TaxTMI 
TaxTMI 
2022 (3) TMI 1589
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.... The writ petition before the High Court is dismissed. Detailed Judgment/Order to follow. 3. The Road Construction Department of Jharkhand invited tenders on 7.6.2019 for reconstruction of Nagaruntari - Dhurki - Ambakhoriya Road. Respondent No. 1 participated in the tender process and also submitted Bank Guarantee as bid security but such tender was cancelled on 20.8.2019 and fresh Notice Inviting Tender [For short, the 'NIT'] was invited for reconstruction of the said Nagaruntari - Dhurki - Ambakhoriya road. 4. The Tender Evaluation Committee held a meeting for technical evaluation of bids and 13 out of 15 bids were held to be non-responsive in terms of Standard Bidding Document [For short, the 'SBD'], including that of Respondent No. 1. The reason for arriving at such conclusion was that Respondent No. 1 submitted a letter along with the amended Bank Guarantee to the effect that such letter forms an integral part of Bank Guarantee. Such Bank Guarantee was not in the format as prescribed in the SBD. It was also found that the Bank Guarantee was valid from 8.7.2019 to 7.3.2020, which was prior to the date on which NIT was issued on 20.8.2019, apar....
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....shed. All the consequential action of the State Respondents taken in relation to the said tender including the award of the tender in favour of the private Respondent - M/s. N.G. Projects Limited is also quashed. The State Respondents are directed to issue fresh tender for the said work and to proceed accordingly. (iii) xx xx xx 9. The Division Bench of the High Court dismissed two appeals against two other tenders on 7.10.2021. However, in appeal against the work in question, the Division Bench of the High Court noticed the fact that the Appellant had already started the execution of the work and that part of the work had already completed but held that there was no valid distinction with the case of other two works against which Letters Patent Appeal was dismissed on 7.10.2021. The Division Bench of the High Court returned the following findings: 22. On a comprehensive comparison of the bid security document submitted by the writ Petitioner and the Appellant, we gather that the bid security document submitted by both the tenderers failed to adhere to the specifications professed by the employer. While the Appellant in the final paragraph of the bid security d....
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....al interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. xx xx xx 77. The duty of the court is to confine itself to the question of legality. Its concern should be: 1. Whether a decision-making authority exceeded its powers? 2. Committed an error of law, 3. committed a breach of the Rules of natural justice, 4. reached a decision which no reasonable tribunal would have reached or, 5. abused its powers. Therefore, it is not for the court to determine whether 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. Th....
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....ad to increased and un-budgeted expenditure. Based on these principles we will examine the facts of this case since they commend to us as the correct principles. 11. Learned Counsel for the Appellant also referred to a judgment reported as Central Coalfields Limited and Anr. v. SLL-SML (Joint Venture Consortium) and Ors. (2016) 8 SCC 622 wherein it was held that it was not for the Court to substitute its opinion in respect of acceptance of bank guarantee. It was held that when a particular format for a bank guarantee is prescribed, then the bidder is required to stick to that particular format alone with the caveat that the State reserves the right to deviate from the terms of the bid document within the acceptable parameters. This Court held as under: 32. The core issue in these appeals is not of judicial review of the administrative action of CCL in adhering to the terms of NIT and the GTC prescribed by it while dealing with bids furnished by participants in the bidding process. The core issue is whether CCL acted perversely enough in rejecting the bank guarantee of JVC on the ground that it was not in the prescribed format, thereby calling for judicial review by a....
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....employer as non-responsive". Surely, CCL ex facie intended this term to be mandatory, yet the High Court held that the bank guarantee in a format not prescribed by it ought to be accepted since that requirement was a non-essential term of the GTC. From the point of view of CCL, the GTC has been impermissibly rewritten by the High Court. 12. In Afcons Infrastructure Limited v. Nagpur Metro Rail Corporation Limited and Anr. (2016) 16 SCC 818, this Court held that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. It was held as under: 13. In other words, a mere disagreement with the decision-making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision-making process or the decision. xx xx xx 15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person t....
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....ionary power must be exercised with a great deal of restraint and caution. The Courts must realize their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer. 20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the state instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does....
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....nment in economic activity and its corresponding ability to give economic "largesse" was the bedrock of creating what is commonly called the "tender jurisdiction". The objective was to have greater transparency and the consequent right of an aggrieved party to invoke the jurisdiction of the High Court Under Article 226 of the Constitution of India beyond the issue of strict enforcement of contractual rights under the civil jurisdiction. However, the ground reality today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court Under Article 226 of the Constitution. The Court held as under: 2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by princi....
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.... Bench ought not to have interfered with it by giving its own interpretation and not giving proper credence to the word "both" appearing in Condition No. 31 of the N.I.T. For this reason, the Division Bench's conclusion that JK Roadways was wrongly declared to be ineligible, is set aside. 18. Insofar as Condition No. 27 of the N.I.T. prescribing work experience of at least 5 years of not less than the value of Rs. 2 crores is concerned, suffice it to say that the expert body, being the Tender Opening Committee, consisting of four members, clearly found that this eligibility condition had been satisfied by the Appellant before us. Without therefore going into the assessment of the documents that have been supplied to this Court, it is well settled that unless arbitrariness or mala fide on the part of the tendering authority is alleged, the expert evaluation of a particular tender, particularly when it comes to technical evaluation, is not to be second-guessed by a writ court. Thus, in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, this Court noted: 22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasona....
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.... in action. xx xx xx 20. This being the case, we are unable to fathom how the Division Bench, on its own appraisal, arrived at the conclusion that the Appellant held work experience of only 1 year, substituting the appraisal of the expert four-member Tender Opening Committee with its own. 17. Therefore, the position of law with regard to the interpretation of terms of the contract is that the question as to whether a term of the contract is essential or not is to be viewed from the perspective of the employer and by the employer. Applying the aforesaid position of law to the present case, it has been the contention of Respondent No. 1 that the format for bank guarantee was not followed strictly by the State and that the relaxation given was not uniform, in that Respondent No. 1 was singled out. The said contention has found favour with the Courts below. 18. In the present matter, Respondent No. 1 submitted its first bank guarantee on 8.7.2019 in relation to the first tender for the same project. However, this first tender was cancelled through a notice, as acknowledged by Respondent No. 1. This being the case, being fully aware of the fact that the first ten....
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....structure developments, public private partnerships and other public projects, involving huge investments; and changes required in the present scheme of the Act so that specific performance is granted as a general Rule and grant of compensation or damages for non-performance remains as an exception, the committee decided i. To change the approach, from damages being the Rule and specific performance being the exception, to specific performance being the rule, and damages being the alternate remedy. ii. To provide guidelines for reducing the discretion granted to Courts and tribunals while granting performance and injunctive reliefs. iii. To introduce provisions for rights of third parties (other than for Government contracts). iv. To consider addressing unconscionable contracts, unfair contracts, reciprocity in contracts etc., and implied terms. The committee observed that there is a need to classify diverse Public utility Contracts as a distinct class recognising the inherent public interest/importance to be addressed in the Act. Any public work must progress without interruption. This requires consideration whether a court's interv....
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.... by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a malafide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present-day Governments are expected to work. 24. The State has paid over a sum of Rs. 3,98,52,396/- to the Appellant till date, though the stand of the Appellant is that it had submitted bills of work of Rs. 8.5 crores. The termination of contract would cause additional financial burden on the State and also deprive the amenity of road for a longer period. Learned Counsel for the Appellant has stated that it shall not claim escalation of costs for the period when the writ petition before the High Court was pending and there was a stay granted. 25. In view thereof, we find....