TaxTMI 
TaxTMI 
2012 (10) TMI 594
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....therefore, consider it necessary to re-count the same all over again except to the extent the same is absolutely necessary for the disposal of these appeals. Suffice it to say that Government of India has entrusted the task of reviving and restructuring of the Dabhol Project to Gas Authority of India Ltd. (GAIL) and National Thermal Power Corporation ('NTPC' for short) both Government of India undertakings who have in turn formed a joint venture company in the name and style of Ratnagiri Gas & Power Pvt. Ltd., the appellant in this appeal, for short referred to as 'RGPPL'. The appellant-RGPPL is charged with the duty of completing the balance work at LNG Terminal of the Dabhol Power project and of commissioning and operating the same. The appellant has, for that purpose, engaged GAIL as its Engineer who has in turn appointed Engineers India Limited (EIL) as their Primary Project Management Consultant. Scott Wilson a U.K. based entity was also kept in the loop as a backup consultant for marine works. 4. In terms of an international competitive bidding notice, issued by it on 26th June, 2009, EIL invited tenders from eligible parties for completion of, what is called "Breakwa....
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....) and letter dated 10th November, 2000 addressed by the said Ellen Hinengo Ltd. to RDS asking it to commence work for construction of breakwater at Mus in Car Nicobar Island pursuant to tender dated 3rd November, 2000 were also produced by RDS apart from a certificate issued by EHL about the offshore location of the breakwater. 8. Tenders received from different parties were techno commercially evaluated by EIL all of whom were found to be technically qualified except Hung-Hua & Ranjit Buildcon Ltd. who went out of the reckoning at that stage itself. Names of only four bidders found techno commercially eligible were recommended by EIL for the approval of GAIL the owner's engineer. The price bids of the four bidders were pursuant to the said recommendation opened on 11th February, 2010 in which RDS was found to be the lowest bidder having quoted a price of Rs.390 crores only, which was less than the estimated cost of the project by Rs.160 crores. GAIL accordingly recommended RDS to the appellant-company for award of the contract. Recommendation received from GAIL notwithstanding the appellant-company appears to have expressed apprehensions about the capability of RDS to comp....
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..... The CAG found that due to delay in the construction of a portion of the breakwater coupled with non-compliance of contractual terms, the department had suffered a loss of Rs.2.61 crores, apart from increase in cost of the work by Rs.3.55 crores. 13. The report of the CAG was forwarded by the appellant to GAIL with the request to arrange copies of work order, and satisfactory evidence of the credentials of RDS. GAIL was also informed that in the absence of satisfactory evidence furnished by RDS, the appellant was not in a position to place the matter for award of contract before the Board of Directors. 14. While correspondence between RGPPL, GAIL and EIL was being exchanged on the subject the appellant received certain documents under RTI Act including the work order placed by Andaman Harbour Works on EHL and those placed on M/s Recon International for a part of the Andaman Project for chainage 22-200 meters. These documents were quickly sent to EIL for review who examined the matter again and submitted its observations in terms of letter dated 18th September, 2010 stating that RDS did not meet the basic qualifying conditions of offshore breakwater of a minimum length of 400 met....
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....ed to issue. We shall presently refer to the writ petition and the effect of its withdrawal in greater detail. Suffice it to say that the maintainability of Writ Petition No.534 of 2011 filed by RDS out of which the appeal arises was assailed by the appellant herein on the ground that the earlier petition filed by it having been withdrawn the second petition filed by RDS was not according to the appellant maintainable insofar as the same sought to question the validity of the decision taken by the Board of Directors on 4th October, 2010 cancelling the tender process and the communication of the said decision with reasons for rejection of the bid submitted by RDS on 6th October, 2010. The High Court has in the judgment under appeal rejected that contention and not only held that the writ petition filed by RDS was maintainable but also that the decision to reject the tender submitted by it was not legally valid nor was the annulment of the entire tender process. The High Court found that the action taken by the appellant on both counts was vitiated by mala fides especially when the fresh tender notice issued by the appellant made an attempt to exclude RDS from competing for the works....
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....irection, as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case." 21. When the above petition came up before the High Court on the 14th December, 2010 learned counsel for RDS withdrew the writ petition and the accompanying application reserving liberty to seek redress in case the tender which is floated sought to exclude RDS in any manner from competing for the allotment of the work in question. Since the answer to question No.1 above depends on the interpretation of the said order we may extract the same in extenso: "Learned senior counsel for the petitioner submits that though the tender process has been scrapped on 4.10.2010, the same was followed up by a letter dated 6.10.2010 of the respondents setting out the reasons why the petitioner was held not to meet the BQC requirements of having completed at least one project of breakwater in an offshore location of a minimum length of 400 mtrs; which was a stipulation in the contract. Learned senior counsel for the petitioner has serious objection to the contents of this letter and thus submits that the objection was only to somehow ensure that the petitioner does not get the contract becau....
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.... to file a fresh petition was in our considered opinion limited to any such fresh challenge being laid by RDS to its exclusion in terms of any fresh tender notice. The order passed by the High Court did not permit RDS to re-open and re-agitate issues regarding rejection of its bid pursuant to the earlier tender notice and the annulment of the entire tender process, even if the second tender notice sought to disqualify it from competition by altering the conditions of eligibility to its disadvantage. In fresh Writ Petition No.534 of 2011 filed by RDS not only were the amended conditions of the tender notice assailed but the validity of the resolution dated 4th October, 2010 and letter dated 6th October, 2010 was also sought to be re-opened no matter the same was already concluded with the withdrawal of Writ Petition No.8252 of 2010. RDS sought to use the liberty to challenge the amended terms of eligibility to re-open what it could and indeed ought to have taken to a logical conclusion in Writ Petition No.8252 of 2010. If the intention behind withdrawal of the Writ Petition No.8252 of 2010 was to come back on the issues raised therein there was no need for any such withdrawal, which....
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....n maker. Vague and general allegations unsupported by the requisite particulars do not provide a sound basis for the court to conduct an inquiry into their veracity. The legal position in this regard is fairly well-settled by a long line of decisions of this Court. We may briefly refer to only some of them. In State of Bihar v. P.P. Sharma 1992 Supp. (1) SCC 222, this Court summed up the law on the subject in the following words: "50. Mala fides means want of good faith, personal bias, grudge, oblique or improper motive or ulterior purpose. The administrative action must be said to be done in good faith, if it is in fact done honestly, whether it is done negligently or not. An act done honestly is deemed to have been done in good faith. An administrative authority must, therefore, act in a bona fide manner and should never act for an improper motive or ulterior purposes or contrary to the requirements of the statute, or the basis of the circumstances contemplated by law, or improperly exercised discretion to achieve some ulterior purpose. The determination of a plea of mala fide involves two questions, namely (i) whether there is a personal bias or an oblique motive, and (ii) whet....
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....egations of mala fides to be proved and only in cases where based on the material placed before the Court or facts that are admitted leading to inevitable inferences supporting the charge of mala fides that the Court should record a finding in the process ensuring that while it does so, it also hears the person who was likely to be affected by such a finding. Decisions of this Court have repeatedly emphasised this aspect, which is of considerable importance. In State of M.P. and Ors. v. Nandlal Jaiswal and Ors. (1986) 4 SCC 566, speaking for the Court, P.N. Bhagwati, J., as His Lordship then was, disapproved the observations made by the High Court attributing mala fides and corruption to the State Government without there being any foundation in the pleadings for such observations. The Court declared that wherever allegations of mala fides are made, it is necessary to give full particulars of such allegations and to set out material facts specifying the particular person against whom such allegations are made so that he may have an opportunity to controvert such allegations. The following observations of the Court are apposite: "39. Before we part with this case we must ex....
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....legation that the policy was amended with a view to benefit Respondents 4 and 5 would amount to the petitioners contending that the Board of Directors of the Bank sought to favour Respondents 4 and 5 and, therefore, agreed to the proposal put before it. Neither the Chairman nor the Directors, who were present in the said meeting, have been impleaded as respondents. This being so the petitioners cannot be allowed to raise the allegations of mala fides, which allegations, in fact, are without merit." (emphasis supplied) 29. In the case at hand there was no allegation of "malice in fact" against any individual nor was any individual accused of bias, spite or ulterior motive impleaded as a party to the writ petition. Even Mr. Sudhir Chandra and Jagdeep Dhankar, learned Senior Counsels appearing for RDS fairly conceded that RDS had not alleged malice in fact against any individual who had played any role in the decision making process. What according to them was alleged and proved by RDS was malice in law, which did not require impleading of individual officers associated with the decision making process. We will presently examine whether a case of malice in law had been made o....
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....spite towards a party and any indirect or improper motive in taking an action". This is sometimes described as "malice in fact". "Legal malice" or "malice in law" means 'something done without lawful excuse'. In other words, 'it is an act done wrongfully and wilfully without reasonable or probable cause, and not necessarily an act done from ill feeling and spite'. It is a deliberate act in disregard of the rights of others'. [See Words and Phrases legally defined in Third Edition, London Butterworths 1989]. . Where malice is attributed to the State, it can never be a case of personal ill-will or spite on the part of the State. If at all, it is malice in legal sense, it can be described as an act which is taken with a oblique or indirect object..." (emphasis supplied) 32. To the same effect is the recent decision of this Court in Ravi Yashwant Bhoir v. District Collector, Raigad and Ors (2012) 2 SCC 407 where this Court observed: "MALICE IN LAW: 37. This Court has consistently held that the State is under an obligation to act fairly without ill will or malice- in fact or in law. Where malice is attributed to the State, it can never be a case of personal ill-will o....
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....nning into hundreds of crores of rupees, RGPPL was perfectly justified in adopting a careful approach to ensure that those found eligible by its technical experts and consultants were indeed so qualified and possessed the necessary wherewithal, experience and expertise to execute the project at Dabhol. It was also well within its right to demand documentary proof from RDS to support its claim that it had indeed executed the project at Mus in Car Nicobar area so as to make it eligible for claiming award of the works in question. In the course of the hearing we had on several occasions asked learned counsel for RDS to furnish documentary evidence to probabilize if not conclusively establish that RDS had indeed undertaken the execution of the work involving construction of 400 meters of breakwater which it claimed to have executed. Besides, we had directed the Central Government Counsel to produce before us the relevant record relating to the project at Car Nicobar in response to which Mr. Gulati had produced a few files. These files, according to Mr. Gulati, did not show that RDS had indeed executed the breakwater Project of 400 meters length in Car Nicobar. More importantly Mr. Gula....
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....d as it was by the legal opinion tendered to it on the subject, observed: "It was submitted before us that this opinion became the edifice for the change of view that the EIL took on 1.9.2010. We may note at the outset that the opinion is completely converse to the stand taken by the EIL up to 11.8.2010. It is pertinent to note (a fact we were told in the hearing) that the said legal opinion bears the endorsement of Mr. Grover, Director (Projects) calling upon Mr. R.K. Bhandari, General Manager (Project), EIL to simply comply with the view taken by the legal department. As noticed here in above by us, Mr. R.K. Bhandari was the same gentleman, who on 10.6.2010 had opined that no revision in the award recommendation in favour of RDS was called for. The crucial question which arises, is that, was Mr. R.K. Bhandari given a chance to express his view on the opinion rendered by the legal department. This is a pertinent aspect of matter to our minds since Mr. R.K. Bhandari, followed by Mr. Ravi Saxena, in EIL and Mr. M.B. Gohil in GAIL were people who would have dealt with such like contact on a number of occasions. Being experts in their respective fields, they would know what w....
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....he process are free and indeed expected to take views on various issues according to their individual perceptions. They may in doing so at time strike discordant notes, but that is but natural and indeed welcome for it is only by independent deliberation, that all possible facets of an issue are unfolded and addressed and a decision that is most appropriate under the circumstances shaped. If every step in the decision making process is viewed with suspicion the integrity of the entire process shall be jeopardized. Officers taking views in the decision making process will feel handicapped in expressing their opinions freely and frankly for fear of being seen to be doing so for mala fides reasons which would in turn affect public interest. Nothing in the instant case was done without a reasonable or probable cause which is the very essence of the doctrine of malice in law vitiating administrative actions. We have, therefore, no hesitation in holding that the findings recorded by the High Court to the effect that the process of annulment of the tender process or the rejection of the tender submitted by RDS was vitiated by mala fides is unsustainable and is hereby set aside. Question n....
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....Ltd. and Ors. (2000) 2 SCC 617, Mr. Nariman argued that the High Court went wrong in declaring the provisions of Clause 8.1.1.1 of the second tender notice to be legally bad. The following passage from the above decision is apposite: "7. ..... The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny...." 39. Having said that we must say to the credit of Mr. Nariman that he made a statement on instructions that in order to show its bona fides and to prove that it had no intention to deliberately target or exclude RDS, RGPPL would not apply the modified Clause 8.1.1.1 of the second tender notice to fresh tenders while evaluating them for techno commercial purposes. RGPPL would, according to Mr. Nariman, treat Clause 8.1.1.1. in the first tender notice as the applicable clause and the second tender process shall be carried forward on the Clause 8.1.1.....
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....otice issued in future, in which Clause 8.1.1.1 remains, the touch stone for determining the eligibility of the tenderers. It is in the above background that we need to examine whether RDS was eligible to compete for the works based on the first tender notice. 41. In its communication dated 6th October, 2010 the appellant had summed up the reasons for declaring RDS to be techno commercially non- responsive in the following words: "From perusal of the various documents, it can be concluded that the qualifying project claimed by you to have been awarded in November 2000 had the maximum length of 290 m and not 400 m required under BQC. The breakwater(s) at Mus (chainage 22 m to 200 m and chainage 200m to 330m/490m) was awarded as two separate projects by the project authority and also executed accordingly by the respective agencies. Further, award for different phases of the project was made on EHL or M/s Reacon International and you were also not responsible for the execution of total scope of work in any of the two projects. In the light of the above, it is concluded that RDS does not meet the BQC requirement of having completed at least one project of a breakwater in an offshor....
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.... from the government files produced by Mr. Gulati appearing for the Central Government. 45. On the question whether the Breakwater constructed at Mus in Car Nicobar comprised one or two projects, also there was some debate which was rendered academic, by Mr. Nariman, making a fair and unqualified concession that for purposes of determining the eligibility of RDS the breakwater at Mus Car Nicobar could be treated as a single project. With that concession, what remains to be determined is whether RDS had limited its claim to eligibility only on the award made in its favour in November, 2000. If so, whether it is debarred or stopped from claiming that it had executed the project from chainage 22 meters to 200 meters also. More importantly, whether RDS had actually executed the Breakwater Project at Mus Car Nicobar with a length of 400 meters. 46. We looked in vain for a finding on the above questions in the impugned judgment leave alone one that satisfactorily dealt with the material placed by the parties on record in support of their respective cases. What we found was a concession attributed to Ms. Indra Jai Singh, learned Additional Solicitor General to which the High Court refer....