TaxTMI 
TaxTMI 
2014 (2) TMI 1427
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....ystem ('MRTS' for short) for Delhi and its extension corridors. The High Court has taken the view that the process of evaluation of the bids received from eligible bidders culminating in the award of a contract in favour of Respondent No. 2-Hyundai Rotem Company ('HR' for short) was transparent and did not suffer from any illegality, irregularity or perversity of any kind to warrant interference by it. The High Court held that the bidders were well aware of and had accepted the tender conditions which were free from any vagueness or uncertainty. The parameters of evaluation conditions were also held to have been applied uniformly to all the bidders under a procedure that was open, transparent and fair as required by law. The present appeal assails the correctness of that judgment and order. Alstom Transport India Ltd. and Ors.-Writ-Petitioners in connected Writ Petition No. 2615 of 2013 have, however, remained content with the view taken by the High Court and have not chosen to appeal. 3. Respondent-Delhi Metro Rail Corporation ('DMRC' for short) has planned to implement Phase-III of the MRTS for Delhi to keep pace with the ever increasing traffic demands i....
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....es Siemens Consortium 3625,27,92,409 7,45,94,223 L-1 Bombardier Consortium 4242,27,83,378 8,72,89,678 L-2 Hyundai ROTEM 4290,57,94,689 8,82,83,528 L-3 Alstom Consortium 4373,87,65,001 8,99,97,459 L-4 CAF Consortium 4614,18,66,794 9,49,42,113 L-5 Hitachi + BHEL 4891,32,60,656 10,06,44,569 L-6 5. Significantly, however, the above did not represent the true inter se position of the bidders. That was so because apart from the price quotation, the terms and conditions of the tender notice required loading of GEC values duly converted into Indian rupee to the price quotation of each eligible bidder. The GEC values in turn comprised two distinct components, namely, 'X' factor representing the electricity consumption for the operation of the train without HVAC and 'Y' factor for operation of HVAC. The GEC values offered by the six bidders found technically compliant were as under: S.No. Bidder Other than HVAC ('X) HVAC ('Y') Total 1 ALSTOM 1434 595 2029 2 BTC 1621 564 2185 3 CAFC 1159 790 1949 4 HBC 1767 514 2281 5 HRC 1259 567 1826 6 SIEMENS 1560 786 2346 6. In terms of Annexure ITT-8 the GEC value of....
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....n of the bidders on the basis of a supposedly anticipated saving in the consumption of energy on a lifecycle of 30 years. Yet another letter dated 25th February, 2013 the Appellant called for evaluation of energy values by an independent third party agency so as to ascertain whether the GEC values offered by HR were achievable. Yet another letter dated 1st March, 2013 to the same effect having failed to cut any ice with the DMRC, the Appellant preferred Writ Petition No. 1853 of 2013 before the High Court of Delhi. That writ petition was notified for hearing on 1st May, 2013. In the meantime DMRC issued a Letter of Acceptance in favour of HR under intimation to the Appellant. The Appellant, therefore, sought a restraint order against the award of the contract before the High Court who in turn accepted an undertaking given by the counsel for the DMRC and HR that they will not act in pursuance of the letter of award pending disposal of the writ petition. 10. Alstom Transport India Ltd. was the only other bidder aggrieved by the award of the contract who filed Writ Petition No. 2615 of 2013 challenging the tender process. Both the writ petitions were eventually heard by the High Cour....
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....of Directors of DMRC constituted a sub-Committee to consider the said representations. The Board sub-Committee consisted of six directors out of whom three were Functional Directors besides MD of the DMRC, a nominee Director of MOUD of Indian Railways and one independent Director. The Sub-Committee met on 4th and 5th March, 2013 and thoroughly examined the issues raised in the representation and found the detailed explanations provided in the Tender Committee Minutes to be satisfactory. The Sub-Committee, therefore, agreed with the recommendations of the Tender Committee culminating in the issue of a Letter of Acceptance to Respondent-HR. Our attention was drawn to the counter-affidavit filed by the DMRC in which the process of evaluation of the bids and the GEC values has been set out. The counter-affidavit further states that the DMRC was fully satisfied about the achievability of the GEC values offered by HR. There was, therefore, no room for validation of the GEC values by any outside agency. 13. It was further contended by Mr. Andhyarujina that the tender conditions specifically provide for levy of a penalty in case of failure of the committed GEC values. He referred to ERTC ....
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....ointed by the Government would be impermissible and improper nor would it be advisable for DMRC to participate in any such exercise. In the premises it was contended that the Report by the Enquiry Committee submitted to this Court in a sealed cover need not be looked into as the same was wholly extraneous to a judicial review of the process of evaluation and eventual award of the contract by DMRC, the authority competent to do so. Relying upon the decisions of this Court in Amrik Singh Lyallpuri v. Union of India and Ors. (2011) 6 SCC 535 and Union of India v. K.M. Shankarappa (2001) 1 SCC 582, it was argued that administrative review of a judicial decision was not legally permissible. It was also contended by Mr. Andhyarujina that pursuant to the allotment made in his favour, HR had taken substantial steps towards implementation of the project and that interference with the award of the contract at this belated stage was neither in public interest nor otherwise justified in the facts and circumstances of the case. 16. Appearing for the Respondent No. 2-HR, Mr. Venugopal, learned senior counsel adopted the submissions of Mr. Andhyarujina and took strong exception to the constituti....
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....f allotment of contracts by an instrumentality of the State and declared that such process was amenable to judicial review. Several subsequent decisions followed and applied the law to varied situations but among the latter decisions one that reviewed the law on the subject comprehensively was delivered by this Court in Tata Cellular's case (supra) where this Court once again reiterated that judicial review would apply even to exercise of contractual powers by the Government and Government instrumentalities in order to prevent arbitrariness or favouritism. Having said that this Court noted the inherent limitations in the exercise of that power and declared that the State was free to protect its interest as the guardian of its finances. This Court held that there could be no infringement of Article 14 if the Government tried to get the best person or the best quotation for the right to choose cannot be considered to be an arbitrary power unless the power is exercised for any collateral purpose. The scope of judicial review, observed this Court, was confined to the following three distinct aspects: (i) Whether there was any illegality in the decision which would imply whether t....
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....aution that in economic and policy matters the scope of judicial review was limited. 20. It is unnecessary and platitudinous for us to burden this judgment with reference to the decisions of this Court on the subject for the governing principles are so well-known and well-settled that any review of the law on the subject is bound to be simply repetitive without any meaningful contribution to the existing legal literature on the subject. We remain content by referring to two only of a plentitude of judicial pronouncements on the subject in which the legal position has been succinctly restated. One of these decisions was delivered in Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517, where too this Court was dealing with the exercise of power of judicial review in matters relating to tenders and award of contracts. This Court identified the special features should be borne in mind while judicially reviewing award of contracts. We can do no better than extract the following observations of this Court in this regard: 22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to ch....
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....t is perfectly clear that in case of review, as distinct from an ordinary appeal, the court may not set about forming its own preferred view of evidence. 22. There is no gainsaying that in any challenge to the award of contact before the High Court and so also before this Court what is to be examined is the legality and regularity of the process leading to award of contract. What the Court has to constantly keep in mind is that it does not sit in appeal over the soundness of the decision. The Court can only examine whether the decision making process was fair, reasonable and transparent. In cases involving award of contracts, the Court ought to exercise judicial restraint where the decision is bonafide with no perceptible injury to public interest. 23. The High Court has, in the case at hand, undertaken that exercise and concluded that there was neither any illegality nor any irregularity in the process of evaluation of the bids or the final allotment of the contract. That view has come to be assailed by the Appellant on what is essentially a short point raised by Mr. Lalit in support of the appeal. The contention, as noticed earlier, is that while no malafide or extraneous consi....
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....nder which the tenders were invited, received, processed, evaluated and eventually accepted. It is common ground that the price bid offered by the tenderers was not itself determinative. What was equally important was the GEC values comprising X and Y factors which the tenderers had to disclose in their technical bids. That the values offered had to be converted into Indian Rupees and loaded to the price bid of the tenderers is also beyond question. That each one of the bidders had offered their GEC values comprising X and Y factors separately was also beyond doubt. There is no error even in the conversion of such values in terms of Indian Rupees nor is there any dispute about the effect of such loading of values to the price bid of all the tenderers because of which loading the bid offered by HR eventually emerged as L-1 with Appellant-Siemens sliding to L-4 position. That being so, the process of evaluation of bids could not be faulted as the same was strictly in accordance with the norms stipulated for such evaluation. Even Mr. Lalit fairly conceded that there was nothing that could be criticized in that process. What DMRC, according to him, should have done was to check whether....
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.... true that DMRC had conducted the simulation in regard to the GEC values offered by HR only but then in the absence of any condition in the tender notice requiring DMRC to conduct such verification even in regard to other GEC values, there was no need for it to undertake any such exercise. DMRC was, in our opinion, entitled to adopt such methods as were reasonable to satisfy itself above about the GEC values and their achievability offered by lowest tenderer in whose favour it was considering the award of the contract. The upshot of the above discussion, therefore, is that the process by which the bids were evaluated and eventually accepted was transparent, fair and reasonable and does not, therefore, call for any interference from this Court. 26. That brings us to the question whether the Government of India was justified in appointing a Committee to test the evaluation of bids and, if so, whether this Court ought to look into the Report of the Committee. There is more than one aspect that needs to be kept in view in this regard. The first and foremost is the fact that the Committee was appointed at a stage when the matter was already pending before the High Court. Considerable t....
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....s for itself. It no where states that the Committee has to look at anything beyond the process of evaluation of tenders received by DMRC. It does not even remotely suggest that the Government is concerned about the procedures that may be followed in the future or anxious to devise transparent methods by which such contract should be allotted. What is notable is that the Committee's hands were not stayed by the Government even when the High Court had pronounced upon the validity of the procedures adopted by the DMRC and the matter reached this Court. Continuance of the process of review even after the High Court had delivered its judgment amounted to subjecting the judicial pronouncement to an administrative review. There was no question of any such judicial determination or adjudication being subjected to any administrative review albeit in the name of a Committee constituted for the purpose. 28. Mr. Parasaran argued that the Committee's proceedings did not amount to sitting in appeal over the judgment of the High Court. The Committee may have not said anything adverse to view taken by the High Court but if the Committee were to find fault with the evaluation process which....
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....me. 30. Reference may also be made to the decision of this Court in N.D. Jayal v. Union of India (2004) 9 SCC 362 where this Court observed: This Court cannot sit in judgment over the cutting edge of scientific analysis relating to the safety of any project. Experts in science may themselves differ in their opinions while taking decisions on matters related to safety and allied aspects. The opposing viewpoints of the experts will also have to be given due consideration after full application of mind. When the Government or the authorities concerned after due consideration of all viewpoints and full application of mind took a decision, then it is not appropriate for the court to interfere. 31. Reliance by the Appellant upon the report of the Committee is misplaced also for the reason that the same was ex parte. It is common ground that HR was never associated with the process of evaluation or verification if any conducted by the Committee. In the absence of any such opportunity to the party whose GEC values were being test checked for their achievability, the report can hardly provide a sound basis for a writ court to upset a decision which the competent authority has taken afte....