. Not filling up even statutory and financial information in the
prescribed formats.
Suppression of information regarding litigations (Annex-13) and
track record of Performance (Annex 12). Casualness in description of
Approach and Methodology. In view of the above, the tender gets marks
D for Average category i.e. 5.00 Marks.
44. It was clearly stated in the NIT that the tenderer was required
to reveal the show-cause notices against it. Despite the specific column
pertaining to the same in the bid document, respondent no.1 had left
the said column blank. Once there is a specific clause requiring the
E mentioning of the show-cause notices for the breach of contract, it was
incumbent upon the tenderer to provide accurate information. As
respondent no.1 has not done so, and has suppressed vital information,
respondent no. 2 has rightly allotted it 5 marks for the same. As
mentioned supra, respondent no.1 submitted an experience certificate
F issued by the PCMC in favour of one M/s BVG Kshitij Waste
Management Services Pvt. Ltd. No material is produced before the
Court to show that M/s BVG Kshitij Waste Management Services Pvt.
Ltd. is the same as BVG India Limited or that it is a consortium member.
In light of specific averment in the bid document by respondent no.1
that there is no other consortium member which has participated in the
G tender process along with BVG India Limited, the experience certificate
issued in favour of BVG Kshitij Waste Management Services Pvt. Ltd
cannot be relied upon to fulfil the eligibility criteria by the BVG India
Limited. Respondent no.1 has submitted its bid as an individual bidder
and not as a consortium and hence the certificate of a third party could
not be considered for the benefit of meeting the technical qualification
H
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 895
[MOHAN M. SHANTANAGOUDAR, J.]
of respondent no.1. In addition to the same, the respondent no.1 had A
suppressed 73 show cause notices issued against it by BBMP and District
Panchayat, Dadra and Nagar Haveli, Silvasa in respect of the work
relating to solid waste management. Despite suppression by the
respondent no.1, the technical expert from its own sources gathered
information and found that 73 show cause notices were issued by the
B
BBMP and others against respondent no.1, which reveal that respondent
no.1 had not shown due diligence in the work of door to door collection
of solid waste. Hence, the conclusion reached by the High Court that it
was not open for the technical committee to suo motu take into
consideration the afore-mentioned 73 show cause notices issued against
the respondent no.1 while evaluating the technical bid is not correct. C
The due diligence and experience of the expert consultant ought to have
been appreciated by the High Court keeping in mind the object to which
bids were invited. 73 show cause notices issued to respondent no.1
establish that respondent no.1 did not have a good track record and
therefore such notices were necessarily taken into consideration by the
D
technical expert. In all fairness, respondent no.1 ought to have disclosed
these factors in its bid. In view of the same, in our considered opinion,
the High Court was not justified in increasing the marks for
responsiveness from 5 to 10.
2. Evaluation of financial bid:
E
45. The method for evaluation of the financial bid as applied by
the High Court is also not proper, and is illogical. As mentioned supra,
the technical expert, in our considered opinion, has rightly applied the
following formula in respect of the bidders so far as financial bids are
concerned:
F
FL1 x 20
FL2/FL3/FL4
On the other hand, the High Court has redone the evaluating
formula in which multiplication of 20 is not adopted:
G
FL1
FL2/FL3/FL4
Since the multiplication of 20 is not adopted by the High Court
(the same rightly adopted by the technical expert in respect of the
H
896 SUPREME COURT REPORTS [2018] 6 S.C.R.
A bidders), the same has led to unreasonableness and a travesty of justice.
The formula adopted by the High Court does not stand to reason at all.
The NIT has prescribed the method of calculation of marks for the
financial bid. The lowest bid, i.e., FL1 will be granted 20 marks. Other
parties will thereafter be given scores by the formula (prescribed in
Clause 3.1.3 of Article III of the NIT), i.e., FL1/FL2 x 20 = FL2’s financial
B
score. In the matter on hand, FL1 of BVG India Limited was 1454,
whereas FL2 was 1710, which was of the successful bidder, i.e., Global
Waste Management Cell Pvt. Ltd. Thus, 1454 (FL1) divided by
1710(FL2), multiplied by 20 marks, gives 17 marks to Global Waste
Management Cell Pvt. Ltd., so far as the financial bid is concerned.
C Per contra, the High Court has failed to multiply the ratio of financial
bids with marks of 20 and thus has erroneously arrived at the score of
0.85 marks instead of 17 marks.
46. The High Court observed in para 25 of the impugned judgment
that the technical consultant had wrongly relied upon the certificate dated
D 16.07.2015 issued by Mira Bhayandar to qualify the successful bidder
as the technical expert had prepared the technical evaluation report on
6.6.2015. The observation of the High Court was that, on the date of
technical evaluation, the certificate issued by Mira Bhayandar was not
in existence. Records reveal that the technical expert had not relied
upon the certificate dated 16.07.2015. The said certificate was an
E additional document submitted for the first time before the High Court
along with the reply affidavit as per annexures R4 to R6. Whereas, the
document submitted in respect of Mira Bhayandar by the successful
bidder was a certificate dated 15.1.2015, which was much prior to the
technical evaluation report dated 6.6.2015. The same is clear from
F Annexure R-21 of the counter affidavit filed on behalf of the successful
bidder. Therefore, the observations and the findings of the High Court
in respect of the certificate issued by Mira Bhayandar are not correct.
47. In the matter on hand, we do not find either the decision-
making process or the decision to be arbitrary or irrational.
G 48. The authority concerned is in the best position to find out the
best person or the best quotation depending on the work to be entrusted
under the contract. If a bidder had faced a number of show-cause
notices from various municipal corporations in the matter of
non-performance of door to door collection of garbage etc., the Court
H
MUNICIPAL CORPORATION, UJJAIN v. BVG INDIA LIMITED 897
[MOHAN M. SHANTANAGOUDAR, J.]
cannot compel the authority to choose such undeserving person/ A
company to carry out the work. Ultimately, the public interest must be
safeguarded. The public would be directly interested in the timely
fulfilment of the contract so that the services become available to the
public expeditiously and effectively. The public would also be interested
in the quality of work undertaken. Poor quality of work or goods can
B
lead to tremendous public hardship and substantial financial outlay either
in correcting mistakes or in rectifying defects or even at times in
re-doing the entire work. Lethargy or tardiness in collecting door to
door garbage on a day-to-day basis would definitely lead to increase
collection of garbage on the roads and public properties, which leads to
health hazards and also reduces the cleanliness of the city. Since the C
public is directly interested and would be affected if the work entrusted
is not carried out appropriately, and as the technical expert has found
that respondent no.1 would not be a suitable company to be entrusted
the work inasmuch as it had faced 73 show-cause notices from
different Municipal Corporations, the High Court could not have
D
interfered with the decision taken by the authority. In our considered
opinion, the High Court has ignored the element of public interest
involved in the matter.
49. As aforementioned, unless the Court concludes that the
decision making process or the decision taken by the authority bristles
with mala fides, arbitrariness, or perversity, or that the authority has E
intended to favour someone, the Constitutional Court will not interfere
with the decision-making process or the decision.
50. Thus, the questions to be decided in this appeal are answered
as follows:
F
(a) Under the scope of judicial review, the High Court could not
ordinarily interfere with the judgment of the expert consultant
on the issues of technical qualifications of a bidder when the
consultant takes into consideration various factors including
the basis of non-performance of the bidder;
G
(b) A bidder who submits a bid expressly declaring that it is
submitting the same independently and without any partners,
consortium or joint venture, cannot rely upon the technical
qualifications of any 3rd Party for its qualification.
H
898 SUPREME COURT REPORTS [2018] 6 S.C.R.
A (c) It is not open to the Court to independently evaluate the
technical bids and financial bids of the parties as an appellate
authority for coming to its conclusion inasmuch as unless the
thresholds of mala fides, intention to favour someone or bias,
arbitrariness, irrationality or perversity are met, where a
decision is taken purely on public interest, the Court ordinarily
B
should exercise judicial restraint.
51. In view of the above, the impugned judgment and order of the
High Court cannot be sustained and the same is set aside.
52. The instant appeals are allowed. There shall be no order as to
C costs.
Ankit Gyan Appeals allowed.
D
E
F
G
H
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