2019 (4) TMI 1838 - SC - Indian Laws

E-public tender - Blacklisting - setting up call centres for receiving recording and replying to information enquiries and Signature Not Verified complaints from LPG customers of IOC/HPC/BPC - SCN alleged that on questions being raised about the correctness of information furnished by the appellant in the bid documents regarding running of call centres at different locations an inquiry was made through officers and despite further information being sought the same was not forthcoming. HELD THAT - It is no doubt true that clause 20 does provide for four eventualities as submitted by learned counsel for respondent No.3. The present case is not one where on the date of submission of the tender the appellant had been banned blacklisted or put on holiday list. The question before us thus would be the effect of an action for blacklisting and holiday listing being initiated. The declaration to be given by the bidder is specified in clause 20(ii) which deals with the first three aspects. The format enclosed with the tender documents also refers only to these three eventualities. It is not a case where no specific format is provided where possibly it could have been contended that the disclosure has to be in respect of all the four aspects. The format having been provided if initiation of blacklisting was to be specified then that ought to have been included in the format. It cannot be said that the undertaking by the appellant made it the bounden duty of the appellant to disclose the aspect of a show cause notice for blacklisting. There are serious disputes relating to the allegations made by respondent No.3 which are rebutted by the appellant. Opportunity had to be afforded to cross-examine the deponents who had filed affidavits. This would really not be possible in writ proceedings and could have only been determined in suit proceedings. There cannot always be a shortcut through a process of writ proceedings under Article 226 of the Constitution of India when such disputes exist - the aforesaid aspects especially in the context of endeavours of courts to give their own interpretation to contracts more specifically tender terms at the behest of a third party competing for the tender rather than what is propounded by the party framing the tender. The object cannot be that in every contract where some parties would lose out they should get the opportunity to somehow pick holes to disqualify the successful parties on grounds on which even the party floating the tender finds no merit. The impugned order is set aside - Appeal allowed.

Summary

Issues Involved:
1. Blacklisting
2. Business Continuity Certificate
3. Interpretation of Contracts and Tender Terms

Issue-wise Detailed Analysis:

Blacklisting:
The appellant participated in an e-public tender floated by Hindustan Petroleum Corporation Limited (HPCL) for setting up call centers. Clause 20 of the tender required bidders to declare if they had been banned, blacklisted, or put on a holiday list. The appellant was issued a show cause notice on 5.12.2017 for blacklisting due to alleged false information in another tender. The appellant submitted the bid on 19.12.2017, declaring no blacklisting. The appellant was later blacklisted on 22.2.2018, after the tender was awarded. The High Court ruled that non-disclosure of the show cause notice violated the undertaking. However, the Supreme Court found that the show cause notice did not equate to blacklisting initiation and that the format provided did not require disclosure of such notices. The Court emphasized that blacklisting has severe consequences and should not be presumed from a mere show cause notice. The Court concluded that the appellant was not disqualified under clause 20 as blacklisting had not been initiated by the due date.

Business Continuity Certificate:
The High Court doubted the validity of the Business Continuity Certificate submitted by the appellant, issued by Elite Certifications Pvt. Ltd. The Court noted that the High Court should not have embarked on an inquiry into the certificate's validity in writ proceedings. Serious disputes require cross-examination, which is not feasible in writ jurisdiction. The Supreme Court highlighted that respondent No.1 (HPCL) did not doubt the certificate's validity and that such matters should be left to the tendering authority's discretion. The Court ruled that the High Court's direction to inquire into the certificate was beyond its domain.

Interpretation of Contracts and Tender Terms:
The Supreme Court emphasized that the author of a tender document is best positioned to interpret its terms. The Court should not interfere unless the decision-making process is arbitrary or irrational. The Court cited precedents, including Afcons Infrastructure Limited v. Nagpur Metro Rail Corporation Limited, stating that the tendering authority's interpretation should prevail unless there is clear evidence of mala fide or perversity. The Court also referred to Nabha Power Limited v. Punjab State Power Corporation Limited, underscoring that contracts should be read as they are, without implying terms unless strictly necessary.

Conclusion:
The Supreme Court set aside the High Court's order and dismissed the writ petition filed by respondent No.3, allowing the appeal and upholding the appellant's contract. The Court reiterated the need for judicial restraint in interfering with tender processes and emphasized the importance of adhering to the tendering authority's interpretation of its documents.