Supreme Court of India
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. LTD. & ANR.versusUNION OF INDIA & ORS.
- Citation
- 2008 INSC 1250
- Decided
- 6 November 2008
- Disposal
- Dismissed
- Bench
- ARIJIT PASAYAT
Holding
Evaluating tenders and awarding contracts are commercial functions; if the decision is bona fide and in public interest, courts will not exercise judicial review even in the presence of procedural lapses.
Summary
The Union of India floated a tender for Digital Radio Trunking Systems for the Army, and three bidders, including Siemens, were shortlisted. After commercial bids were opened, Siemens claimed to be the lowest bidder but alleged that the Evaluation Committee artificially inflated its price by multiplying a unit rate with a quantity not quoted in its bid. The respondents argued that the Committee correctly applied the unit price to the required quantity of 1,200 units, as per the Army's requirement, and that no malafide or favoritism was shown. The Supreme Court examined whether the court could intervene in the award of a government contract where the decision was bona fide, commercial, and in the public interest, despite alleged procedural lapses. It held that tender evaluation and contract award are essentially commercial functions and, absent any arbitrariness, bias or violation of law, judicial review should not disturb the decision. Consequently, the appeal was dismissed, upholding the High Court's order.
Issues considered
- Whether the award of the contract to a bidder other than the lowest bidder can be challenged under Article 226 on grounds of procedural irregularities.
- Whether the Evaluation Committee erred by multiplying the unit price quoted by Siemens with a quantity not specified in its bid documents.
- Whether courts may intervene in commercial decisions of government contracts when the decision is bona fide and in public interest.
- Whether the failure to announce the L1 bidder or alleged misinterpretation of bid details warrants judicial interference.
Legislation cited
- Constitution of Indias. Article 226
- Indian Contract Act, 1872
Subjects
tender evaluationcontract awardjudicial reviewadministrative decisionpublic interestdefence procurementcommercial functionArticle 226lowest biddertransparencyfairness
Judgment
[2008] 15 S.C.R. 585
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. A
.... >--
LTD. & ANR.
II.
UNION OF INDIA & ORS.
(Civil Appeal No. 6515 6f 2008)
NOVEMBER 6, 2008 B
[DR. ARIJIT PASAYAT, C.K. THAKKER AND
LOKESHWAR SINGH PANTA, JJ.]
Constitution of India, 1950; Article 226: c
Government contracts - Tender - Award of contract -
Administrative decision, judicial review of - Held: Evaluating
tenders and awarding contracts are essentially commercial
functions - When the decision relating to award of contract
D
found bonafide and in public interest, Courts should not
exercise the power of judicial review to interfere with such
administrative decision even if there was procedural lacunae
- In the instant case, the contract was for sensitive army
equipments needed on urgent basis - Expert Committee
E
rightly determined price of requisite quantity of goods by
multiplying with unit price quoted in the bid documents
submitted by all the tenderers - There was no scope for the
authority to read into the tender documents suggestion by the
appellant, which did not exist in the bid documents ..r.
Moreover, no personal allegation of malafideslfavouritism F
levelled against the authority- Hence, no fault could be found
with the decision taken by the authority/process adopted in
awarding the contract - Indian Contract Act, 1872 -
Government contracts - Administrative decision - Power of
Judicial Review - Exercise of. G
Respondent No. 2, a Public Sector Undertaking of
Government of India, floated a Request for Proposal
'-+ (RFP)/Tender for procurement of Digital Radio Trunking
585 H
,__
586 SUPREME .COURT REPORTS [2008] 15 S.C.R.
.;:,
L
A System (DRTS)/Terrestrial Trunked Radio (TETRA), a pa.rt
of, Technical Communication· System for lndi.an Army/
M•nistry of Defence, Government of India, respondent
No. f. In terms of. the tender ·document, the evaluation,·
trials and completion of the contract was proposed to be
B carried out in five phases. In each phase committees of,
experts have been entrusted the task of evaluation of
bids and short listing the ~ld~ers by eliminating "those not
qualified in terms of ev~luation criteria. In all, eight
bidders submitted their bids. After the end of phase Ill,
c three bidders viz. appellant No.1, respondent Nos. 3 & 4
have been declared qualified for evaluation in phase IV.
In Phase~IVj commercial· bids were opened in the
presence of the representatives of all .three bidders and
the prices of the main items as per their commercial bids
were read out. The total price of appellant No.1, as worked
0
out, was lowest. However, as the proposals of the bidders
comprised various details contained in the en.closures to
the bid, they.·were informed that a comprehensive
evaluation would be.carried out by the Expert Committee
E for arriving at L 1 bidder and that any further interaction
would only be held with L 1 bidders. The Evaluation
Committee asked for certain clarifications in the form of
queries from all the three bidders including appellant No. ·
1. The bidders gave their clarifications. The Committee,
after completion of evaluation of the bids, finalized the
F total package cost for each of the bidders. Since name \
of L-1 lenderer was not announced by the respondents, ·
appellants filed a representation. Respondents ailegedly
did not declare outcome of tenders after Phase IV but
negotiated with them. Appellants, one of the bidders, filed
G a writ petition praying for issuance of directions to
respondent Nos. 1 & 2 to award the contract in their
favour as they being the lowest bidders and not to
negotiate with other bidders. The other two bidders were
also impleaded as. parties; The petition was dismissed by . I
H
'I
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SIEMENS PUBLIC COMMUNICATION NETWORKS PVT.
LTD. & ANR. v. U.0.1 & ORS.
the High Court. Hence the present appeal.
587
A
Appellants, inter alia, contended that the bid of
appellant No.1 was the lowest of the three technically
qualified bidders; that appellant No. 1 was being ousted
by adding an imaginary price to its bid, which the
B
appellants never quoted and such an addition to the bid
was unwarranted and amounted to artificially loading the
bid; and that a confusion was being created about the
~ nature of the bid. It was clearly the intention of the
appellants to indicate the price for 100 units. The unit
base is 1 for 100 and that is how the appellants have c
understood the matter and had accordingly put the figure.
Respondents, inter alia, submitted that the appellants
with their eyes open had quoted the figures and at
different points of time have taken totally varying stands; D
that they had stated the quantity to be "as required" and
indicating the unit price. However, the total price was left
blank. At that point of time the quantity was not known
and that a similar indication was made by each of the
bidders; that all the bidders understood the required E
quantity to be 1200 units but the appellants had indicated
the quantity to be 1 and had quoted the price; that
nothing could have precluded the appellants from turning
around later on, and seeking to bind respondent No. 2
down to the rates as offered by it for a single unit in the F'
.. original, the same being part of the original tender
documents.
Dismissing the appeal, the Court
HELD: 1.1. hi the composite price schedule in G
respect of Item No.11 of the bid document, appellant No.
1 endorsed the figure "1" in the column of "Quantity", an·d
while filling in the price in the column of "Unit Price Euro"
~
as also "Total Price Euro", inserted the figure, "8,977.34".
The said composite price statement was at variance with H
588 SUPREME COURT REPORTS [2008] 15 S.C.R.
A the original Bill of Materials submitted by the appellant
. No. 1 in respect of item No.11 for the reason that in the ...... ..
original Bill of Materials, in the column of "Quantity" the
appellant had indicated nAs required" and the' column of
"Totaf Price Euro" was left blank by it. [Para 23l [615-H;
B 616-A, B]
1.2. The appellants have placed heavy reliance on the
composite price schedule to state that there was no
correlation of the quantity of 1200 given for Vehicular 1
Mobile Stations, as specified in Item No4.1, with item
c No.11 to state that the quantity against item No.11 was
never declared and further, that at best the respondent
No.2 could have bound the appellant No.1 down to the
price indicated in the column "Total Price Euro" indicated
in the composite price schedule, but it could not have
D multiplied the rate given in the "Unit Price" with the figure
of 1200 which had resulted in absurdity. [Para 23] [616-
c, DJ ...
1.3. The High Court rightly noted that any reference
E to or reliance upon the composite price schedule
submitted by the appellants after opening of the
commercial bids of all the vendors on an earlier date, is
impermissible. Had respondent No.2 taken the composite
price schedule into consideration in respect of item
F No.11, it would have created justifiable doubts in the
minds of respondents No. 3 and 4 and defeated the rule ~·
\
of transparency and fairness on the part of respondent ;
No. 2, as it would have amounted to improving the bid
made originally by appellant No. 1, by supplying details
upon ascertaining the rates quoted by the others. [Para
G
24] [616-E, F, G]
1.4. Specific queries were put forward by respondent .
No. 2 to each of the three bidders wherever clarifications y
were required qua particular items in the Bill of Materials
H submitted and other aspects of the bid. No query was
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 589
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>
LTD. & ANR. v. U.0.1 & ORS .
raised by the respondent No. 2 on the appellant No. 1 in A
respect of item No.11. Hence, the question of taking into
--- consideration the clarifications given thereon by appellant
No. 1 did not arise. [Para 24] [616-G, H; 617-A]
1.5. While taking note of the changes made by
B
appellant No. 1 in respect of item No.11 in the composite
price schedule, as against the original Bill of Materials
submitted, the former was not taken into consideration
by the Committee. Instead, the Committee made a point
to observe in its analysis that no technical explanation
was given by the appellant as to why the quantity had c
been changed by appellant No. 1 from "As required" to
"1" while the "Unit Price" and "Total Price" was kept as
the same in the composite price schedule. Thus the
Committee multiplied the unit price furnished by appellant
No. 1 with the figure 1200 to arrive at the total price, and D
the same method was uniformly adopted for the other two
bidders. Looking at it from another angle, respondent No.
2 cannot be faulted for strictly adhering to the rates
furnished by appellant No. 1 in its original bid documents.
[Para 25] (617-B-E] E
1.6. It is the common case of all the parties that
commercial offers were to be made by all the bidders for
quantities of 80 systems as per the Bill of Materials
enclosed with the RFA. As no quantity was disclosed for
F
item No.11 in the Bill of Materials, none of the bidders
quoted rates for any spe~ific quantity, but did so only for
a single unit. Thus the unit rate quote remained the
deciding factor for the Committee, while finally analyzing
the bids. [Para 26] [618-B, C]
G
1.7. The contention ·of the appellants that they had a
J
license for the software under which one software unit
would serve 100 units of Vehicular Mobile Terminals and
as a result, the total requirement of software unit was
H
590 SUPREME COURT REPORTS [2008] 15 S.C.R.
A only 12{12x100 = 1200) and ,not 1200 (1x1200=1200), is
misconceived and without any basis for the reason that
a perusal ·of item No. 11 of the Bill of Materials submitted
by the appellants does not show that any such remarks
were made therefor. In fact, the remarks column in the
B said Bill of Materials was left 'blank. [Para 27] [618-C, D]
1.8. There is nothing on re.cord by way of any
remarks in the bid document to effect that the said price
of a single unit was to hold good for 100 units on the
ground that appellant No. 1 was granted a software
C license which catered to 100 users at one time. [Para 28]
[619-C]
1.9. A basic distinction has to be drawn between a
case where against an item, no rates or prices or
o quantities are quoted, and those where some rate is
quoted. Appellant No.1 having quoted a rate on a unit
basis ill respect of item No.11, respondent No. 2 had no
option but to make the said rate the basis for arriving at
the total price. Accepting the interpretation as sought to
E be given by the appellants would amount to re-writing
the entries in the bid document and reading into the bid
document, terms that did not exist therein. [Paras 28 and
29] [619-C, D, E]
.F . _2.~. R.e~pondent No. 2 was under an obligati~n to not
only maintain a great degree of transparency· and fair
dealing on its part, but was also expected to maintain the
sanctity and integrity of the entire process. Thus it was
incumbent upon respondent No. 2 to ensure that no
different yardstick were adopted for any of the vendors
G and at the same time, to ensure that there was not the
·remotest possibility of discrimination, arbitrariness or
favouritism. There was no scope for respondent No. 2 to
read into the documents, terms and conditions which did
not exist in the bid documents. The appellants have also
H not levelled any personal allegations of malafides or
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 591
•
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LTD. & ANR. v. U.0.1 & ORS .
favouritism against respondent No. 2. The approach of
the High Court is in the right direction a·nd the factual
A
position obtaining has also been noted in detail and the
conclusions have been arrived at. [Paras 29, 30 and 31]
~
[619-F, G, H; 620-A, B]
I
B
Reliance Airport Developers (P) Ltd. vs. Airports Authority
of India and Others, (2006) 10 SCC 1 and Asia Foundation
& Construction Ltd. vs. Trafalgar House Construction (I) Ltd.
~
~ And Others, (1997) 1 SCC 738, referred to.
2.2. On examining the 1acts and circumstances of the c
present case, this Court is of the view that none of the
criteria has been satisfied justifying Court's interference
in the grant of contract in favour of the appellants. When
the power of judicial review is invoked in the matters
relating to tenders or award of contracts, certain special D
features- have to be considered. A contract is a
commercial transaction and evaluating tenders and
awarding contracts are essentially commercial functions.
In such cases principles of equity and natural justice stay
at a distance. If the decision relating to award of contracts E
is bonafide and is in public interest, Courts will not
exercise the power of judicial review and interfere even
if it is accepted for the sake of argument that there is a
procedural lacuna. [Para 34] [620-F, G, H; 621-A]
~
Master Marine Services (P) Ltd. vs. Hodgkinson (P) Ltd. F
and Another, (2005) 3 SCC 138; Sterling Computers Ltd. vs.
M.N. Publications Ltd. (1993) 1 SCC 445; Raunaq
International Ltd. vs. I. V.R. Construction Ltd., (1999) 1 SCC
492; Mis. B.S.N. Joshi and Sons-Ltd. vs. NairCoal Services
Ltd., AIR 2007 SC 437; Reliance Airport Developers (P) Ltd. G,
vs. Airports Authority of India and Others, (2006) 10 SCC 1;
Tata Cellular vs. Union of India, (1994) 6 SCC 651; Asia
Foundation & Construction Ltd. vs. Trafalgar House
Construction(/) Ltd. and Others (1997) 1 SCC 738; W.B. State
Electricity Board vs. Patel Engineering Co. Ltd. And Others H
SUPREME COURT REPORTS (2008] 15 S.C.R.
592 .
t-
A (2001) 2 sec 451 and Jagdish Manda/ vs. State of Orissa .,J
& Ors., (2006) 14 SCALE 224, referred to.
2.3. In the instant case, the contract is in respect of
sensitive Army equipments which are urgently needed.
--
•
It cannot be held that the process adopted or decision
B
made is so arbitrary or irrational that no responsible
authority acting reasonably or in accordance with the
relevant law could have taken such a decision. [Para 35]
(621-A, B]
~ ,._
c Case Law Reference:
(ZOOS) 3 sec 138 Referred to Para 11
(1993) 1 sec 445 Referred to Para 12
(1999) 1 sec 492 Referred to Para 13
D
AIR 2007 SC 437 Referred to Para 15
(2006) 1o sec 1 Referred to Para 16
(1994) 6 sec 651 Referred to Para 17
E
(1997) 1 sec 738 Referred to Para 18
• (2001) 2 sec 451 Referred to Para 18
(2006) 14 SCALE 224 Referred to Para 21
+
F CIVIL APPELLATE JURISDICTION : Civil Appeal No.
6515 of 2008.
From the final Judgment and Order dated 10.8.2007 of the
· High Court of Delhi at New Delhi in W.P.(C) No. 1768 of 2007.
G
Shyam Diwan; Sr. Adv., Pradeep Kumar Bakshi, Rajat
Navet and Madhur Yadav for the Appellants.
8. Datta, ASG., Dr. A.M. Singhvi, Vinay 8hasin, Dushyant
Dave, Sr. Advs., Rahul Gupta, Reema Sharma, 8hargava V.
H Desai, Ashok K Srivast~va, 8. Krishna Prasad, N. Ganapathy,
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 593
LTD. & ANR. v. U.0.1 & ORS.
~~ > Tasneem Ahmadi, Gaurab Joshi, Sharifa Chaudhary and A
........_ Sudhir Kumar Gupta for the Respondents .
The Judgment of the Court was delivered by
DR. ARIJIT PASAYAT, J. 1. Leave granted.
2. Challenge in this appeal is to the judgment of a Division B
Bench of the Delhi High Court dismissing the writ petition filed
by the appellants. In the writ petition they had inter a/ia prayed
for issuance of directions to the respondents 1 and 2 to award
the contract in respect of tender No. DRTS/AREN/Jan-2005
floated by Bharat Electronics Limited-respondent No. 2 on c
behalf of Union of India-respondent No. 1 in favour of appellant
No.1. They further prayed for directions to restrain respondents
1 and 2 from negotiating with any other bidder except appellant
No.1 on the ground that it is the lowest bidder of the said tender.
D
3. The factual position in a nutshell is as follows.
Respondent No. 2, Bharat Electronics Ltd. was nominated
by respondent No. 1, Ministry of Defence, Government of India,
as the prime contractor for Indian Army's modernization plan
for Technical Communication System (in short the 'TCS'). E
Respondent No. 2 floated a Request for Proposal (RFP) for
procurement of Digital Radio Trunking System (in short the
'ORTS'), also popularly known as Terrestrial Trunked Radio (in
+ short the 'TETRA') which is a major component in the TCS
Programme of the Indian Army, vide Tender No. DRTS/AREN/ F
Jan--2005. In 2 the RFP floated by respondent No. 2 for the
ORTS, the vendors were called upon to make firm technical
and commercial proposals for the supply and transfer of
technology of ORTS to respondent No. 2 for incorporating in
their solution to Indian Army. It was specified that the G'
commercial offers should be for quantities of 80 systems as
___,.--: ''+- per Bill of Material enclosed with RFP.
The technical specifications detailed the components of the
ORTS by splitting them into 9 sub-systems. The tender also
--' H
594 SUPREME COURT REPORTS [2008) 15 S.C.R.
A stipulated that the licensed manufacture of ORTS shall be -<I.. 4t
undertaken by respondent No. 2 through a Transfer of _,..._
Technology (in short the 'ToT') for both hardware and software
by executing a ToT Agreement between the vendor and
respondent No. 2.
B
In terms of the tender document, the evaluation, trials and
completion of the contract was proposed to be carried out in
five phases spread over a period of time. Phase-I comprised
a Preliminary Evaluation of Vendor Proposal and ·technical
analysis, including presentations to be made by the vendors.as
c also clarifications to be provided on questions raised during the
presentations and subsequent analysis to the Technical 3
Evaluation Committee (in short the 'TEC') for being shortlisted
for the Phase-II evaluations. Phase-II evaluations comprised the
visits of the empowered technical team to assess the vendor
D system at the vendor premises to assess the technical
capability, encryption, implementation, confirmation of essential
parameters and suitability of equipment as per RFP,
demonstration of system capability, mock up installation at the ·
location of the vendors and vendors found qualified by the above
E criteria were to be shortlisted for Phase-Ill evaluation.
Phase-Ill evaluation required the vendors to offer three
systems for user trials; one of them was to be installed in a
shelter provided by respondent No. 2, which was to be followed
by user trials to be conducted by an evaluation team from the +·
F
·Indian Army. The vendors were also.required to.give a written
undertaking that their systems will meet all the requirements of
technical and environmental evaluations, maintainability·
evaluation trials .etc. to be conduded in Phase-V.
G Phase-IV comprised opening ofthe commercial offers of ·
such of the vendors whose systems were. shortlisted after
Phase-Ill by a Committee in the presence of the tenderers and --Y
further negotiations were to be made 4 only with the lowest
bidder (L 1) as determined by the Committee. Final Phase-V
H ~
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 595
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
'• > came into play after placement of order when the successful A
-. tenderer was required to supply the three·systems.
On 8th February, 2005, a pre-bid meeting was held by
respondent No. 2 where the prospective bidders were apprised '
of the contents and basic requirements of the tender. ln March
B
2005, eight bidders, including appellant No.1 submitted their '
bids in response to the RFP. Phase-I evaluation was carried
out by the TEC which shortlisted six bidders for Phase-II
evaluation. Phase-II evaluation was carried by the Empowered
Technical Committee (in short the 'ETC'), which after visiting
the factory sites of the six qualified bidders, including appellant ~
No.1 recommended three vendors, namely, petitioner No. 1,
respondent No. 3 (/M/s. Selex Communications SpA (Mis.
Selex) and M/s. Thales Land & Joint Systems (M/s. Thales) for
Phase-Ill evaluation. In P~ase-111 evaluation, field trials,
maintainability evaluation trials, EMl/EMC testing and D
discussions on feasibility etc. were held and further evaluation
trials were carried out.· After approval of the Technical
Committee's report, all the three bidders as referred to
hereinabove, qualified for Phase-IV evaluation and clearance
was accorded for the next phase of evaluation. In Phase-IV, 5 lE
commercial bids wer~ opened on 23rd January, 2007 in the
presence of the representatives of all three bidders and the
prices of the main items as per their commercial bids were read
out. The total price of the three bidders worked out as under :
i
F
(i) M/s. Siemens (appellant No. 1) 16, 100,969 Euros
(ii) M/s. Selex (Respondent No. 3) 25.775,048 Euros
(iii) M/s. Thales (Respondent No .4) 22.781.769 Euros
G
However, as the proposals of the bidders comprised
...,.. various details contained in the enclosures to the bid, they were
informed that a comprehensive evaluation would be carried out
by the Expert Committee for arriving at L 1 bidder and that any
further interaction would only be held with L 1 bidders. An
H
596 SUPREME COURT REPORTS [2008] 15 S.C.R.
..(_
A Evaluation Committee was constituted and the bids of the said . "
three bidders were analyzed. By letter dated 1st February, 2007, :#'
the Evaluation. Committee asked for certain clarifications in the
form· of queries from all the three bidders including appellant
No. 1. In the meeting dated 7th February, 2007 with the .said
B three bidders they gave their clarifications to the queries raised
by respondents No. 1 and 2. As a result, the Evaluation
Committee completed its evaluation of the bids of the said three
bidders and on 10th February, 2007 finalized the total package
cost 6 for each of the three bidders working out a comparative
c statement contai.ning the details as per the scope of the RFP.
According to appellants, since respondent No.2 was not
announcing the name of L-1 tenderer, they wrote to the
respondents on 16.2.2007 inter alia stating that though the price
bid had been opened more than three weeks back the name
D of L-1 had not yet been announced. On the basis of read out
price of all the three bidders on 23.1 .2007, the appellant No. 1
had emerged as the lowest bidder and was, therefore, entitled
to be intimated the results of the tender. Grievance was made
that they did not get any response from the respondent No. 2
E and, therefore, they sent a reminder on 22.2.2007. Finally, by
letter dated 23.2.2007 a response was received from
respondent No. 2 acknowledging their representation but the
outcome of the tender was not intimated. Therefore, the writ
petition was filed. The prayers, as set out in the writ petition
F have been noted above. In essence the appellants wanted +
respondent No. 2 to award the tender in their favour being the
lowest bidder. Counter-affidavits were filed. During the course
of the hearing of the writ petition, a preliminary objection was
raised regarding non-impleadment of two other bidders and
G they were impleaded on the oral request of the appellants.
Stand of respondent No. 2 was that the writ petitioner's •
-y
price is not based on the actual package cost to meet the
complete requirement of RFP, in view of the short falls while
working out the actual package cost based on the assumption
H
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 597
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
of number of quantities and items which the writ petitioners had A
>- ignored and the details were given in Annexure R-5.
It was stated ttfat the Evaluation Committee has not
violated any norms while preparing the report and holding M/s.
Seiex as L-1 bidders .
8
It was further stated that conditions of the tender were not
violated and all the guidelines as per eve were followed
scrupulously while arriving at a package price considering the
complete requirement of RFP and there is no genuine
grievance of the writ petitioners giving rise to any cause of C
action in their favour. The writ petitioner has indulged in
deliberate distortion and contortion of facts and misrepresented
the settled law in this regard.
5. The appellants disputed the above position and it was
0
stated that the appellant No. 1's bid was the lowest of the 3
technical qualified bidders whose commercial bids were
opened and appellant No. 1 was being ousted by adding an
imaginary price of EU 11 billion to its bid, which the appellants
never quoted and addition to its bid was unwarranted and
amounted to artificially loading the bid. It was in essence stated. E
that so far as Item No. 11 is concerned, a wrong view was taken
on the basis of absurd reasoning. The addition of EU 11 billion
I to the bid of the appellants on account of Item No. 11 has
resulted in increasing its total bid to EU 28 billion which, on the
face of it, is absurd. F
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6. Further the stand of respondent No. 2 was that the
appellants could have sought necessary clarification in this
regard, as was done by them in the case of other issues raised
on 7.2.2007. G
-t 7. In the course of arguments the appellants stated that they
were willing to provide software for 1200 users for the price
""f" quoted in the bid, i.e., for EU 8977.34. The respondents, as
noted above, disputed the factual scenario as narrated by the
H
'
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598 SUPREME COURT REPORTS [2008] 15 S.C.R.
A appellants and they specifically stated that different stands have
been taken at different points of time by the writ petitioners to .4.. .
suit their own .purpose. Therefore, there was no scope for L
.....
interfer~nce considering the limited scope of judicial review,
particularly when, no malafides have been alleged or pleaded.
B The High Court by the impugned judgment dismissed the.writ
petition.
8. In support of the appeal, stands taken before the High
Court were reiterated. With reference to the figures indicated ,..\
in the bid documents, it was submitted that a confusion was
c being created about the nature of the bid. It was clearly the
intention of the appellants to indicate the price for too units.
The unit base is 1 for tqo anq that is how the appellants have
understood the matter and had accordingly put the figure. It was
submitted that there is a great price variation and in the greater
D public interest the bid offered by the appellants should be
accepted and even they are willing to supply 1200 units at the
price quoted for 1 unit, i.e., EU 8977.34. ~
9. Learne,d counsel for the respondents on the other hand
E submitted that the appellants with their eyes open had quoted
the figures and. at different points of time have taken totally
varying stands.'lnitially, they had stated the qu.antity to be "as
required" and the unit price in EU.to be 8977.34.The total price
was left blank. At that point of time the quantity was not known
I
F and that a similar indication was made by each of the bidders. I_
All the bidders understood the required quantity to be 1200~ + '
Interestingly the appellants had indicated the quantity to be 1
and had. quoted the total price at EU 8977.34. They further
submitted that the High Court rightly noted that had the
respondent No. 2 proceeded on the basis of the rates furnished
G
by the appellants in the composite bid schedule in the column
(total price EU). Nothing could have precluded the appellants
·from turning around later on, and seeking to bind respondent
No. 2 down to the rates as offered by it for a single unit in the i"
original, the same being part of the original tender documents.
H
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 599
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
· 1t is also submitted that the variation in figures is not exorbitantly A
,.. high, as is being projected by the appellants.
1 10. It would be appropriate to first deal with the scope of
power of judicial review, more particularly, in the matter of
tenders before we take note of various conclusions arrived at.
B
by the High Court.
11. In Master Marine Services (P) Ltd. vs. Hodgkinson (P) .
Ltd. and Another (2005) 3 SCC, 138, it was observed as
follows:
.c
"11. 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 a three-Judge
Bench in Tata Cellular vs. Union of India (1994) 6 SCC,
D
651. It was observed that the principles of judicial review
would apply to the exercise of contractual powers by
""'\'
Government bodies in order to prevent arbitrariness or
favouritism. However, it must be clearly stated that there
are inherent limitations in exercise of that power of judicial
E
review. 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 of the Constitution have to be kept in
view while accepting or refusing a tender. There can be F
-+
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 of that power will
be struck down. G
After an exhaustive consideration of a large number
of decisions and standard books on Administrative Law,
the Court enunciated the principle that the modern trend
points to judicial restraint in administrative action. The Court H
600 SUPREME COURT REPORTS [2008] 15 S.C.R.
A 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
B necessary expertise, which itself m·ay be fallible. The
Government must have freedom of contract. In other words,
a fairplay in the joints is a necessary concomitant for an
administrative body functioning in an administrative sphere
or quasi-administrative sphere. However, the decision must
not only be tested by the application of Wednesbury
c principles of reasonableness but must be free from
arbitrariness not affected by bias or actuated by mala
tides. It was also pointed out that quashing decisions may
impose heavy administrative burden on the administration
and lead to increased and unbudgeted expenditure.
D
12. In Sterling Computers Ltd. Vs. M.N.Publications Ltd.
(1993) 1 sec 445 it was held as under :
"18. While exercising the power of judicial review, in
E respect of contracts entered into on behalf of the State, the
Court is concerned primarily as to whether there has been
any infirmity in the "decision making process." 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. Court have inherent limitations
F +- '
on the scope of any such enquiry. But at the same time
the Courts can certainly examine whether "decision making
process" was reasonable rational, not arbitrary and
violative of Article 14 of the Constitution.
G 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
H by substituting its opinion in respect of selection made for
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 601
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
entering into such contract." ., A.
A.
13. In Raunaq International Ltd. v. I. V.R. Construction Ltd.
(1999 (1) sec 492) it was observed that the award of a
contract, w~ether it is by a private party or by a public body or
the State, is essentially a commercial transaction. In arriving at B
a commercial decision, considerations which are of paramount
importance are commercial considerations, which 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 is of ability to
deliver the goods or services as per specifications.
c
14. The law relating to award of contract by State and
public sector corporations was discussed in Air India Ltd. v.
Cochin International Airport Ltd. [2000 (2) SCC 617] and it was
held that the award of a contract, whether by a private party or D
by a State, is essentially a commercial transaction. It 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. It was further held that the
State, its corporations, instrumentalities and agencies have the E
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 powers under Article 226 with great
caution and should exercise it only in furtherance of public
interest and not merely on the making out of a legal point. The F
' .... 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
requires interference, the Court should interfere.
15. In Mls.B.S.N. Joshi and Sons Ltd. Vs. Nair Coal G'
Services Ltd. AIR 2007 SC 437, while summarizing the scope
of judicial review and the interference of superior Courts in the
~- award of contracts, it was observed as under:
"67. We are not oblivious of the expansive role of the H,
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 603
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
same, their bids are considered and they are given an offer A
.... to match 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
B
restraint."
16. In Reliance Airport Developers (P) Ltd. vs. Airports
)c
Authority of India and Others, (2006) 10 SCC 1, at paragraphs
56, 57 and 77, it was observed as follows :-
c
"56. One of the points that falls for determination is the
scope for judicial interference in matters of administrative
decisions. Administrative action is stated to be referable
to bro2d area of Governmental activities in which the
repositories of power may exercise every class of statutory D
function of executive, quasi-legislative and quasi-judicial
-· nature. It is trite law that exercise of power, whether
legislative or administrative, will be set aside if there is
manifest error in the exercise of such power or the exercise
of the power is manifestly arbitrary (See State of UP. and
E
Ors. v. Renusagar Power Co. and Ors. (Al R 1988 SC
1737). At one time, the traditional view in England was that
the executive was not answerable where its action was
attributable to the exercise of prerogative power. Professor
De Smith in his classical work 'Judicial Review of
Administrative Action' 4th Edition at pages 285-287 states F
the legal position in his own terse language that the relevant
principles formulated by the Courts may be broadly
summarized as follows. The authority in which a discretion
is vested oan be compelled to exercise that discretion, but
not to exercise it in any particular manner. In general, a G
discretion must be exercised only by the authority to which
it is committed. That authority must genuinely address itself
to the matter before it; it must not act under the dictates of
another body or disable itself from exercising a discretion
H
604. SU.PREME COURT REPORTS [2008] 15 S.C.R.
'·
A ,.. in. each__ individ~al case .. In the purported exercise of its .,;...
. , qjscretion, jt must not do what it has-been forbidden to do,
nor must it do what it has not been authorized to do: It must
act in good faith, must have regard to all relevant
}:=
·GOnSideratfons and mi.Jst not be influenced _by ·irrelevant
I
B · · considerations·; must hot· seek to :promote purposes alien )-
to the letter or to the spirit of the legislation that gives it
power to act; and must not act arbitrarily or capriciously.
' Th~se several principles can conveniently be grouped in _;,._ }
two main ·categories: (i) failure to exercise a discretion, and
c (ii) excess or abuse of discretionary power. The two
classes are not, however, mutually exclusive. Thus,
discretion may be improperly fettered beca_use irrelevant
considerations have been taken into account, and where
an authority hands over its discretion to another body it
D acts ultra vires.
57. The present trend ofjudicial opinion is to restrict the -....
doctrine of immunity from judicial review to those class of
cases which relate to deployment of troupes, entering into
international treaties, etc. The distinctive features of some
E
of these recent cases signify the wil,lingness of the Courts
to assert their power to scrutinize the factual basis upon
which discretionary powers have been exercised. One can
conveniently classify under three heads the grounds on
which administrative action is subject to control by judicial
F review. The first ground is illegality the second irrationality, +
and the thirq procedural impropriety. These principles were
highlighted by Lord Diplock in Council of Civil Service
Unions v. Minister for the Civil Service (1984 (3)
All.ER.935), (commonly known as ccsu Case). If the
G power has been exercised on a non-consideration or non-
application of mind to relevant factors, the exercise of
power will be regarded as manifestly erroneous. If a power
(whether legislative or administrative) is exercised on the y1
basis of facts which ~o not exist and which are patently
H
SIEMENS PUBLIC COMMUN.ICATION NETWORKS PVT. 605
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
erroneous, such exercise of power will stand vitiated. (See A
Commissioner of Income-tax v. Mahindra and Mahindra
Ltd. (AIR 1984 SC 1182). The effect of several decisions
on the question of jurisdiction have been summed up by
Grahame Aldous and John Alder in their book Applications
for Judicial Review, Law and Practice thus: B
( "There is a general presumption against ousting the
.,.L jurisdiction of the Courts, so that statutory provisions which
purport to exclude judicial review are construed restrictively.
There are, however, certain areas of governmental activity,
national security being the paradigm, which the Courts c
regard themselves as incompetent to investigate, beyond
an initial decision as to whether the Government's claim
is bona fide. In this kind of non-justiciable area judicial
review is not entirely excluded, but very limited. It has also
been said that powers conferred by the Royal Prerogative D
are inherently unreviewable but since the speeches of the
House of Lords in Council of Civil Service Unions v.
Minister for the Civil Service this is doubtful. Lo.rds
Diplock, Scaman and Roskili appeared to agree that there
is no general distinction between powers, based upon E
whether their source is statutory or prerogative but that
judicial review can be limited by the subject matter of a
particular power, in that case national security. May
prerogative powers are in fact concerned with sensitive,
non-justiciable areas, for example, foreign affairs, but F
. some are reviewable in principle, including the
prerogatives relating to the civil service where national
security is not involved. Another non-justiciable power is
the Attorney General's prerogative to decide whether to
institute legal proceedings on behalf of the public interest. G
77. Expression of different views and discussions in
r._,. different meetings really lead to a transparent process and
transparency in the decision-making process. In the realms
of contract, various choices were available. Comparison
H
606 SUPREME COURT REPORTS [2008) 15 S.CR.
A of the respective merits, offers of choice and whether that
choice has been properly exercised are the deciding
factors in the judicial review.''
17. While arriving at the aforesaid conclusions, this Court
took note of the illustrious case of Tata Cellular v~ Union of India
8
(1994) 6 sec 651 wherein at paras 77 and 94, it was noted
as follows:
"77. The duty of the court is to confine itself to the question
of legality. Its concern should be:
c
1. Whether a decision-making authority exceeded its
powers?
2. Committed an error of law,
D 3. committed a breach of the rul.es of natural justice,
4. reached a decision which no reasonable tribunal
would have reached or,
5. abused its powers.
Therefore, it is not for the court to determine whether a
particular policy or particular decision taken in the fulfillment
of that policy is fair. It is only concerned with the manner in
which those decisions have been taken. The ext~nt of the
F duty to act fairly will vary from case to case. Shortly put, +-
the grounds upon which an administrative action is subject
to control by judicial review can be classified as under:
(i) Illegality : This means the decision-maker must
understand correctly the law that regulates his decision-
G making power and must give effect to it.
(ii) Irrationality, namely, Wednesday unreasonableness.
(iii) Procedural impropriety.
H
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 607
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
The above are only the broad grounds but it does not rule A
out addition of further grounds in course of time. As a
matter of fact, in R. v. Secretary of State for the Home
Department, ex Brind, Lord Diplock refers specifically to
one development, namely, the possible recognition of the
'
~ principle of proportionality. In all these cases the test to be B
adopted is that the court should, "consider whether
something has gone wrong of a nature and degree which
~ requires its intervention."
94. The principles deducible from the above are:
c
(1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but merely
reviews the manner in which the decision was made. D
(3) The court does not have the expertise to correct the
administrative decision~ If a review of the administrative
decision is permitted it will be substituting its own decision,
without the necessary expertise which itself may be fallible.
E
(4) The terms of the invitation to tender cannot be open to
judicial scrutiny because the invitation to tender is in the
realm of contract. Normally speaking, the decision to
accept the tender or award the contract is reached by
process of negotiations through several tiers. More often F
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
G
sphere or quasi-administrative sphere. However, the
decision must not only be tested by the application of
'"\'
Wednesbury principle of reasonableness (including its
other '~cts pointed out above) but must be frer from
arbitrariness not affected by bias or actuated by mala
H
· ,:608 SUPREME COURT REPORTS. [2008] 15 S.C.R.
A . fides. +
(6) Quashing decisions may impose heavy administrative
burden on the administration and lead to increased and
unbudgeted expenditure.
B 18. In Asia Foundation & Construction Ltd. Vs. Trafalgar '
House Construction (/)Ltd. And Others (1997) 1 SCC 738, it
was held as follows :
"10. Therefore, though the principle of judicial review
c cannot be denied so far as exercise of contractual powers
of government bodies are concerned, but it is intended to
prevent arbitrariness or favouritism and it is exercised in
the larger public interest or if it is brought to the notice of
the Court that in the matter of award of a contract power
D has been exercised for any collateral purpose. But on
examining the facts and circumstances of the present case
and on opinion that non of the criteria has been satisfied
justifying court's interference in the grant of contract in
favour of the appellant. We are not entering into the
controversy raised by Mr. Parasaran, learned senior
E
counsel that th.e High Court committed a. tactual error in
coming to the conclusion that respondent no. 1 was the
lowest bidder and the alleged mistake committed by the
consultant in the matter of bid evaluation in not taking into
account the custom.s duty and t.he contention of Mr.
F Sorabjee, learneid ·senior counsel that it has been
conceded by all parties concerned before the High Court
that on correction being made respondent no. 1 was the
lowest bidder. As in our view in the ma.tter of a tender a
lowest bidder may not claim an enforceable right to get the
G contract though ordinarily the concerned authorities should
accept the lowest bid. Further we find from the letter.dated
12th July, 1996, that Paradip Port Trust itselfhas come to
the followi'"'g conclusion :-
H "the technical capability of any of the three bidders
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 609
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
to undertake the works is not in question. Two of the A
bids are very similar in price. If additional
commercial information which has now been
provided by bidders through Paradip Port Trust, had
been available at the time of assessment, the
· outcome appear to the favour award to AFCONS." B
Strong reliance has been placed by learned counsel for the
- .>-
appellants on the observations of this Court in the case of WB.
State Electricity Board Vs. Patel Engineering Co. Ltd. And
Others (2001) 2 SCC 451, more particularly para 31.
c
19. It is no doubt true that while considering the matter in
a broader perspective, larger public interest. has to be kept in
view but at the same time the other relevant factors noted by
this Court in the said judgment, as reflected in paragraphs 6,
23, 24, 28, 31 and 34, need to be noted. D
- "6. Mr. Bhaskar P. Gupta, the learned senior counsel
appearing for respondent No.10, submitted that the unit
rate given by respondent Nos.1 to 4 was an essential term
which would be evident from Clauses 14, 27 and 29 of the
E
ITB, so permitting them to correct the bid would tantamount
to modifying the essential term of the bid and as such the
High Court ought not to have directed the appellant to
permit correction of bid documents and further to consider
their bid along with the other bids.
F
23. The mistakes/errors in question, it is stated, are
unintentional and occurred due to the fault of computer
termed as a repetitive systematic computer typographical
transmission failure. It is difficult to accept this contention.
A mistake ·may be unilateral or mutual but it is always G
unintentional. If it is intentional it ceases to be a mistake.
Here the mistakes may be unintentional but it was not
r'-( beyond the control of respondents 1 to 4 to correct the
same before submission of the bid. Had they been vigilant
in checking the bid documents before their submission, the H
610 SUPREME COURT REPORTS [2008) 15 S.C.R.
A mistakes would have been avoided. Further, correction of
such mistakes after one and a half month of opening of the
bids will also be violative of Clauses 24.1,24.3 and 29.1
oflTB.
24. The controversy in this case has arisen at the threshold.
B
It cannot be disputed that this is an international
competitive bidding which postulates keen competition and
high efficiency. The bidders have or should have assistance
of technical experts. The degree of care required in such
a bidding is greater than in ordinary local bids for small
_......
-
c works. It is essential to maintain the sanctity and integrity
of process of tender/bid and also award of a contract. The
appellant, respondents 1 to 4 and respondents 10 and 11
are all bound by the ITB which should be complied with
scrupulously. In a work of this nature and magnitude where
D bidders who fulfil pre-qualification alone are invited to bid,
adherence to the instructions cannot be given a go-bye by
branding it as a pedantic approach otherwise it will
encourage and provide scope for discrimination,
arbitrariness and favouritism which are totally opposed to
E the Rule of law and our Constitutional values. The very
purpose of issuing Rules/instructions is to ensure their
enforcement lest the Rule of law should be a casuality.
Relaxation or waiver of a rule or condition, unless so
provided under ITB, by the State or its agencies (the
F appellant) in favour of one bidder would create justifiable
,
doubts in the minds of other _bidders, would impair the rule
of transparency and fairness and provide room for
manipulation to suit the whims of the State agencies in
picking and choosing a bidder for awarding contracts as
G in the case of distributing bounty or charity. In our view such
approach should always be avoided. Where power to relax
or waive a rule or a condition exists under the Rules, ithas
y"i
to be done strictly in compliance with the Rules. We have,
therefore, no hesitati<i:i in concluding that adherence to ITB
H or Rules is the best principle to be followed, which is also
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 611
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
in the best public interest. A
28. In the instant case, we have also noted that the
mistakes in the bid documents of respondent Nos.1 to 4
even though caused on account of faulty functioning of
computer, could have been discovered and notified by the·
8
said respondents with exercise of ordinary care and
diligence. Here, the mistakes remained in the documents
•,
due to gross negligence in not checking the same before
the submission of bid. Further Clauses 24 and 27 of ITB
permit modification or withdrawal of bids after bid
submission but before the dead line for submissions of the C
bids and not thereafter. And equity follows the law. Having
submitted the bid they did not promptly act in discovering
the errors and informing the same to the appellant. Though
letters were written on 25-10-1999, and 17-12-1999, yet
the real nature of errors/mistakes and corrections sought D
were not pointed out till 23-12-1999 when representation
was made after interim direction of the High Court was
given on 21-12-1999. Indeed it appears to us that they
improved their claim in the representation. In our view the
said respondents are not entitled to rectification of E
mistakes/error for being considered along with the other
bidders.
31. The submission that remains to be considered is that
as the price bid of respondents 1 to 4 is lesser by 40 F
crores and 80 crores than that of respondents 11 and 10
respectively, public interest demands that the bid of
respondents 1 to 4 should be considered. The project
undertaken by the appellant is undoubtedly for the benefit
of public. The mode of execution of the work of the project
should also ensure that the public interest is best served. G.
Tenders are invited on the basis of competitive bidding for
execution of the work of the project as it serves dual
purposes. On the one hand it offers a fair opportunity to
all those who are interested in competing for the contract H
612 'SU PRE.ME COURT REPORTS [2008] 15 S.C.R.
A relating to execution of the work and on the other hand it +
affords the appellant a choice to select the best of the
competitors on competitive price without prejudice to the
quality of the work. Above all it eliminates favouritism and
discrimination in awarding public works to contractors. The
B contract is, therefore, awarded normally to the lowest
tenderer which is in public· interest. The principle of
awarding contract to the lowest tenderer applies when all
things are equal. It is equally in public interest to adhere. --"'-
to the rules and conditions subject to which bids are
c invited. Merely .because a bid is the lowest the
requirements of compliance of rules and conditions cannot
be ignored. It is obvious that the bid of respondents 1 to
4 is the lowest of bids offered. As the bid documents of
respondent~ 1 to 4 stands without correction there will be
inherent inconsistency between the particulars given in the
D
annexure and the total bid amount, it cannot be directed
to be considered along with other bid on the sole ground
of being the lowest.
34. For the reasons above mentioned, though the
E impugned order of the High Court insofar as it relates to
quashihg of letter of the appellant dated 18-12-1999 falls
within the purview of judicial review, yet the direction to the
appellant to permit correction of errors by Respondents 1
to 4 in their bid documents and consider their bid along
F with other bid, goes far beyond the scope of judicial review,
as elucidated by this Court in Tata Cellular. In the result,
we uphold the impugned order of the Division Bench
insofar as it relates to quashing of communication and
letter dated 18-12-1999 and set aside that part of the
G impugned order giving direction to the appellant to permit
Respondents 1 to 4 to correct bid documents and to
consider their bid after correction along with other bids.
The appeal is thus allowed in part. On the facts and in the ,---
circumstances of this case we leave the parties to bear
H their own costs."
-
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 613
LTD. & ANR. v. U.0.1 & ORS.· [DR: ARIJIT PASAYAT, J.]
20. This Court ~mph_asized tn?.t in iqter11ational competitive A
bidding which postulates keen' competition and high efficiency,
the bidders should have assistance of technical experts
because the degree of care required in such a bidding is
greater than in ordinary local bids for small works.
B
21. In Jagdish Manda/ Vs. State of Orissa & Ors. 2006
(14) SCALE, 224, the scope of limited power of judicial review
in tender and award of contracts was also lucidly stated in
paragraph 19 as follows :-
" 19. Judicial review of administrative action is intended to C
prevent arbitrariness, irrationality, unreasonableness, bias
and malafides. Its purpose is to check whether choice or
decision is made 'lavJfully' aild not to check whether choice
or decision is 'sound'. When the power of judicial review
is invoked in matters relating to tenders or award of D
contracts, certain special features should be born.e in mind.
A contract is a commercial transaction. Evaluating tenders
and awarding contracts are essentially commercial
functions. Principles of equity and natural justice stay at a
distance. If the decision relating to award of contract is E
bona fide and is in public interest, courts will not, in
exercise of power of judicial review will not be permitted
to be invoked to protect private interest at the cost of public
interest, or to decide contractual disputes. The tenderer or
contractor with a grievance can always seek damages in F
a civil court. Attempts by unsuccessful tenderers with
imaginary grievances, wounded pride and business rivalry,
to make mountains out of molehills of some technical/
procedural violation or some prejudice to self, and
persuade courts to interfere by exercising power of judicial G
review, should be resisted. Such interferences, either
interim or final, may. hold up public works for years, or
delay relief and succour to thousands and millions and
may increase the project cost manifold. Therefore, a court
before interfering in tender or contractual matters in H
614 SUPREME COURT REPORTS [2008] 15 S:C.R.
A · exercise of power of judicial review, should pose to itself ·~-
the following questions : '•'
(i) Whether the process adopted or decision made by the
authority is mala fide or intended to favour someone.
B OR
Whether the process adopted or decision made is
so arbitrary and irrational that the Court can say: 'the
decision is such that no responsible authority acting
c reasonable and in accordance with relevant law could have
reached.'
(ii) Whether public interest is affected. If the answers are
in the negative, there should be no interference under
Article 226. Cases involving black-listing or imposition of
D penal consequences on a tenderer/contractor. or
distribution of state largesse (allotment of sites/shops,
grant of licences, dealerships and franchises) stand on a t
'
·different footing as they may require a higher degree of
fairness in action."
E
22. After having taken note of the parameters for exercise
of power ofjudicial review, the conclusions arrived at by the
High Court need to be noted; The High Court has elaborately
dealt with the_ factual position and inter alia observed as
F follows:,..
"35. In the instant case, it may be noted that it is not denied
by any of the parties that at the time of floating the tender,
no separate quantities were furnished to the vendors in -
respect of item No. 11. Thus all the bidders were in the
G same state as regards the required quantity by respondent
No. 1. While petitioners inserted the words "As Required"
in the column of "Quantity" against the said item, .
1
respondent No. 3 inserted the figure "1" in the column of
"Quantity" and respondent No. 4 left the column of
H "Quantity" as blank. However, unit price was entered in the
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 615
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
column "Unit Price" by each of the vendors. This was at A
the time of submitting the bid documents. The next relevant
stage arrived on 23rd January, 2007 when the commercial
bids were opened in the meeting held where the three
successful vendors, namely, petitioner No. 1 and the
respondents No. 3 and 4 were called. At that stage, B
respondent No. 2 for the first time declared the quantity of
Vehicular Mobile Terminals as 1200 in number, based on
the requirement given by the Indian Army to whom the
systems were to be ultimately supplied by it. Thus the bids
of each of the vendors became public on 23rd January, c
2007. Once the bids became public, there was no question
of changing/adding/ altering/modifying the same by any of
the parties."
23. It needs to be noted that after opening of the bids, the
Expert Committee was required to carry out a comprehensive D
evaluation for arriving at the L1 bidder. The Evaluation
Committee while undertaking the said process, analyzed the
bids of each of the vendors and sought clarifications from all
the three vendors wherever felt necessary and also held
meetings with each of them to enable them to furnish their E
clarifications. In so far as appellant No. 1 was concerned, a
meeting was held on 7th February, 2007, on which date, only
two queries were raised on it, neither of which related to Item
No. 11. However, appellant No. 1 while responding to the two
queries raised by respondent No. 2, gave a written reply under F
cover of letter dated 7th February, 2007 where at the end of
the response, it noted as below :
"Separate pricing sheets of FF, SKD and CKD which is
breakup of the composite Price Schedule are enclosed for G
your ready reference.
Enclosed please find the composite price schedule as well
for ready reference in line with RFP requirements."
In the composite price sheet in respect of Item No.11, as H
616 SUPREME COURT REPORTS [2008] 15 S,C.R..
A ; indicated in the -statement referred to in the High· Court's
judgment appellant No. 1 endorsed the figure 'T in the column
of "Quantity", and while filling in the price in the column of "Unit
Price Euro" as also "Total Price Euro", inserted the figure,
"8,977.34". The said composite price statement was at
s. variance with the original Bill of Materials submitted by the
appellant No. 1·in respect of item No.11 for the reason that in
the original Bill of Materials, in the column of "Quantity" the
appellant had indicated "As required" and the column of "Total
Price Euro" was left blank by it. The appellant have placed
c heavy reliance on the composite price schedule to state that
there was no correlation of the quantity of 1200 given for
Vehicular Mobile Stations, as specified in Item No4.1, with item
No.11 to state that the quantity against item No.11 was never
declared and further, that at best the respondent No.2 could
have bound the appellant No.1 down to the price indicated in
0
the column "Total Price Euro" indicated in the composite price
· schedule, but it could not have multiplied the rate given in the
"Unit Price" with the figure of 1200 which had resulted in
absurdity.
E 24. As rightly noted by the High Court, the aforesaid
submission, as any reference to or reliance upon the said
composite· price schedule submitted after opening of the
commercial bids of all the vendors on an earlier date, is
impermissible. Had respondent No.2 taken the composite price
F schedule into consideration in respect of item No.11, it would
have created justifiable doubts in the minds of respondents No.
3 and 4 and defeated the rule of transparency and fairness on
the part of respondent No. 2, as it would have amounted to
improving the bid made originally by appellant No. 1, by
G supplying details upon ascertaining the rates quoted by the
others. It was not as if the respondent No. 2 had asked any of
the vendors to furnish a con:iposite price bid to it on 7.2.2007.
Specific queries were put forward by respondent No. 2 to each
of the three bidders wherever clarifications were required qua
H particular items ·in the Bill of Materials submitted and other
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 617
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
aspects of the bid. No query was raised by the respondent No. A
2 on the appellant No. 1 in respect of item No.11. Hence, the
question of taking into consideration the clarifications given
thereon by appellant No. 1 did not arise.
25. Thus, while taking note of the changes made by B
appellant No. 1 in respect of item No.11 in the composite price
schedule, as against the original Bill of Materials submitted, the
,..L former was not taken into consideration by the Committee.
a
Instead, the Committee made point to observe in its analysis
that no technical explanation was given by the appellant as to
why the quantity had been changed by appellant No. 1 from "As
c
required" to "1" while the "Unit Price" and "Total Price" was kept
as the same in the composite price schedule. Thus the
Committee multiplied the unit price furnished by appellant No.
1 with the figure 1200 to arrive at the total price, and the same
method was uniformly adopted for the other two bidders. 0
-.. Looking at it from another angle, had the respondent No. 2
proceeded on the basis of the rate furnished by the appellants
in the composite price schedule in the column, "Total Price
Euro", then nothing could have precluded them from turning
around later on, and seeking to bind respondent No. 2 down E
to the rates as offered by it for a single unit in the original Bill
of Materials, the same being a part of the original tender
documents. Thus, respondent No. 2 cannot be faulted for strictly
adhering to the rates furnished by appellant No. 1 in its original
.......
bid documents. F
26. The plea of petitioner No. 1 that the software at item
No.11 had no connection or relationship with Vehicular Mobile
Stations as specified in items No. 4.1 and 7 is also not
acceptable inasmuch as for the Vehicular Mobile Stations to
G
be operational and functional, they have to be attached to PC
with software to enable a sending/receiving party to send/
-.,.., receive any speech/image, to/from another vehicular mobile.
Thus all the three items mentioned at items No. 4, 7 and 11
were inter-connected and inter-related and only upon being
H
618 SUPREME COURT REPORTS [2008J 15 S.C.R.
A integrated they be used for the ORTS. In any case, nothing
material would turn on this for the reason that originally, prices·
were quoted by all the three.bidders for item No.11 on a unit
rate basis. The figure of 1200 cropped u·p much later. It is the ·
common case of all the parties that commercial offers we.re to
B be made by all the bidders for quantities of 80 systems as per
the Bill of Materials enclosed with the RFA. As no quantity was
disclosed for item No.11 in the Bill of Materials, none of the
bidders quoted rates for any specific quantity, but did so only
for a single unit. Thus the unit rate quote remained the deciding
c factor for the Committee, while finally analyzing the bids.
27. The contention of the appellants that they had a license
for the software under which one software unit would serve 100
units of Vehicular Mobile Terminals and as a result, the total L
requirement of software unit was only 12(12x100 = 1200) and
D not 1200 (1x1200=1200), is misconceived and without any basis
for the reason that a perusal of item No. 11 of the Bill of
Materials submitted by the appellants does not show that any
such remarks were made therefor. In fact, the remarks column
in the said Bill of Materials was left blank. Had such been the
E intention of appellant No. 1, nothing prevented it from indicating
so in the remarks column. This conclusion is further fortified by ."
"~
the fact that remarks were specifically given by appellant No. 1
in the remarks column of the Bill of Materials in respect of other
items, wherein it made observations to indicate wherever the
F price of a particular item was included in another item or where I
I=
the price quoted in respect of an item was exclusive of certain
other items. Thus, if appellant No. 1 wanted to offer the price
of one unit which as per its contention, was good to serve 100
users, then the same should have been so indicated in the Bill
G of Materials. There being no such indication in the original bid
documents, respondent No. 2 could not have been expected
to assume on its own that appellant No. 1 possessed a license
which .permitted to use the software mentioned at item No.11
for serving 100 units. Nor can respondent No. 2 be blamed for
H using the multiplying factor of 1200 to arrive at the total price
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 619
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
of units required under item No.11. A
28. The appellants have also not been able to establish
that respondent No.2 adopted a pick and choose policy or
discriminated against appellant No.1. Respondent No. 2 dealt
with all the three bidders with an even hand as the same method
8
was adopted for arriving at the total price of materials specified
in item No.11 in respect of all the three bidders. It is not the case
~ of the appellant that they had not quoted the said price as that
of a single unit. There is nothing on record by way of any
remarks in the bid document to effect that the said price of a
single unit was to hold good for 100 units on the ground that C
appellant No. 1 was granted a software license which catered
to 100 users at one time. A basic·distinction has to be drawn
· between a case where against an item, no rates or prices or
quantities are quoted, and those where some rate is quoted.
Appellant No.1 having quoted a rate on a unit basis in respect D
of item No.11, respondent No. 2 had no option but to make the
said rate the basis for arriving at the total price.
29. Accepting the interpretation as sought to be given by
the appellants would amount to re-writing the entries in the bid E
document and reading into the bid document, terms that did not
exist therein. An international bidding of such a nature being
highly competitive, is also expected to be extremely precise.
The technical nature of the subject matter of the contract itself
postulated assistance of technical experts and thus, a very high F
degree of care and meticulous adherence to the requirements
of the bid was inherent in such a bidding. On its part, respondent
No. 2 was under an obligation to not only maintain a great
degree of transparency and fair dealing on its part, but was also
expected to maintain the sanctity aRd integrity of the entire G
process. Thus it was incumbent upon respondent No. 2 to
ensure that no different yardstick were adopted for any of the
. '"( vendors and at the same time, to ensure that there was not the
. remotest possibility of discrimination, arbitrariness or
favouritism.
H
620 SUPREME COURT REPORTS [2008] 15 S.C.R.
-~
A 30. There was no scope for respondent No. 2 to read into
the docum~ntS, ·t~rms and conditions which did not exist in the
bid docurneQt_s. The appellar:tts have also not levelled any
personaj ·all~gations of m_alafides or favouritism against
respondent No. 2.
B
31. The approach of the High Court is in the right direction
and the factual position obtaining has also been noted in detail _....
and the conclusions have been arrived at.
32. The matter can be looked at from a different angle.
c As noted in the case of Reliance Airport Developers (P) Ltd.
(supra) at para 77, if two views are possible and no maiafides
or arbitrariness is alleged or shown, there is no scope for
interference with the view taken by the authorities in inviting
tenders.
D ~
~
33. As was noted in the case of Asia Foundation & '
Construction Ltd. (supra) though the principle of judicial review
cannot be denied so far as exercise of contractual powers of
government bodies are concerned, but it is intended to prevent
arbitrariness or favouritism and it is exercised in the larger
E public interest or if it is brought to the notice of the Court that
in the matter of award of a contract power has been exercised
for any collateral purpose.
i
-r
34. On examining the facts and circumstances of the '
F present case, we are of the view that none of the criteria has
been satisfied justifying Court's interference in the grant of
contract in favour of the appellants. When the power of judicial
review is invoked in the ·matters relating to tenders or award
of contracts, certain special features have to be considered.
G A contract is a commercial transaction and evaluating tenders
and awarding contracts are essentially commercial functions.
y •
In such cases principles of equity and natural justice stay at a
distance. If the decision relating to award of contracts is
bonafide and is in public interest, Courts will not exercise the
H power of judicial review and interfere even if it is accepted for
SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 621
LTD. & ANR. v. U.0.1 & ORS. [DR. ARIJIT PASAYAT, J.]
the sake of argument that there is a procedural lacuna. A
35. In the instant case, as has been rightly contended by
the learned Addi. Solicitor General appearing for Union of India,
the contract is in respect of sensitive Army equipments which
are urgently needed. It cannot be held that the process adopted B
or decision made is so arbitrary or irrational that no responsible
authority acting reasonably or in accordance with the relevant
law could not have taken such a decision. The inevitable
conclusion is that the appeal is dev.oid of any merit and
deserves dismissal, which we order. However, there shall be C
no order as to costs.
36. Appeal dismissed.
S.K.S. Appeal dismissed.
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