2006 (12) TMI 521 - SC - Indian Laws

SC Affirms Mumbai Authority's Right to Cancel Bids, Re-tender Project; No Mala Fides Found, Actions in Public Interest.

Ramchandra Murarilal Bhattad Versus State of Maharashtra

The SC upheld the decision of the Mumbai Metropolitan Region Development Authority to cancel the bids and re-tender the project. It concluded that the ... Advertisement issued inviting 'Expression of Interest for development of C&EC' - highest bidder - validity of clause 2.4 of the Request for Proposal in which the Authority reserved the right to reject at any stage all or any of the bids without assigning any reason - Power of the Authority to cancel or reject the bids - whether the project would be financially viable if the method of calculation is changed - HELD THAT:- A power to deal with a contractual matter and a power of a statutory authority to exercise its statutory power in determining the rights and liabilities of the parties are distinct and different. Whereas reasons are required to be assigned in a case where civil or evil consequences may ensue, the same may not be necessary where it is contractual in nature, save and except in some cases, e.g., Star Enterprises [1990 (4) TMI 231 - SUPREME COURT]. We have noticed that power has not been exercised by the Executive Committee in rejecting the tender. The power has been exercised by the Authority in cancelling the tenders so as to enable it to have a re-look of the entire project. Some reasons may be required to be assigned for rejecting the bid, but in the instant case, in our opinion, no reason was required to be assigned as there has been a change in the policy decision. The news item appearing in the Economic Times is not of much significance. No affidavit has been affirmed as regards the correctness or otherwise of the said news item. may be true that the Authorities at one point of time, as was disclosed in the Counter Affidavit, had thought of setting up a Convention center of their own and without any private participation, but only because there has been a deviation from the said stand would not, in our considered opinion, render the entire policy decision vitiated in law. It had set up its Evaluation Committee. The decision presumably has been reached by experts. The reasons as regards purported unsatisfactory performance of Appellants, take a back seat once having a re-look to the entire situation was thought of. It is not a case where the Court is called upon to exercise its equity jurisdiction. It is also not a case where ex facie the policy decision can be held to be contrary to any statute or against a public policy. A policy decision may be subjected to change from time to time. Only because a change is effected, the same by itself does not render a policy decision to be illegal or otherwise vitiated in law. However, if the Court in a given situation is not in a position to allow a bid to take place before, it may not still venture to strike down an Act in the name of public interest, although, no such public interest exists. Appellant stated before us that he is ready and willing to take a part of the contract, viz., construction of the C&EC and pay the same amount as has been done by Reliance Industries Ltd. and in addition it would pay 2.5% of its annual turnover from the Convention center from the 21st year, as was initially offered. Appellant did not participate in the second bid. The tender process is complete. Before us only a higher bid has been given. We do not intend to enter into the intricacies of the question. Appellants could have submitted its bids pursuant to the new tender and new conditions, even without prejudice to its rights and contentions in this appeal. The stipulations made in 2002 tender could have been repeated by it so as to demonstrate before the experts comprising members of the Executive Committee that its bid was the highest. If, in view of the change in the policy decision, the Authority does not intend to become a partner in the profit making and opt for having the entire bid amount at one go instead of waiting for 20 years, we do not find any fault therewith. We, therefore, are of the opinion that it is not a case where we should interfere with the judgment of the High Court. It, however, would not mean that the Authority or the Executive Committee would not be entitled to take note of the offer of Appellant. It may do so. It would not further mean that if the terms of new tender are violative of the provisions of the master plan, the same would not be suitably dealt with. We merely place on record that we have not gone into the said questions, although raised before us by the learned Counsel for the appellant, simply on the ground that no such plea had been taken before the High Court. In the absence of any plea that the policy decision adopted by the Authority would be violative of the provisions of the Act or any master plan, the same cannot be entertained The question, however, is left open. Thus, there is no merit in these appeals, which are accordingly dismissed. Issues Involved:1. Jurisdiction of the Authority to cancel the bid.2. Validity of the rejection of the highest bid.3. Alleged mala fides in the cancellation of bids.4. Requirement of assigning reasons for rejecting bids.5. Judicial review of administrative actions and policy decisions.Detailed Analysis:1. Jurisdiction of the Authority to Cancel the Bid:The primary issue was whether the Mumbai Metropolitan Region Development Authority (MMRDA) had the jurisdiction to cancel the bids. The judgment emphasized that the Executive Committee's power was limited to the acceptance or rejection of tenders, whereas the Authority held larger powers, including the power to cancel the entire tender process. The court concluded that the Authority's decision to cancel the bids was within its jurisdiction and not illegal or without authority.2. Validity of the Rejection of the Highest Bid:The appellants argued that their bid, being the highest, should have been accepted. They contended that the rejection was arbitrary and lacked sufficient reasoning. The court noted that the Authority had decided to reassess the entire project and had the right to alter its policy. The decision to cancel the bids and re-tender was based on a new policy framework, which was within the Authority's discretion.3. Alleged Mala Fides in the Cancellation of Bids:The appellants alleged that the cancellation of bids was done with mala fide intent to favor a particular party in the re-tendering process. The court found no evidence of mala fides or arbitrariness in the Authority's decision. The re-tendering process was competitive, and the highest bid in the new tender was significantly higher than the previous bids, indicating a fair and transparent process.4. Requirement of Assigning Reasons for Rejecting Bids:The appellants contended that the Authority was required to assign reasons for rejecting their bid. The court held that while reasons might be necessary in certain contractual matters, in this case, the Authority's decision was based on a change in policy rather than the rejection of a specific bid. Therefore, the requirement to provide detailed reasons was not applicable.5. Judicial Review of Administrative Actions and Policy Decisions:The court emphasized that judicial review of administrative actions, especially policy decisions, is limited. It reiterated that courts should not interfere with policy decisions unless there is clear evidence of arbitrariness or violation of statutory provisions. The Authority's decision to re-tender was a policy decision aimed at maximizing public interest and revenue, which did not warrant judicial interference.Conclusion:The Supreme Court upheld the Authority's decision to cancel the bids and re-tender the project. The court found that the Authority acted within its jurisdiction and there was no evidence of mala fides or arbitrariness. The change in policy and the subsequent re-tendering process were deemed to be in the public interest. The appeals were dismissed with no order as to costs.