2008 (11) TMI 606 - SC - Indian Laws

Whether the process adopted or decision made by the authority is mala fide or intended to favour someone? Whether public interest is affected? Held that - Appeal dismissed. On examining the facts and circumstances of the present case, we are of the view that none of the criteria has been satisfied justifying Court s interference in the grant of contract in favour of the appellants. A contract is a commercial transaction and evaluating tenders and awarding contracts are essentially commercial functions. In such cases principles of equity and natural justice stay at a distance. If the decision relating to award of contracts is bonafide and is in public interest, Courts will not exercise the power of judicial review and interfere even if it is accepted for the sake of argument that there is a procedural lacuna. In the instant case, as has been rightly contended by the learned Addl. Solicitor General appearing for Union of India, the contract is in respect of sensitive Army equipments which are urgently needed. It cannot be held that the process adopted or decision made is so arbitrary or irrational that no responsible authority acting reasonably or in accordance with the relevant law could not have taken such a decision. The inevitable conclusion is that the appeal is devoid of any merit and deserves dismissal, which we order

Summary

Issues Involved:
1. Whether the appellants were entitled to be awarded the tender as the lowest bidder.
2. Whether the Evaluation Committee followed the correct procedure in determining the lowest bidder (L1).
3. The scope of judicial review in the matter of tenders and award of contracts.

Issue-Wise Detailed Analysis:

1. Entitlement of the Appellants to be Awarded the Tender as the Lowest Bidder:
The appellants argued that they were the lowest bidder based on the price read out during the opening of commercial bids. They contended that respondent No. 2 failed to announce the L1 bidder and added an imaginary price to their bid, which was unwarranted and artificially increased their bid. However, the respondents countered that the appellants' price did not meet the complete requirements of the RFP due to certain shortfalls and that the Evaluation Committee did not violate any norms in determining M/s. Selex as the L1 bidder. The High Court noted that the appellants had quoted the price for a single unit without specifying the required quantity, leading to discrepancies in the final evaluation. The High Court concluded that respondent No. 2 adhered to the original bid documents and did not act arbitrarily or discriminatorily.

2. Procedure Followed by the Evaluation Committee:
The Evaluation Committee conducted a comprehensive evaluation of the bids, including seeking clarifications from the bidders. The appellants provided a composite price schedule after the opening of commercial bids, which was at variance with their original Bill of Materials. The Committee did not consider the composite price schedule as it would have created doubts about transparency and fairness. The High Court upheld the Committee's method of multiplying the unit price by the required quantity to arrive at the total price for each bidder. The appellants' claim that their software license covered 100 units was not indicated in the original bid documents, and the Committee's adherence to the original bid documents was deemed appropriate.

3. Scope of Judicial Review:
The Supreme Court emphasized the limited scope of judicial review in matters of tenders and contracts. The Court referred to several precedents, including Tata Cellular, Sterling Computers Ltd., and Air India Ltd., which highlight that judicial review is intended to prevent arbitrariness or favouritism and not to substitute the Court's decision for that of the administrative authorities. The Court noted that the decision-making process must be reasonable, rational, and free from arbitrariness, bias, or mala fides. The High Court's detailed examination of the factual position and adherence to the principles of judicial review was upheld. The Supreme Court concluded that the process adopted by respondent No. 2 was neither arbitrary nor irrational, and no malafides were alleged or shown.

Conclusion:
The Supreme Court dismissed the appeal, holding that the Evaluation Committee followed the correct procedure, and the appellants were not entitled to be awarded the tender as the lowest bidder. The Court reiterated the limited scope of judicial review in tender matters, emphasizing that public interest and transparency must be maintained. The Court found no grounds for interference in the decision to award the contract to M/s. Selex and upheld the High Court's judgment.