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2018 (5) TMI 2128 - HC - Indian LawsScope of Judicial Review - Withdrawal of a Request of Proposal issued by the Union Ministry of Defence (MoD), for procurement of forty-five (45) Bird Detection and Monitoring Radar Systems - Accrual of enforceable rights - HELD THAT - A long line of decisions of this Court settles the scope of judicial review in matters relating to award of contracts by the State and its instrumentalities. The Supreme Court, in TATA CELLULAR VERSUS UNION OF INDIA 1994 (7) TMI 307 - SUPREME COURT reviewed the law on award of public contracts and held that T he Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free arbitrariness not affected by bias or actuated by mala fides. Again, in Master Marine Services Pvt. Ltd. v. Metcalfe and Hodgkinson Pvt. Ltd., 2005 (4) TMI 579 - SUPREME COURT , 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. On reading of the above judgments, it is clear that the courts can review a tender process or tender stipulation, on grounds of proven procedural irregularity. In judicial review, a court under Article 226 of the Constitution reviews the decision-making process, its legality and procedural regularity and not the merits of the decision of the executive agency. The principal decision maker is the administrative or public agency - the uniform judicial view has been that public law review of tender matters ought to be exercised, judiciously. Such judicial review must be restrained to ensure that the choice or decision is made lawfully and not to exercise oversight over whether choice or decision is sound . The state cannot be compelled to enter into a contract with any entity and ultimately even in tender related cases, commercial considerations ought to be paramount. In the present case, the Petitioner petition premised on its contention that it is the lowest bidder and therefore the Union MoD, should be directed to enter into a contract with it. This court is of the view however, that it is a settled principle of law that no vested right accrues on the lowest bidder and the government has the right to withdraw the bid with valid reasons - the MoD contentions that the Petitioner bid, if allowed to stand would have resulted in unfairness to other Indian bidders, because all of them tendered in Indian currency, whereas the Petitioner tendered in a manner that allowed it to hedge in foreign currency. This, according to MoD resulted in an unequal playing field, which compelled it to cancel and withdraw the bid. The decision to award a public contract is not based merely on factors such asfulfilment of technical qualifications and financial viability of the offer of a given bidder but much more. The vital public interest is a necessary condition, which invariably informs every decision of the executive authority or agency that is to award the contract - this Court is satisfied that the withdrawal of the RFP dated 30.04.2012 is not arbitrary and fresh RFP issued dated 31.08.2016 does not call for any interference - petition dismissed.
Issues Involved:
1. Legality of withdrawal of the Request for Proposal (RFP) dated 30.04.2012. 2. Alleged violation of Article 14 of the Constitution of India. 3. Compliance with Defence Procurement Procedures (DPP) 2011. 4. Allegations of mala fides and bias in issuing a fresh Request for Information (RFI). 5. Evaluation of bids in multiple currencies. 6. Scope of judicial review in tender matters. Issue-wise Detailed Analysis: 1. Legality of Withdrawal of the RFP dated 30.04.2012: The petitioner challenged the withdrawal of the RFP issued by the Ministry of Defence (MoD) for procurement of Bird Detection and Monitoring Radar Systems (BDMRS). The petitioner argued that the withdrawal was non-transparent, arbitrary, and without explanation, violating Article 14 of the Constitution and DPP-2011. The MoD contended that the withdrawal was due to non-compliance of bids with the RFP terms and the need to maintain a level playing field among vendors. The court found the withdrawal justified on the grounds that the petitioner’s bid, if accepted, would have resulted in unfairness to other Indian bidders due to currency hedging advantages. 2. Alleged Violation of Article 14 of the Constitution of India: The petitioner argued that the withdrawal of the RFP was arbitrary and violated the right to equality and fair treatment under Article 14. The court held that the government has the discretion to withdraw an RFP with valid reasons and that no vested right accrues to the lowest bidder. The court found that the MoD’s decision was based on legitimate grounds, including the need to ensure fairness among bidders. 3. Compliance with Defence Procurement Procedures (DPP) 2011: The petitioner contended that the MoD violated DPP-2011 by delaying the procurement process and not awarding the contract to the lowest bidder. The court noted that the DPP-2011 timeline is essential but deviations are permissible for recorded reasons. The court found that the MoD’s actions were in compliance with the provisions of DPP-2011, as the petitioner’s bid did not meet the commercial requirements specified in the RFP. 4. Allegations of Mala Fides and Bias in Issuing a Fresh RFI: The petitioner alleged that the fresh RFI was issued to favor a rival bidder, OIS-AT, and that the MoD acted with bias. The court found no evidence of mala fides or bias. It noted that the issuance of a new RFI was a legitimate exercise of the MoD’s discretion to procure the best available technology and that the petitioner was not at a disadvantage as it participated in the new RFI process. 5. Evaluation of Bids in Multiple Currencies: The petitioner argued that its bid, submitted in multiple currencies, was compliant with DPP-2011 and MoF Policy, 2006. The MoD contended that allowing bids in multiple currencies would give undue advantages to certain bidders and vitiate the level playing field. The court upheld the MoD’s decision, stating that the requirement for bids in Indian Rupees was to ensure fairness among all bidders and that the petitioner’s bid in multiple currencies was rightly rejected. 6. Scope of Judicial Review in Tender Matters: The court reiterated the limited scope of judicial review in tender matters, emphasizing that it does not sit as an appellate authority to review the merits of administrative decisions. The court’s role is to ensure that the decision-making process is legal, fair, and free from arbitrariness or bias. The court found that the MoD’s decision to withdraw the RFP and issue a fresh RFI was based on valid reasons and did not warrant judicial interference. Conclusion: The court dismissed the writ petition, holding that the withdrawal of the RFP dated 30.04.2012 was justified and not arbitrary. The court found that the MoD’s actions were in compliance with DPP-2011 and that the petitioner’s rights were not violated. The court emphasized the limited scope of judicial review in tender matters and upheld the MoD’s discretion to withdraw the RFP and issue a fresh RFI.
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