STATE OF ORISSA AND ANRversusM/S. TATA IRON AND STEEL CO. LTD. AND ORS.

                      [2008] 2 S.C.R 363


               STATE OF ORISSA AND ANR                            A
                               v.
    MIS. TATA IRON AND STEEL CO. LTD. AND ORS.
             (Civil Appeal No. 653 of 2006)
                     FEBRUARY 4, 2008
                                                                   B
    [DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.]

     Constitution of India, 1950 - Art. 226:
      Government contracts - Tenders - Judicial review -
Scope - Industrial Development Corporation of Orissa Ltd.
                                                                    c   .
(IDCOL) issued advertisement inviting technical bids - Bids
of two out of three parties rejected at the threshold - Third party
selected- Writ petitions by unsuccessful parties -Allowed by
High Court which held that the bid of selected party was not
evaluated in an impartial manner - On appeal, held: High D
Court relied upon extraneous materials and arrived at
unfounded conclusions - Hence, matter ought to have been
remitted back to High Court - But considering that the
advertisement was issued 5 years back and on basis of
materials on record, appeals disposed of with suitable E
directions - Directions issued that technical bids of all the three
parties be treated as valid - Parties permitted to submit
revised financial bids - Authorized Committee of IDCOL to
consider the technical bids and the financial bids, keeping in
view parameters of the advertisement, the NIT and best F
interests of the State - Observations and conclusions made
by High Court about malafides of the officials and their alleged
favoritism quashed.
      The Industrial Development Corporation of Orissa
Limited (IDCOL) issued advertisement inviting technical G
bids for development of a chromite deposit project in Joint
Venture. The bids of two out of the three parties viz VISA
and TISCO were rejected at the threshold. The third party,
viz. Jindal was selected. VISA and TISCO filed writ petitions
                             363                              H
    364        SUPREME COURT REPORTS               [2008] 2 S.C.R.


A before the High Court which allowed the same holding
   that the bid. of Jindal was not evaluated in an impartial
   manner and that there was no attempt to find out as to
   which of the bids offered by the three parties gave
 · maximum advantage to the State in terms of public
s interest and State exchequer. After making certain
   observations questioning the bonafides of the officials
   of the State and IDCOL, the Court in exercise of its power
   of judicial review set aside the decision of IDCOL to select
   Jindal.
                                                                              ·-
c        The contention of Appellants is that the High Court
    took into account various irrelevant and extraneous
    materials without even any pleading in that regard and
    wrongly assumed collusion and loss of revenue if Jindal's
    bid was to be accepted.
D
          Disposing of the appeals, the Court
      HELD: 1. Certain conclusions of the High Court are
  clearly indefensible. The observations relating to
  favoritism, so far as Jindal is concerned, are clearly
E without any foundation. [Para 1O] [368-C]
      . 2. On the sole ground that the High Court had relied
  upon extraneous materials and has arrived at unfounded
  conclusions, in normal course this Court would have set
  aside the order and asked the High Court to re-consider
F the matter. But considering.the passage of time and more
  particularly the fact that the advertisement was issued in
  2002 and on the basis of materials on record, the appeals
                                                                     __,...   -
  are being disposed on the following terms:
          a.   It shall be treated that the technical bids of all
G
               the three parties are v~lid;
          b.   The financial bids were submitted about five                    O=
               years back it wou.ld be appropriate to permit                   '
               the parties to submit revised financial bids within
H              three weeks and;
                                                                                   -
          STATE OF ORISSA AND ANR. v. MIS. TATA IRON                365
           AND STEEL CO. LTD. AND ORS. [PASAYAT, J.]

             c.  The appropriate. and authorized Committee of A
                 IDCOL shall consider the technical bids and the
                 financial bids, 'keeping in view the parameters
                 of the advertisement, the NIT and the best .
                 interest of the State. [Para 11] [368-D; E, F, GJ
            3. The observations and conclusions about 8
        malafides of the officials and their alleged favoritism stand
-.,.    quashed. [Para 13] [369-8, C]
  ...
             CIVIL APPELLATE JURISDICITON : Civil Appeal No. 653
        of 2006.                                                          c
             From the final Judgment and Order dated 18.11.2004 of
        the High Court of Orissa at Cuttack in W.P. (C) No. 6798/2004.
                                    WITH
             Civil Appeal Nos. 654, 655, 671, 672 and 673 of 2006.        D
             G.E. Vahanvati, Solicitor General, B.K. Mohanti,Advocate
        General (Orissa), Arun Jaitley, K.K. Venugopal, Dr. A.M. Singhvi,
        Shyam Divan, Shanti Bhushan, Ashok Parija, T.R. Andhiarujina,
        R.F. Nariman, Rajat Rath, Suman Kukrety, Raj Kumar Mehta, '
        Rishi Maheshwari, P.S. Sudheer, Aanne Mathew, Shally Bhasin E
        Maheshwari, Sanjeev K. Kapoor, Vishal Gupta, Vikram Bajaj,
        Kumar Mihir, Avinash Menon (for· M/S. Khaitan & Co.), R.N.
        Karanjawala, Gopal Jain,Akhil Sibal, Nandini Gore, Prachi Goel
        and Manik Karanjawala for the appearing parties.
                                                                          F
             The Judgment of the Court was delivered by
              Dr. ARIJIT PASAYAT, J. 1. Challenge in these appeals is
        to the judgment of a Division Bench of the Orissa High Court
        allowing the Writ Petitions filed by Visa Industries Limited (in
        short the 'VISA') and Another (Writ Petition (C) No. 5128 of G
        2004) and M/s. Tata Iron and Steel Co. Ltd.(in short the 'TISCO')
        (Writ Petition (C) No. 6798of2004). By the impugned Judgment
        the High Court held that the technical bids of VISA and TISCO
        could not have been rejected at the threshold without proper
        evaluation in terms of the eligibility condition as set out in the H
    366       SUPREME COURT REPORTS                  [2008] 2 S.C.R.


A concerned advertisement. It was also held that Jindal Strip            -t
  Limited (in short 'Jindal's') bids were never evaluated and
  assessed in a dispassionate and impartial manner. There was
                                                                                     ,..
                                                                                    >'

  no attempt to find out as to which of the bids offered by the three               l
  parties would give maximum advantage to the State in terms of
B public interest and state exchequer. Certain other observations
  were made questioning bonafides of the officials of the State
  and Industrial Development Corporation of Orissa Limited (in
                                                                        A
                                                                         ·...-     ....
  short the 'IDCOL'). It was held that power of judicial review was
  to be exercised as the selection of Jindal as a Joint Venture
c Partner for the project in question was not properly done.
  Therefore the IDCOL's decision to select Jindal cannot be
  maintained and was set aside.
        2. It was noted that the matter could have been remitted to
  IDCOL for fresh evaluation and formation of merits on the bids
D of the respective parties, but it was not thought proper. It was
  also noted that Jindal proposed to set up stainless Steel Industry
  which could not have been considered as a relevant factor while            ,._ ...,
  deciding the question of Joint Venture Partner. However, IDCOL
  was given the opportunity to issue a fresh advertisement for the
E purpose of setting out in clear terms whether it wants stainless
  industries to be set up in the State or other industry where chrome
  could be used as an ingredient.
         3. The technical bids offered by the various parties are on
    record. By the last date for receipt of offers, four parties had
F   submitted their offers but later on Jindal Steel Power Ltd. did        ...,_
    not want to continue.
          4. The present appeals arise out of Special Leave Petitions
    filed by the State of Orissa, IDCOL and Jindal.
G        5. Primary stand of Mr. G.E. Vahanvati, Learned Solicitor
    General is that the High Court's approach is clearly erroneous.      ___,.     ~   .
    It has taken into account various irrelevant and extraneous
    materials without even any pleading in that regard. It has
    assumed collusion, loss of revenue if Jindal's bid was to be
H   accepted. It is not fathomable as to on what basis the
        STATE OF ORISSA AND ANR. v. MIS. TATA IRON                 367
         AND STEEL CO. LTD. AND ORS. [PASAYAT, J.]

      conclusions were arrived at, that too without any material A
      foundation. The similar effect is the submission of Jindal. It is to
      be noted that Jindal Steels Limited is presently known as Jindal
      Stainless Steel Limited. However for the sake of convenience it
      shall be described as 'Jindal' in this judgment.

-tI         6. To similar effect is the submission of learned counsel 8
      for IDCOL.
            7. Learned counsel for TISCO and VISA submitted that
      the conclusions of the High Court are in order. Considering the
      parameters of judicial review it is clear that the Government       c
      granted approval in the most mechanical manner without
      application of mind to the facts of the case. It was submitted
      that as has been rightly held by the High Court Jindal did not
      satisfy the required parameters and, therefore, its bid could not
      have been accepted.
                                                                          D
            8. One of the factors highlighted by learned counsel for
      TISCO is that the information brochure and the NIT referred to
      certain vague expressions like "Value addition". In view of such
      an indefinite condition the bids submitted by TISCO and VISA
      could not have been rejected at the threshold and therefore the E
-f
      High Court has rightly interfered in the matter.
           9. At this juncture, it would be relevant to quote the
      Recommendations of the Technical Committee constituted for
      evaluation of the offers received for development of Tangarpada
      Chromite Deposit in Joint Venture, which reads as follows:          F
           "RECOMMENDATIONS OF THE TECHNICAL
           COMMITTEE CONSTITUTED FOR EVALUATING THE
           OFFERS RECEIVED FOR DEVELOPMENT OF
           TANGARP/.\DA CHROMITE DEPOSIT IN JOINT G
           VENTURE
            Offers for development of Tangarpada Chromite Deposit
      in Joint Venture were received from four parties namely:
           1.   Tata Iron and Steel Co. Ltd.;
                                                                          H
    368        SUPREME COURT REPORTS                    [2008] 2 S.C.R.


A         2.   Jindal Strips Limited;
          3.   Jindal Steel and Power Ltd.; and
          4.   VISA Industries Limited
          Before opening of the sealed offers, Jindal Steel and Power
B         (one of the offer) withdrew its offer. The technical bid of the
          other three parties were opened by the committee in
          presence of the respective parties on gth December, 2002.
          Each party presented their case before the Technical
          Committee on the same day."
c
          10. It may be stated here that certain conclusions of the
    High Court are clearly indefensible. The observations relating
    to favoritism, so far as Jindal is concerned, are clearly without
    any foundation.
D       11. On the sole ground that the High Court had relied upon
  extraneous materials and has arrived at unfounded conclusions,
  in normal course we would have set aside the order and asked
  the High Court to re-consider the matter. But considering the
  passage of time and more particularly the fact that the
E advertisement was issued in 2002 and on the basis of materials
  on record, we dispose of the appeals on the following terms:
          1.   · It shall be treated that the technical bids of all the
                 three parties are valid.

F         2.    The financial bids were submitted about five years
                back it would be appropriate to permit the parties to       +·
                submit revised financial bids within three weeks.
          3.    The appropriate and authorized Committee of IDCOL
                shall consider the technical bids and the financial
G               bids, keeping in view the parameters of the
                advertisement, the NIT and the best interest of the
                State.
          12. It is needless to say the Committee examining the bids        '   ~
                                                                                \
    shall take note of all relevant factors. In case it is considered            I
H                                                                                \
                   STATE OF ORISSA AND ANR. v. M/S. TATA IRON                  369
                    AND STEEL CO. LTD. AND ORS. [PASAYAT, J.]

      ~         appropriate and in the interest of the State, it shall be open to A
                the State Government to negotiate with the parties so that the
                best interest of the State including generation of the revenue of
                the State and overall development of the State in the relevant
                fields could be achieved.
                      13. Since the matter is pending· since long it would be         8

..     't-
            l
                desirable for the State Government to ensure that the technical
                bids and the revised financial bids to be submitted within three
                weeks as directed earlier, be evaluated and informed decision
                taken by end of June, 2008. The observations and conclusions
                about malafides of the officials and their alleged favoritism stand   c
                quashed.
                     14. The appeals are allowed to the aforesaid extent without
                any order as to costs.
                8.8.8.                                     Appeals disposed of.       D

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