TaxTMI 
TaxTMI 
2018 (5) TMI 2128
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.... Bird Detection and Monitoring Radar Systems (hereinafter referred to as "BDMRS"). 2. The brief facts and necessary facts are that the Petitioner (formerly known as Axis Aerospace & Technologies Pvt. Ltd) is a Bangalore based company. It is inter alia engaged in providing strategic technologies to aerospace, defence and homeland security sectors and is also sub serving the larger "Make in India" initiative of the Union Government to build indigenous defence capabilities. The MoD, had issued an RFP with an intent to procure 45 BDMRS with 3D coverage to reduce the risk of bird strikes in air operations in various airfields on 23.02.2010. Bird air strikes are a major cause of aircraft accidents, particularly of combat aircrafts. These accidents are preventable by the use of BDMRS, used to reduce and prevent Bird Air Strike Hazards. The Petitioner, in partnership with a Canadian company, Accipter Radar Technologies responded to the bid. 3. After a period of around 18 months, the RFP, was withdrawn by the MoD by letter dated 13.09.2011 as none of the bidders satisfied the terms of the RFP. Later, a fresh Request for Information (hereinafter referred to as "RFI") dated 21.09.2011 w....
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.... Aggrieved, it preferred an appeal; again unsuccessfully, since it was told that that the information sought is exempt from disclosure by virtue of Section 8(1)(d) of the RTI Act, 2005. Subsequently, the Petitioner preferred two second appeals before the Central Information Commission (CIC). It later sought intercession of the RM in the matter and also highlighted that the BDMRS was not acquired over the past 6-7 years by the MoD. Also, by letter dated 02.08.2016 it wrote to the CIC requesting early processing of the appeals. In response to the Petitioner' letter dated 06.07.2016 to the RM, a letter dated 17.08.2016 was issued to it by the MoD confirming that a meeting would be arranged with Ms. Smita Nagaraj, the Director General (Acquisition). In the meeting which followed, it was assured that the reasons for withdrawal of the BDMRS would be intimated to it. When, on 31.08.2016, a fresh RFI was issued for procurement of BDMRS with 3D coverage the Petitioner by letters dated 15.09.2016 and 28.09.2016 sought information about the reasons of withdrawal; it also addressed a letter on 21 November, 2016. 6. Aggrieved by the inaction and lack of response on the part of the MoD and be....
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....s that the MoD is under a constitutional duty to act in public interest. The cancellation and unnecessary delay in the procurement process is against the imperatives of public interest. The Petitioner argues that rejection of the lowest bid to the RFP dated 30.04.2012 without giving any reasons violates the fundamental right of the Petitioner to equality and fair treatment, violating Article 14 of the Constitution. 10. Mr. Kathpalia urged that the fresh RFI envisages a 3D coverage requirement the specification which is favourable to M/s OIS-AT, one of the vendors to the RFP dated 30.04.2012.The Petitioner has contended that the issuance of the fresh RFI appears to have been actuated by mala fides and bias and seeks to disadvantage the Petitioner. Reliance was also placed on the CVC Circular 4/3/07 dated 03.03.2007 which provides that re-tendering is permissible only in cases where in the lowest bidder backs out or is incapable of fulfilling the contract. 11. The Petitioner further argued that this court should intervene and quash the order dated 10.04.2015 of the MoD, Government of India by way of which the RFP dated 30.04.2012 was withdrawn. It is also prayed a direction to ....
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....o acquisition by the Defence forces. 14. In this regard, Mr. Kathpalia argued that the Petitioner further submits that the MoD conveniently placed reliance only on the portion that favours their position, thereby completely omitted in citing Clause 11.5 of the MoF policy-2006. The Petitioner places reliance on Clause 9.2 of the MoF policy, 2006 to explain that the Indian bidders are allowed to quote the price in foreign currency. The relevant portion of the policy is extracted hereunder for ready reference: "Clause 9.2 the tender documents are to specify the currency (currencies) in which the tenders are to be priced. As a general rule, domestic tenderers are to quote and accept their payment in Indian currency; Indian agents of foreign suppliers are to receive their agency commission in Indian currency; costs of imported goods, which are directly imported against the contract, may be quoted in foreign currency (currencies) and paid accordingly in that currency; and the portion of the allied work and services, which are to be undertaken in India (like installation & commissioning of equipment) are to be quoted and paid in Indian currency. Clause 11.5 Conversion....
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....ingh, for the MoD resists the claim and argues that the present petition deserves to be dismissed on the ground that no enforceable right is accrued to a party despite being the lowest bidder. To substantiate this point, the Respondent places reliance on the judgment in the case of Era Infra Engineering v. DDA & Anr166 (2010) DLT 402 (DB). The relevant portion of the judgment is as follows: "Applying the above principles, it is obvious that the petitioner cannot claim any enforceable right to be awarded the contract merely because it happens to be the lowest bidder. Normally, the lowest bidder or the highest bidder, as the case may be, ought to be awarded the contract. But this is not an absolute rule and the governmental authority can deviate from this and award the contract to someone other than the lowest of highest bidder, as the case may be. But, there must be good and valid reasons for this departure. The government body or authority may decide not to award the contract to the lowest bidder/ highest bidder or to anyone else and may decide to scrap the tender and/or call for fresh tenders. However, once again, there must be good reasons for doing so. In the present ca....
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....ders are to quote and accept their payments in Indian Currency. Further, the RFP also clearly indicated that ERV clause shall be applicable for Rupee contracts with Indian vendors. 20. It is stated that for the above reasons, the Petitioner' bid was rejected. Therefore, the case for procurement of BDMRS was closed with the approval of Competent Authority on account of vitiation of level playing field in multi-vendor scenario. The RFP was withdrawn in April 2015 with due approval of the Competent Authority for re- initiation of the procurement process. It is also submitted that the MoD has the power to withdraw the RFP in terms of the RFP and DPP provisions. The relevant portion of para 36 of the RFP are reproduced as follows: "This RFP is being issued with no financial commitment; and the Ministry of Defence reserves the right to withdraw the RFP and change or vary any part thereof or foreclose the procurement case at any stage. The Government of India also be so necessary at any stage on grounds of National Security." 21. MoD argues that the RFPs were not withdrawn arbitrarily. The Respondent was forced to withdraw the RFP twice for good reasons. It was argued one, ....
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....k of this nature and magnitude where bidders who fulfil pre-qualification alone are invited to bid, adherence to the instructions cannot be given a go-by branding it as a pedantic approach, otherwise it will encourage and provide scope of discrimination, arbitrariness and favouritism which are totally opposed to the rule of law and our constitutional values. 24. It was submitted for the MoD that the interest of the Indian bidders was safeguarded from INR depreciation by incorporation of the ERV clause as per the provisions of DPP 2011. As per this clause, the year-wise amount of foreign exchange component of the imported items as indicated in the contract shall be adjusted for the impact of exchange rate variation of the rupee based on the exchange rate prevailing on the date of each transaction. Therefore, the Petitioner' contention that level playing field is lost as the Indian bidders will be subject to vagaries of ERV and hedging overheads is absolutely false. 25. OIS-Advanced Technology, the second respondents in the present case, submits that the Petitioner has misled the court by stating it is only a proforma party, even though various unsubstantiated allegations have ....
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....on and lead to increased and unbudgeted expenditure." 27. Again, in Master Marine Services Pvt. Ltd. v. Metcalfe and Hodgkinson Pvt. Ltd., AIR 2005 SC 2299, it was stated that the role of the Court is not to review or oversee the award of contract, on the merits of the decision, but rather consider whether the decision making was regular, legal, procedurally fair and untainted by mala fides. Further, in the case of BECIL v. Arraycomindia Ltd. &Ors., 2010 (1) SCC 139 it was held as below: "16. In administrative matters, the scope of judicial review is limited and the judiciary must exercise judicial restrained in such matters, as held by this Court in Tata Cellular v. Union of India: AIR 1996 SC 11: (1994) 6 SCC 651. Moreover, the view of Prasar Bharti also appears reasonable because Prasar Bharti has to pay the amount inclusive of sales tax, since there is no concessional forms. If Prasar Bharti has taken up one possible interpretation, the High Court should not have intervened. The scope of judicial review in administrative matters is limited." ... Emphasis Supplied 28. Reviewing its previous judgments, the Supreme Court, in Michigan Rubber (India) Ltd. v. State ....
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....enders where public largesse is put to auction stand on a different compartment. Tender with which we are concerned, is not comparable to any scheme for allotment. This arena which we have referred requires technical expertise. Parameters applied are different. Its aim is to achieve high degree of perfection in execution and adherence to the time schedule. But, that does not mean, these tenders will escape scrutiny of judicial review. Exercise of power of judicial review would be called for if the approach is arbitrary or malafide or procedure adopted is meant to favour one. The decision- making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requi....
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....2016 SC 3585. In that case, it was stated that the court should not interfere at the insistence of the unsuccessful bidder in respect of a procedural violation in the following words: "Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias 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 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, 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 ten....