Supreme Court of India
THE BHARAT COKING COAL LTD. & ORS.versusAMR DEV PRABHA & ORS.
- Citation
- 2020 INSC 307
- Decided
- 18 March 2020
- Disposal
- Disposed off
Holding
The writ petition was not maintainable as the claimant had no public‑law right and the auction process, despite minor procedural lapses, was lawful; therefore the Division Bench order was set aside.
Summary
Bharat Coking Coal Ltd (BCCL) issued an online reverse auction for hiring heavy equipment. Due to connectivity problems, the auction automatically closed at 1:03 pm after AMR‑Dev Prabha’s (Respondent 1) bid remained unresponded for 30 minutes. BCCL, through its facilitator C1‑India, restarted the auction at 2:30 pm after notifying all bidders, and subsequently awarded the contract to RK Transport (Respondent 6). Respondent 1 filed a writ petition claiming it was the lowest bidder and seeking to quash the Letter of Acceptance. The High Court Division Bench set aside the award, but the Supreme Court held that the writ petition was not maintainable because no public‑law right was asserted, the interest was purely private, and the technical glitches and subsequent resumption were confirmed by independent monitors. Minor procedural lapses did not amount to illegality or mala‑fide, and BCCL’s interpretation of the tender documents was entitled to deference. Consequently, the Division Bench order was set aside and the writ dismissed.
Issues considered
- The maintainability of a writ petition challenging a public procurement award where the claimant asserts only a private contractual right
- Whether the technical connectivity problems and the subsequent resumption of the e‑auction constitute procedural impropriety warranting judicial intervention
- Whether BCCL and C1‑India acted illegally, irrationally or arbitrarily in pausing and restarting the auction
- Whether the court must defer to the authority’s interpretation of the tender clauses
Subjects
public procuremente‑auctionjudicial reviewpublic interestprocedural improprietycontract awardconnectivity failuretender process
Judgment
[2020] 7 S.C.R. 603 603
THE BHARAT COKING COAL LTD. & ORS. A
v.
AMR DEV PRABHA & ORS.
(Civil Appeal No. 2197 of 2020)
MARCH 18, 2020 B
[S. A. BOBDE, CJI. B. R. GAVAI AND SURYA KANT, JJ.]
Tenders – A notice inviting tender was issued by appellant-
BCCL for purposes of ‘Hiring of HEMM for removal of OB,
extraction and transportation of coal with fire fighting.....’ – The C
appellant aimed of contracting firm which offered the lowest cost
estimate for fulfilment of the tender work – The bidding was stated
to be conducted online – When the auction proceeded, there were
connectivity problems leading to failure in submission bids – In the
interregnum, the last bid of Rs. 2345 crores made by respondent
No. 1 at 12:33 p.m. went unresponded for thirty minutes and auction D
was automatically closed at 1:03 p.m. – Respondent no. 1 was
declared lowest bidder – However, taking notice of technical issues,
the auction was restarted at 2.30 p.m. and same was communicated
to all bidders – Accordingly, various bids were received by many
participants including respondent no. 1 – The auction proceeded E
to the extended time of 1 hour and 27 minutes – The LOA was issued
to the successful bidder, i.e. respondent no. 6 – Respondent no. 1
filed writ petition for declaring that it was successful bidder and
for quashing the LOA issued to respondent no. 6 – It was contended
that there were lapses on the part of the appellant – The Single
Judge of the High Court dismissed it – However, a Division Bench F
of the High Court held that there were procedural lapses and
quashed the LOA issued by the appellant and directed reconduction
of the auction – On appeal, held: The Division Bench of the High
Court was cognizant of the principles surrounding scope of judicial
review in tenders, however, it failed to effectively evaluate whether G
larger public interest was being affected – The interest of the
respondent no.1 was purely private and monetary in nature – There
are concurrent finding of the second Independent External Monitors,
CERT-In, TCL, as well as the Central Vigilance Commission that the
auction process was not afflicted by collusion, and confirmed the
existence of connectivity problems which necessitated resumption H
603
604 SUPREME COURT REPORTS [2020] 7 S.C.R.
A of the auction process – Before resumption of auction process, it is
clear that the message was communicated to all the bidders, stating
that the auction process would be extended by a period equivalent
to the time between closure of auction at 1:03 p.m. and resumption
at 2.30 p.m. – Not only did such uniform communication put all
bidders on an equal footing, but there was no possibility of any
B
confusion given the clear wordings of the email – The minutes after
the resumption of the auction process, bids started coming in and
more than a dozen bids were received subsequently – Therefore, the
impugned order of the Division Bench of the High Court is not
correct in its conclusion that there were substantial procedural lapses
C on part of the appellant – Resultantly, the judgment of the Division
Bench is set aside.
Disposing of the appeals, the Court
HELD: Maintainability of Writ Petition
D 1. The scope of judicial review in tenders has been explored
in-depth in a catena of cases. It is settled that constitutional courts
are concerned only with lawfulness of a decision, and not its
soundness. Phrased differently, Courts ought not to sit in appeal
over decisions of executive authorities or instrumentalities.
Plausible decisions need not be overturned, and latitude ought
E to be granted to the State in exercise of executive power so that
the constitutional separation of powers is not encroached upon.
However, allegations of illegality, irrationality and procedural
impropriety would be enough grounds for courts to assume
jurisdiction and remedy such ills. This is especially true given
F our unique domestic circumstances, which have demonstrated
the need for judicial intervention numerous times. Hence, it would
only be the decision-making process which would be the subject
of judicial enquiry, and not the end result (save as may be
necessary to guide determination of the former). [Para 29][616-
C-E]
G
2. In cases where a constitutional right is infringed, writs
would ordinarily be the appropriate remedy. In tender matters,
such can be either when a party seeks to hold the State to its
duty of treating all persons equally or prohibit it from acting
arbitrarily; or when executive actions or legislative instruments
H
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 605
PRABHA & ORS.
are challenged for being in contravention to the freedom of A
carrying on trade and commerce. However, writs are
impermissible when the allegation is solely with regard to violation
of a contractual right or duty. Hence, the persons seeking writ
relief must also actively satisfy the Court that the right it is seeking
is one in public law, and not merely contractual. In doing so, a
B
balance is maintained between the need for commercial freedom
and the very real possibility of collusion, illegality and squandering
of public resources. [Para 32][617-C-E]
3. In the present case, although it is clear that the Division
Bench of the High Court was cognizant of these principles
surrounding scope of judicial review, however, it failed to C
effectively evaluate whether larger public interest was being
affected. On the contrary, this Court feels that the interest of
Respondent No. 1 was purely private and monetary in nature.
[Para 36][618-G]
4. The first respondent has failed to demonstrate which D
public law right it was claiming. The main thrust of AMR-Dev
Prabha's case has been on the fact that at 1:03PM on 05.05.2015
it was declared the lowest bidder (or L-1). However, being
declared the L-1 bidder does not bestow upon any entity a public
law entitlement to award of the contract. [Para 40][620-C] E
Infirmities in the auction process
5. Having the benefit of a detailed inquiry report of the
Central Vigilance Commission (“CVC”), this Court is of the firm
opinion that both the appellant and Respondent No. 4 acted in a
bona fide manner and as per their abilities. Even if it is true that F
BCCL could have assumed more responsibility and C1-India could
have exercised a more proactive role in checking for internet
issues, yet the possibility of improvement can’t be a ground for
striking down an authority’s action. Additionally, no allegation of
the decisions being accentuated by illegal gratification, or G
otherwise being fraudulent or contrary to a statute have either
been clearly made or established. [Para 44][621-E-G]
6. This Court does not deem it necessary to venture into
the existence of technical problems of limited bandwidth, for the
H
606 SUPREME COURT REPORTS [2020] 7 S.C.R.
A same is a question of fact. However, given the concurrent finding
of the second IEM, CERT-In, TCL, as well as the CVC, we feel
that the Division Bench erred in holding that there were no
technical difficulties. Furthermore, such a conclusion is at odds
with subsequent occurrences. A finding that there were no internet
problems implies that no other bidder deemed it appropriate to
B
counter the bid of Rs 2345 crores offered by Respondent No. 1
at 12:33PM and that it was the competitively determined lowest
price. However, it is obvious that minutes into the resumption of
the auction process bids started coming in and more than a dozen
bids were received subsequently, with the last bid of Rs 2043
C crores having been made mere seconds before closure of the
auction at 7:27PM. [Para 46][622-H; 623-A-B]
7. There is also no need to venture into questions
concerning quantum of extension of time. It is clear that the same
message was communicated by CI–India to all, stating that the
D auction process would be extended by a period equivalent to the
time between closure of auction at 1:03PM and resumption at
2:30PM. Not only did such uniform communication put all bidders
on an equal footing, but there was no possibility of any confusion
given the clear wordings of the email. When it is not the case of
Respondent No. 1 that they thought that auction would close at
E 7:35PM and hence they were taken by surprise at the early
closure, nor did they in fact highlight or object to such
interpretation over the course of the resumed auction process,
the question is moot and a finding ought not to be given on it.
[Para 49][623-G; 624-A-B]
F Deference to authority’s interpretation
8. Lastly, this Court deems it necessary to deal with another
fundamental problem. It is obvious that Respondent No. 1 seeks
to only enforce terms of the NIT. Inherent in such exercise is
interpretation of contractual terms. However, it must be noted
G that judicial interpretation of contracts in the sphere of commerce
stands on a distinct footing than while interpreting statutes.
[Para 51][624-D-E]
9. In the present facts, it is clear that BCCL and C1-India
have laid recourse to Clauses of the NIT, whether it be to justify
H
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 607
PRABHA & ORS.
condonation of delay of Respondent No. 6 in submitting A
performance bank guarantees or their decision to resume auction
on grounds of technical failure. BCCL having authored these
documents, is better placed to appreciate their requirements and
interpret them. [Para 52][624-E-F]
10. The High Court ought to have deferred to this B
understanding, unless it was patently perverse or mala fide. Given
how BCCL’s interpretation of these clauses was plausible and
not absurd, solely differences in opinion of contractual
interpretation ought not to have been grounds for the High Court
to come to a finding that the appellant committed illegality.
[Para 53][624-F-G] C
Jagdish Mandal v. State of Orissa (2007) 14 SCC 517
: [2006] 10 Suppl. SCR 606; Maa Binda Express
Carrier v. North-East Frontier Railway (2014) 3 SCC
760 : [2013] 12 SCR 529; Shobikaa Impex (P) Ltd. v.
Central Medical Services Society (2016) 16 SCC 233 : D
[2016] 5 SCR 319; Raunaq International Ltd. v. IVR
Construction Ltd. (1999) 1 SCC 492 : [1998] 3 Suppl.
SCR 421 – relied on.
RD Shetty v. International Airport Authority of India
(1979) 3 SCC 489 : [1979] 3 SCR 1014; Tata Cellular E
v. Union of India (1994) 6 SCC 651 : [1994] 2 Suppl.
SCR 122; Ram and Shyam Co v. State of Haryana (1985)
3 SCC 267 : [1985] 1 Suppl. SCR 541; Master Marine
Services (P) Ltd v. Metcalfe & Hodg Kinson (P) Ltd.
(2005) 6 SCC 138 : [2005] 3 SCR 666 – referred to. F
Case Law Reference
[1979] 3 SCR 1014 referred to Para 15
[1994] 2 Suppl. SCR 122 referred to Para 15
[1985] 1 Suppl. SCR 541 referred to Para 23 G
[2006] 10 Suppl. SCR 606 relied on Para 33
[1998] 3 Suppl. SCR 421 relied on Para 39
[2013] 12 SCR 529 relied on Para 40
H
608 SUPREME COURT REPORTS [2020] 7 S.C.R.
A [2005] 3 SCR 666 referred to Para 41
[2016] 5 SCR 319 relied on Para 47
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2197
of 2020.
B From the Judgment and Order dated 12.04.2018 of the High Court
of Jharkhand at Ranchi in LPA No. 466/2017.
With
Civil Appeal Nos. 2198, 2199 and 2200 of 2020.
K.K. Venugopal, AG, A.N.S. Nadkarni, ASG, P.S. Narasimha,
C N.K. Kaul, Dr. A.M. Singhvi, Ajit Kumar Sinha, Jamshed P. Cama, Kiran
Suri, Sr. Advs., Amit Sharma, Dipesh Sinha, Ms. Ayiala Imti, Ankur
Talwar, Ms. Chinmayee Chandra, Muneesh Malhotra, Manpreet Kaur,
Vanya Khanna, Rajat Bhardwaj, Avishkar Singhvi, Ms. Ashwarya Sinha,
Alok K. Singh, Nipun Katyal, Ivan, L. Nidhram Sharma, Anil Kumar
D Mishra-I, Ms. Suruchi Kumar, Mayan Parsad, Idrish Mohammed,
Supantha Sinha, Rajnish Prasad, Mukul Singh, Sayooj Mohandas, Gurmeet
Singh Makker, Arvind Kumar Sharma, Santosh Sharma, B.V. Balaram
Das, Advs. for the appearing parties.
The following Judgment of the Court was delivered:
E JUDGMENT
1. Leave Granted.
2. These appeals have been preferred by Bharat Coking Coal
Ltd. (hereinafter, “BCCL”) being aggrieved by the order dated
12.04.2018 passed by a Division Bench of the High Court of Jharkhand
F at Ranchi, wherein a writ petition filed by AMR-Dev Prabha (Respondent
No. 1) had been allowed and the auction process conducted by M/s C1
India Pvt Ltd (Respondent No. 4, hereinafter “C1-India”) was set aside
and the resultant award of tender by BCCL to M/s RK Transport Co
(Respondent No. 6) had also been quashed.
G FACTUAL BACKGROUND
3. BCCL, a subsidiary of Coal India Ltd, operates coking coal
mines in India and as part of its operations regularly outsources many
mining and processing functions to external entities. Such allocation of
tasks is done through competitive bidding processes, with Respondent
No. 4 [M/s C1 India Pvt Ltd (hereinafter “C1 India”) – an online
H
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 609
PRABHA & ORS.
procurement facilitator] being appointed as the service provider for e- A
tendering of its contracts.
4. A Notice Inviting Tender (“NIT”) was issued by the appellant
on 09.03.2015 for purposes of ‘Hiring of HEMM for removal of OB,
extraction and transportation of coal with fire fighting from XIV,
XII, XI/XII, XII, XI, IX/X, V/VI/VII/VIII, IV/VIII, IV(T), IV(B), III, II B
I(T) and I(B) seams at Patch-DE (Mega Project) of Dhansar-Ena
colliery of Kusunda Area along with crushing of coal by portable
crusher’ (NIT No 312). An initial estimate of Rs 1694.84 crores was
prepared by the appellant, with the aim of contracting the firm which
offered the lowest cost estimate for fulfilment of the tender work.
C
5. The bidding was slated to be conducted on the online e-reverse
auction platform of C1-India on 04.05.2015 and 05.05.2015, with C1-
India having near complete supervision and autonomy over the auction
process. In turn, C1-India had hosted its server with Tata Communications
Ltd (“TCL”) which was also providing internet connectivity through a
leased line to C1-India. As per terms of the NIT, the auction would close D
at 6:00PM on 05.05.2015. However, the auction would automatically
terminate in case any particular bid went unresponded for a period of 30
minutes. In case of any technical faults at the service provider’s end,
the auction period was to be paused and extended by the period of the
fault; however, bidders were to be responsible for connectivity problems E
at their end.
6. Although the auction proceeded smoothly on the first day, on
05.05.2015 at around 12:55PM, C1-India is stated to have received certain
telephone calls from various participants claiming that there were
connectivity problems leading to failure in submitting bids. An email was F
thus sent by C1-India to TCL at 12:59PM stating “my link is down”. In
response, TCL informed C1-India through an email at 2:11PM that
bandwidth issues had indeed been experienced owing to a dual fiber cut
in their intra-city network as well as a fault in their patch cord. In the
interregnum, the last bid of Rs 2345 Crores made by M/s AMR-Dev
Prabha (Respondent No. 1) at 12:33PM went unresponded for thirty G
minutes, and the auction was automatically closed at 1:03PM.
7. Taking conscious notice of these technical issues communicated
by TCL and estimating that a lower price could be discovered had such
fault not arisen, C1-India (allegedly with the concurrence of BCCL
officials) took a decision to restart the auction process at 2:30PM. Such H
610 SUPREME COURT REPORTS [2020] 7 S.C.R.
A resumption, with the possibility of extension of time, was communicated
to all bidders telephonically, as well as through emails sent between
2:17PM and 2:36PM. Accordingly, various bids were received by many
participants, including numerous bids from the now aggrieved Respondent
No. 1 and the ultimately successful Respondent No. 6. The auction
proceeded to the extended time of 1 hour and 27 minutes (calculated as
B
being the time of interruption between the erroneous closure at 1:03PM
and subsequent resumption at 2:30PM), and Respondent No. 6 was
declared successful with a bid of Rs 2043 crores at 7:27PM.
8. This was communicated to BCCL, which then after assessing
eligibility of M/s RK Transport (Respondent No. 6, hereinafter “RK
C Transport”), issued Letter of Acceptance (“LOA”) on 30.05.2015. As
per earlier agreed contractual terms, a Performance Bank Guarantee
had to be submitted within 28 days of receipt of LOA. Respondent No.
6 was unable to do so, and it requested BCCL to provide an additional
two months for compliance. The appellant returned the Earnest Money
D Deposit (“EMD”) to all unsuccessful bidders, including Respondent No.
1, through speed post on 18.06.2015. Finally, the requisite guarantees
were submitted after a delay of 49 days, which was condoned by the
appellant and job was started on the ground.
9. Three months after closure of the auction, Respondent No. 1
E preferred a Writ Petition before the High Court of Jharkhand at Ranchi
on 10.08.2015, praying for a declaration that it emerged as the successful
L-1 bidder at 1:03 PM on 05.05.2015, and for quashing of the LOA
issued by the appellant to Respondent No. 6 for being arbitrary.
Simultaneously, it was also prayed that directions be issued to BCCL for
awarding the contract to them and for conducting enquiry into the entire
F matter.
10. During the pendency of the Writ Petition, Respondent No. 1
invoked Clause 20 of the NIT which provided for an integrity pact under
which two Independent External Monitors (“IEM”) had been appointed.
A report was received from one of these two IEMs on 23.09.2016 which
G held that there had been no technical problem and that resumption of the
auction process at 2:30PM was unjustified. It is relevant to mention that
this report was submitted by the first IEM, acting unilaterally and without
according hearing to C1-India and RK Transport.
11. Simultaneously, the appellant approached the second IEM who
H post receiving response from all parties presented a divergent report
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 611
PRABHA & ORS.
with the observation that there was no possibility of collusion and noting A
that the interruption in bandwidth had been established and thus the
subsequent resumption by C1-India was in consonance with specified
procedure.
12. In light of such conflict, BCCL first approached the
Standardization, Testing & Quality Certification (STQC) Directorate B
seeking an audit, and later upon them expressing inability to do so owing
to the technical nature of the dispute; the appellant approached the
Director General of CERT-In (an independent body under the Ministry
of Communications & IT of the Government of India). An ‘Incident
Analysis Report’ was consequently submitted by the CERT-In to BCCL
on 30.12.2015. This report broadly concurred with the observations of C
the second IEM and found that the process was not afflicted by collusion,
and confirmed the existence of connectivity problems which necessitated
resumption of the auction process.
13. On 16.08.2017, the learned Single Judge dismissed the first
respondent’s writ, holding that a level playing field had been provided by D
BCCL to all bidders; there indeed was a connectivity issue and the
subsequent resumption of auction was as per terms of the NIT; award
of contract to RK Transport was not arbitrary for not only was it L-1 but
also had offered a bid much better than that of AMR-Dev Prabha. Further,
the first respondent was held to have acquiesced to any possible E
irregularity in the process by participating in the resumed auction, and
BCCL’s condonation of delay in submission of guarantee by RK Transport
was held to be permissible and in public interest.
14. This was challenged by Respondent No. 1, before a Division
Bench of the High Court. During the pendency of the letters patent F
appeal, on 18.09.2017, counsel for AMR-Dev Prabha offered a lower
bid of Rs 1950 Crores for the job, which they portrayed as being far
better than their earlier bid of Rs 2345 Crores which they had made at
12:33PM on 05.05.2015. This, however, was refused by the appellant
and instead a work order was issued to Respondent No. 6 on 23.11.2017,
who shortly afterwards commenced work. G
15. The Division Bench allowed the appeal vide impugned
judgment dated 12.04.2018 and quashed the LOA issued by BCCL in
favour of RK Transport and held that all consequent work was invalid.
The Division Bench of the High Court further directed reconduction of
the auction and ordered a vigilance enquiry into the matter. Taking H
612 SUPREME COURT REPORTS [2020] 7 S.C.R.
A cognizance of the ratio of RD Shetty v. International Airport Authority
of India1 and Tata Cellular v. Union of India2 wherein this Court had
elucidated the breadth and permissibility of judicial review in tender
matters, the High Court opined that it was concerned not with the outcome
but only the manner in which the decision to award work-contract was
arrived at.
B
16. Analysing the terms of the NIT, the High Court held that it
was the bidder’s responsibility to comply with system requirements, with
BCCL not being liable for any technical difficulties or connectivity failures.
Tender could be paused only in case of technological/system failure at
the service provider’s end and once concluded, could only be revoked in
C limited circumstances. Not only were the complaints non-actionable for
C1-India was continuously connected to TCL which meant there were
no problems at the service provider’s end, but even otherwise C1-India
failed to pause the auction process during the crucial period which it
ought to have as per the terms of the NIT.
D 17. Noting the absence of any call records or other proof of
technical complaints by the bidders, the delay in communication of
resumption of auction process (observing how emails were sent till
2:37PM whereas auction resumed at 2:30PM), failure to revoke/cancel
declaration of AMR-Dev Prabha as L1 bidder and erroneous calculation
E of the extended time (7:27PM instead of 7:35PM), the Court held that
BCCL and C1-India failed to maintain the sanctity of the auction process
and committed serious illegality which raised doubts on procedural
propriety and indicated arbitrariness in the decision making process. Such
deviations from terms of the NIT were held to not only be mere
aberrations, but indicative of a complete lack of fair play which affected
F integrity of the entire process, rendering it contrary to public interest and
consequently illegal.
CONTENTIONS OF PARTIES
18. Assailing the order of the High Court primarily on preliminary
G counts, BCCL vehemently contended that the present case was not one
where judicial review was possible. It highlighted that the scope of writ
jurisdiction in contractual dealings of the State or its instrumentalities
was extremely limited, and deference to commercial wisdom of the
1
(1979) 3 SCC 489.
2
H (1994) 6 SCC 651.
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 613
PRABHA & ORS.
executive ought to be the norm. The decision making process was shown A
as not being illegal as there was no allegation of receipt of extraneous
gratification or violation of any statute; nor irrational as the decision of
resuming the auction process to arrive at a better price wasn’t such
which would offend the sensibilities of a reasonable person; nor arbitrary
as there was substantial discretion granted by the terms of the NIT.
B
Respondent No. 1’s participation in the tender process post-resumption
was contended to bind him from making any further judicial challenge,
and alternate remedies under contract and civil law were demonstrated.
It was further stated that the entire process had been upheld by multiple
independent authorities, not least being the CERT-In and one of the two
IEMs. C
19. Adopting such stand, Respondent No. 4 (C1-India) contended
that the slight delay in the decision-making process, wherein it did not
immediately take action, was because C1-India as a responsible e-services
provider was first attempting to determine whether the interruption was
at the bidders’ end or its own. By the time a response had been received D
from the entity responsible for hosting and connectivity (i.e. TCL), the
auction had stopped by itself. Instead, it was argued that upon receipt of
written response from TCL at 2:11 PM, C1-India expeditiously took a
decision in consultation with BCCL, and started informing all participants
and resumed bidding at 2:30PM. It was underscored that no prejudice
had been caused to any bidder. Respondent No.1 had more than an E
adequate opportunity of bidding, as it itself submitted eight bids during
the resumed time frame. Further, such participation combined with silence
for three-months afterwards evidenced that AMR-Dev Prabha did not
consider itself to be L-1 and the present legal challenge was nothing but
commercial opportunism. With regard to the calculation of extended time, F
counsel for C1-India submitted that such was immaterial as the quantum
of extension had uniformly been communicated to all bidders, and
everyone had the same information and hence an equal opportunity. The
resumption decision was claimed to have been taken in good faith and
upon a judicious consideration of all factors. It was thought to be in
public interest, and in retrospect, had only resulted in substantial savings G
for the public exchequer.
20. Counsel for the appellant, along with that for C1-India
highlighted how the goalpost was being changed by Respondent No.1
throughout the litigation. Whereas before the High Court AMR-Dev
H
614 SUPREME COURT REPORTS [2020] 7 S.C.R.
A Prabha sought adherence to terms of NIT and strict procedural
compliance, but later they wished to settle the matter at a lower price
claiming larger public interest. This was claimed to demonstrate how
AMR-Dev Prabha’s interest was, in fact, personal and not public, and
only to win the tender one way or the other and not to maintain the
sanctity of the auction process. The lack of on-the-spot protest, neither
B
during the auction process, nor at the time of availing refund of the
Earnest Money Deposit; and the substantial delay in filing the writ petition
(after more than 3 months of close of the auction process and 2 months
from issue of the LOA) was nothing but an afterthought aimed at making
a commercial opportunity out of litigation. Hence, the present proceedings
C were claimed to be an abuse of the process of law by AMR-Dev Prabha
and only a chance for arm twisting BCCL to award to it the tender, no
better than a contractual enforcement of private rights.
21. Instead, it was submitted, that any possible infirmity was merely
minor and inconsequential. There had been a substantive compliance of
D the tender process and the Clauses of the Notive Inviting Tender (NIT),
and public interest of ensuring the lowest price discovery had been kept
at the forefront. It was contended that hyper technical compliance was
often not possible, nor desirable as often-a-times strict procedural
compliance could defeat the ends of substantive equality, like in the
present case.
E
22. Reliance was placed on the CERT-IN report to demonstrate
lack of any mala fide or tampering in the process. The interruptions at
the end of TCL were claimed to be but natural and a part of operational
inefficiencies which were not unheard of in e-tendering processes.
F 23. On the other side, Respondent No. 1 claimed that it had been
declared as the lowest bidder (L-1) by virtue of automatic conclusion of
the auction process at 1:03PM, post which any resumption was
impermissible and contrary to contractual terms. Further, a colour was
sought to be cast, by claiming that such resumption was to benefit
particular parties. The refusal of BCCL to accept the new bid which
G was more than Rs 400 crores less than the previous offer was claimed
to demonstrate this. Per AMR-Dev Prabha, public interest ought to be
prioritised, which according to Ram and Shyam Co v. State of
Haryana3 would entail that the State instrumentality accept the best
available price, irrespective of formal technicalities.
3
H (1985) 3 SCC 267.
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 615
PRABHA & ORS.
24. No adverse inference could be drawn against Respondent 1’s A
participation in the resumed bidding process as the resumption itself was
illegal. The auction was closed and not paused, and hence no resumption
of a closed bidding process was possible. Even otherwise, it was asserted
that grant of extension of 1 hour and 27 minutes was wrong. The time
should have been calculated from the time when the internet was affected,
B
which as per the appellant themselves was from 12:55PM as informed
to them by TCL. Hence an extension of 1 hour and 35 minutes (and not
1 hour and 27 minutes) was appropriate, per which the auction ought to
have concluded at 7:35 PM, and not 7:27 PM. Similarly, emails for
resumption at 2:30PM, were shown as having been sent to some
participants at 2:17PM and to others at 2:36PM. Further, two persons C
were claimed to have logged into the system at 2:29PM, that is, one
minute before resumption of the e-auction process, which wrongly gave
them an upper hand in the e-auction process. Other allegations were
also made regarding login by one entity using two accounts, which was
contended as being impermissible per the NIT.
D
25. All this was postulated to cast a serious cloud of doubt over
the entire auction process. Even during the pendency of the writ petition
before the High Court, instead of complying with an order dated
04.11.2015 to produce all relevant records, BCCL was said to have
impermissibly referred the matter to CERT-In. However, the first IEM
had held that the server of the appellant was well connected to the E
server of the TCL and that there was no problem on the appellant’s end
which would necessitate stoppage or resumption of the auction process.
26. On maintainability, although Respondent No. 1 admitted to
having alternate remedies, but it argued that there could be no hard and
fast rule preventing it from approaching writ courts. On the point of F
delay, in their counter-affidavit, Respondent No. 1 has contended that
the cause of action arose after Respondent No. 6 failed to submit the
Performance Guarantee within 28 days per the tender clauses.
27. Substantial emphasis was placed on the offer made by the
Respondent No. 1 to the appellant during the course of hearing of the G
writ petition, the rejection of which was claimed as being contrary to
public interest and settled law which aims at prioritising value
maximisation of the public exchequer.
H
616 SUPREME COURT REPORTS [2020] 7 S.C.R.
A ANALYSIS
28. Two clear issues-in-dispute arise from the above discussion.
The first pertains to the maintainability of the writ considering the nature
of tender processes, and the second concerns application of that standard
to the facts of the present case to determine whether there were lapses
B on part of BCCL and C1-India.
(I) Maintainability of Writ Petition
29. The scope of judicial review in tenders has been explored
in-depth in a catena of cases. It is settled that constitutional courts are
C concerned only with lawfulness of a decision, and not its soundness. 4
Phrased differently, Courts ought not to sit in appeal over decisions of
executive authorities or instrumentalities. Plausible decisions need not
be overturned, and latitude ought to be granted to the State in exercise
of executive power so that the constitutional separation of powers is not
encroached upon.5 However, allegations of illegality, irrationality and
D procedural impropriety would be enough grounds for courts to assume
jurisdiction and remedy such ills. This is especially true given our unique
domestic circumstances, which have demonstrated the need for judicial
intervention numerous times. Hence, it would only be the decision-making
process which would be the subject of judicial enquiry, and not the end
E result (save as may be necessary to guide determination of the former).
30. This position of law has been succinctly summed up in Tata
Cellular v. Union of India (supra), where it was famously opined that:
“77. ... Therefore, it is not for the court to determine whether
F a particular policy or particular decision taken in the
fulfilment of that policy is fair. It is only concerned with the
manner in which those decisions have been taken. The extent
of the 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:
G
(i) Illegality: This means the decision-maker must understand
correctly the law that regulates his decision-making power
and must give effect to it.
4
Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium), (2016) 8 SCC 622;
Siemens Aktiengeselischaft & Siemens Ltd. v. DMRC Ltd., (2014) 11 SCC 288.
5
H Air India Ltd v. Cochin International Airport Limited (2000) 2 SCC 617.
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 617
PRABHA & ORS.
(ii) Irrationality, namely, Wednesbury unreasonableness, A
(iii) Procedural impropriety.”
31. But merely because the accusations made are against the
State or its instrumentalities doesn’t mean that an aggrieved person can
bypass established civil adjudicatory processes and directly seek writ
relief. In determining whether to exercise their discretion, writ courts B
ought not only confine themselves to the identity of the opposite party
but also to the nature of the dispute and of the relief prayed for. Thus,
although every wrong has a remedy, depending upon the nature of the
wrong there would be different forums for redress.
32. In cases where a constitutional right is infringed, writs would C
ordinarily be the appropriate remedy. In tender matters, such can be
either when a party seeks to hold the State to its duty of treating all
persons equally or prohibit it from acting arbitrarily; or when executive
actions or legislative instruments are challenged for being in contravention
to the freedom of carrying on trade and commerce. However, writs are D
impermissible when the allegation is solely with regard to violation of a
contractual right or duty. Hence, the persons seeking writ relief must
also actively satisfy the Court that the right it is seeking is one in public
law, and not merely contractual. In doing so, a balance is maintained
between the need for commercial freedom and the very real possibility
of collusion, illegality and squandering of public resources. E
33. Such a proposition has been noticed by this Court even earlier
in Jagdish Mandal v. State of Orissa6 in the following words:
“22. Judicial review of administrative action is intended to
prevent arbitrariness, irrationality, unreasonableness, bias F
and mala fides. Its purpose is to check whether choice or
decision is made “lawfully” and 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 contracts,
certain special features should be borne in mind. A contract
is a commercial transaction. Evaluating tenders and awarding G
contracts are essentially commercial functions. Principles of
equity and natural justice stay at a distance. If the decision
relating to award of contract is bona fide and is in public
interest, courts will not, in exercise of power of judicial review,
6
(2007) 14 SCC 517. H
618 SUPREME COURT REPORTS [2020] 7 S.C.R.
A interfere even if a procedural aberration or error in
assessment or prejudice to a tenderer, is made out. The 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 a civil court. Attempts
B
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 review, should be resisted. Such
C 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.”
(emphasis supplied)
34. Such conscious restraint is also necessary because judicial
D intervention by itself has effects of time and money, which if unchecked
would have problematic ramifications on the State’s ability to enter into
contracts and trade with private entities. Further, it is not desirable or
practicable for courts to review the thousands of contracts entered into
by executive authorities every day. Courts also must be cognizant that
E often-a-times the private interest of a few can clash with public interest
of the masses, and hence a requirement to demonstrate effect on ‘public
interest’ has been evolved by this Court.7
35. It is thus imperative that in addition to arbitrariness, illegality
or discrimination under Article 14 or encroachment of freedom under
F Article 19(1)(g), public interest too is demonstrated before remedy is
sought. Although the threshold for the latter need not be high, but it is
nevertheless essential to prevent bypassing of civil courts and use of
constitutional avenues for enforcement of contractual obligations.
36. In the present case, although it is clear that the Division Bench
G of the High Court was cognizant of these principles surrounding scope
of judicial review, however, it failed to effectively evaluate whether larger
public interest was being affected. On the contrary, we feel that the
interest of Respondent No. 1 was purely private and monetary in nature.
7
H Jagdish Mandal v. State of Orrisa, (2007) 14 SCC 517 ¶ 22.
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 619
PRABHA & ORS.
37. First, AMR-Dev Prabha’s initial prayer sought to nullify the A
award of contract, which if granted, would have increased the sums
payable by the State instrumentality from Rs 2043 crores to Rs 2345
crores. Second, the conduct of Respondent No. 1 over the course of
the present proceedings, as highlighted by the appellants, further bolsters
the lack of public interest. Whereas initially the first respondent was
B
seeking quashing of the LOA issued to Respondent No. 6 owing to
arbitrariness on part of BCCL and on the ground that sanctity of the
auction process had been violated; later, before the Division Bench,
Respondent No. 1 sought to make a new offer of Rs 1950 Crores. This
shows how AMR-Dev Prabha’s priority was only to secure the contract
and not to uphold the law or protect larger public interest. C
38. Even otherwise, granting such a prayer means that Respondent
No. 1 would have gotten a special opportunity of negotiation, to the
detriment of all other participants, which would probably be a more
egregious violation of equality envisaged under Article 14 than the
procedural adherence which they were initially seeking to protect. D
39. Additionally, we are not impressed with the first respondent’s
argument that there is a certain public interest at stake whenever the
public exchequer is involved. There are various factors in play, in addition
to mere bidding price, like technical ability and timely completion which
must be kept in mind. And adopting such interpretation would permanently E
blur the line between contractual disputes involving the State and those
affecting public law. This has aptly been highlighted in Raunaq
International Ltd. v. IVR Construction Ltd.8
“11. When a writ petition is filed in the High Court challenging
the award of a contract by a public authority or the State, the F
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 the litigation. A mere difference in the
prices offered by the two tenderers may or may not be decisive G
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
8
(1999) 1 SCC 492. H
620 SUPREME COURT REPORTS [2020] 7 S.C.R.
A than any saving which the court 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 should not
intervene under Article 226 in disputes between two rival
B
tenderers.”
(emphasis supplied)
40. Further, the first respondent has failed to demonstrate which
public law right it was claiming. The main thrust of AMR-Dev Prabha’s
C case has been on the fact that at 1:03PM on 05.05.2015 it was declared
the lowest bidder (or L-1). However, being declared the L-1 bidder does
not bestow upon any entity a public law entitlement to award of the
contract, as noted in Maa Binda Express Carrier v. North-East
Frontier Railway9:
D “8. The scope of judicial review in matters relating to award
of contracts by the State and its instrumentalities is settled by
a long line of decisions of this Court. While these decisions
clearly recognise that power exercised by the Government
and its instrumentalities in regard to allotment of contract is
subject to judicial review at the instance of an aggrieved party,
E submission of a tender in response to a notice inviting such
tenders is no more than making an offer which the State or its
agencies are under no obligation to accept. The bidders
participating in the tender process cannot, therefore, insist
that their tenders should be accepted simply because a given
F tender is the highest or lowest depending upon whether the
contract is for sale of public property or for execution of works
on behalf of the Government. All that participating bidders
are entitled to is a fair, equal and non-discriminatory treatment
in the matter of evaluation of their tenders. It is also fairly
well settled that award of a contract is essentially a commercial
G transaction which must be determined on the basis of
consideration that are relevant to such commercial decision.
This implies that terms subject to which tenders are invited
are not open to the judicial scrutiny unless it is found that the
same have been tailor-made to benefit any particular tenderer
9
H (2014) 3 SCC 760.
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 621
PRABHA & ORS.
or class of tenderers. So also, the authority inviting tenders A
can enter into negotiations or grant relaxation for bona fide
and cogent reasons provided such relaxation is permissible
under the terms governing the tender process.”
(emphasis supplied)
41. Instead, precedent laid down by this Court in Master Marine B
Services (P) Ltd v. Metcalfe & Hodg Kinson (P) Ltd,10 illustrates that
if a prayer for re-bidding is on account of a desire to get a better price,
then involvement of Article 14 of the Constitution would not be made
out.
42. Further, regular recourse was made over the course of C
proceedings by learned senior counsel for the first respondent on terms
of the NIT. Findings in the impugned order too were based upon disputed
interpretation of such contractual terms. Thus, it is clear that there was
neither any public law right of the first respondent which was affected,
nor was there any public interest sought to be furthered. D
(II) Infirmities in the auction process
43. On merits also, we do not feel that the impugned order is
correct in its conclusion that there were substantial procedural lapses on
part of BCCL and C1-India which amount to arbitrariness, and ought to
be remedied by way of judicial review. E
44. Instead, having the benefit of a detailed inquiry report of the
Central Vigilance Commission (“CVC”), we are of the firm opinion that
both the appellant and Respondent No. 4 acted in a bona fide manner
and as per their abilities. Even if it is true that BCCL could have assumed
more responsibility and C1-India could have exercised a more proactive F
role in checking for internet issues, yet the possibility of improvement
can’t be a ground for striking down an authority’s action. Additionally,
no allegation of the decisions being accentuated by illegal gratification,
or otherwise being fraudulent or contrary to a statute have either been
clearly made or established.
G
45. It would thus be apt at this stage to reproduce the concluding
passage of fact finding enquiry conducted by CVC, which reads as
follows:
10
(2005) 6 SCC 138. H
622 SUPREME COURT REPORTS [2020] 7 S.C.R.
A “It is significant to place on record that the notification of
closure of the reverse auction generated by system at 13:03:47
hrs on 05.05.2015 submitted by M/s AMR Dev Prabha, in
fact, belongs to another bidder M/s. Montecarlo Ltd. Neither
BCCL nor C1 India Pvt. Ltd. have ever placed such
notification on record. It remaims unclear as to how and when
B
M/s. AMR Dev Prabha got possession of this document, which
actually belonged to M/s. Montecarlo Ltd. and which became
the basis for M/s. AMR Dev Prabha to stake their claim of
being the lowest bidder at 13.03.47 hrs. It is also seen that
this important fact, of generation of notification of closure of
C the auction by the system at 13:03:47 Hours, as the bid of M/
s AMR Dev Prabha remained unresponded for the specified
period of 30 minutes, was neither reported by C1 India to
BCCL nor to the participating bidders. Such, notification of
closure of the auction, even though generated during the
period of interruption in connectivity of the bidders with the
D
server, should have been declared as ‘null and void’ before
restarting the auction process. Even, BCCL did not demand
any report from C1 India Pvt. Limited for the interruption
period so as to take a call before proceeding further for
restart of the reverse auction process. Further, considering
E that during this period BCCL was aware of the connectivity
problem being faced by the bidders, it should have exercised
intense real time monitoring which have not been done. Failure
to do so is a reflection of the fact the adequate incident
management system was not put in place by the service
provider M/s. C1 India Pvt. Ltd. to handle such eventuality
F
effectively.
While there was lack of control and supervision on part of
BCCL, however, the Committee has not come across any
evidence suggesting mala-fide on their part. As regards to
C1 India Pvt. Ltd., their conduct has been found to be far
G from satisfactory.”
46. We do not deem it necessary to venture into the existence of
technical problems of limited bandwidth, for the same is a question of
fact. However, given the concurrent finding of the second IEM, CERT-
In, TCL, as well as the CVC, we feel that the Division Bench erred in
H
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 623
PRABHA & ORS.
holding that there were no technical difficulties. Furthermore, such a A
conclusion is at odds with subsequent occurrences. A finding that there
were no internet problems implies that no other bidder deemed it
appropriate to counter the bid of Rs 2345 crores offered by Respondent
No. 1 at 12:33PM and that it was the competitively determined lowest
price. However, it is obvious that minutes into the resumption of the
B
auction process bids started coming in and more than a dozen bids were
received subsequently, with the last bid of Rs 2043 crores having been
made mere seconds before closure of the auction at 7:27 PM.
47. With regard to other allegations concerning condonation of
Respondent No. 6’s delay in producing guarantees, we would only
reiterate that there is no prohibition in law against public authorities C
granting relaxations for bona fide reasons. In Shobikaa Impex (P) Ltd.
v. Central Medical Services Society11, it has been noted that:
“… the 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. It has been D
further held that the State, its corporations, instrumentalities
and agencies have the 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 E
furtherance of public interest and not merely on the making
out of a legal point.”
48. Even if there had been a minor deviation from explicit terms
of the NIT, it would not be sufficient by itself in the absence of mala fide
for courts to set aside the tender at the behest of an unsuccessful bidder. 12 F
This is because notice must be kept of the impact of overturning an
executive decision and its impact on the larger public interest in the form
of cost overruns or delays.
49. There is also no need to venture into questions concerning
quantum of extension of time. It is clear that the same message was G
communicated by CI–India to all, stating that the auction process would
be extended by a period equivalent to the time between closure of auction
at 1:03PM and resumption at 2:30 PM. Not only did such uniform
communication put all bidders on an equal footing, but there was no
11
(2016) 16 SCC 233. H
624 SUPREME COURT REPORTS [2020] 7 S.C.R.
A possibility of any confusion given the clear wordings of the email. When
it is not the case of Respondent No. 1 that they thought that auction
would close at 7:35PM and hence they were taken by surprise at the
early closure, nor did they in fact highlight or object to such interpretation
over the course of the resumed auction process, the question is moot
and a finding ought not to be given on it.
B
50. Additionally, we also do not see merit in the justification for
delay in filing writ proffered by the first respondent. It is claimed that the
cause of action arose when Respondent No. 6 failed to submit guarantees
within a period of 28 days. However, we do not see how that would
allow AMR-Dev Prabha to challenge the entire process of auction, or
C overcome the settled legal principle of privity of contract between
Respondent No. 6 and the appellant.
(III) Deference to authority’s interpretation
51. Lastly, we deem it necessary to deal with another fundamental
D problem. It is obvious that Respondent No. 1 seeks to only enforce terms
of the NIT. Inherent in such exercise is interpretation of contractual
terms. However, it must be noted that judicial interpretation of contracts
in the sphere of commerce stands on a distinct footing than while
interpreting statutes.
E 52. In the present facts, it is clear that BCCL and C1-India have
laid recourse to Clauses of the NIT, whether it be to justify condonation
of delay of Respondent No. 6 in submitting performance bank guarantees
or their decision to resume auction on grounds of technical failure. BCCL
having authored these documents, is better placed to appreciate their
requirements and interpret them.13
F
53. The High Court ought to have deferred to this understanding,
unless it was patently perverse or mala fide. Given how BCCL’s
interpretation of these clauses was plausible and not absurd, solely
differences in opinion of contractual interpretation ought not to have
been grounds for the High Court to come to a finding that the appellant
G committed illegality.
CONCLUSION
54. In light of the above discussion, the appeal filed by Bharat
Coking Coal Ltd, as well as connected appeals filed by M/s RK Transport
13
H Afcons Infrastructure Ltd v. Nagpur Metro Rail Corporation Ltd, (2016) 16 SCC 818
at ¶ 15.
THE BHARAT COKING COAL LTD. & ORS. v. AMR DEV 625
PRABHA & ORS.
and M/s C1 India Pvt Ltd, are allowed. Resultantly, the appeal filed by A
AMR-Dev Prabha is dismissed. The Division Bench judgment of the
High Court dated 12.04.2018 is set-aside and the writ petition filed by
AMR-Dev Prabha is dismissed. No order as to costs.
Ankit Gyan Appeals disposed of.
B
C
D
E
F
G
H
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