2023 (5) TMI 1253 - SC - Indian Laws

Rejection of Tender - undertaking fresh tender process after disqualification of TATA Motors from the Tender - carrying on further exercise to ascertain whether EVEY also stood disqualified - HELD THAT - This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. It is not in dispute that the first and the foremost requirement of the Tender was the prescribed operating range of the single decker buses which would operate for around and average of 200 Kms in a single charge in actual conditions with 80% SoC without any interruption. Then materials on record would indicate that the TATA Motors in its bid deviated from this requirement and had informed BEST that it could carry the operating range in the standard test conditions which was not in accordance with the Tender conditions. The High Court has rightly observed in its impugned judgment that the bid of the TATA Motors failed to comply with the said clause. TATA Motors deviated from the material and the essential term of the Tender - the restriction on revision of documents under Clause 16 of Schedule I, which states, No addition/correction, submission of documents will be allowed after opening of technical bid, is only limited to the documents necessary to be included in the technical bid and would not be applicable to any such document which does not form a part of the technical bid. The High Court should have been a bit slow and circumspect in reversing the action of BEST permitting EVEY to submit a revised Annexure Y. The BEST committed no error or cannot be held guilty of favoritism, etc. in allowing EVEY to submit a revised Annexure Y as the earlier one was incorrect on account of a clerical error. This exercise itself was not sufficient to declare the entire bid offered by EVEY as unlawful or illegal. Thus, that part of the judgment and order passed by the High Court by which the decision of BEST to accept the tender of EVEY was set aside, is set aside - it was left to the discretion of BEST to undertake a fresh tender process - appeal dismissed.

Summary

Issues Involved:

1. Whether the disqualification of TATA Motors from the tender process was justified.
2. Whether the acceptance of EVEY's revised Annexure Y after the bid submission deadline was lawful.
3. Whether the High Court was justified in directing BEST to undertake a fresh tender process.

Summary:

Disqualification of TATA Motors:

The High Court upheld the disqualification of TATA Motors, noting that the tender required the buses to run 200 Kms in a single charge under "actual conditions" with 80% State of Charge (SoC). TATA Motors deviated from this requirement by referencing "standard test conditions as per AIS 040" instead of actual road conditions. The High Court stated, "The prima donna requirement of the tender document it appears is that the electric vehicle offered should run 200 Kms in a single charge for Single Decker air conditioning bus in actual conditions with 80% SoC without any interruption." Consequently, TATA Motors was rightly disqualified for deviating from the material requirements stipulated in the tender.

Acceptance of EVEY's Revised Annexure Y:

The High Court found that EVEY's revised Annexure Y, submitted after the technical bid opening, should not have been entertained as it violated Clause 16 of Schedule I of the Tender, which prohibits additions or corrections after the opening of technical bids. The High Court held, "The facts create doubt about, whether the decision was a fair one or was the decision reached fairly? The same does not appear to be so in view of the facts discussed above while accepting the bid of Respondent No.2 as responsive." However, the Supreme Court noted that Annexure Y was originally required to be submitted by the "Successful Bidder" after the evaluation of the bid and did not form part of the technical bid documents. The Court stated, "We are of the view that the restriction on revision of documents under Clause 16 of Schedule I...is only limited to the documents necessary to be included in the technical bid and would not be applicable to any such document which does not form a part of the technical bid."

Fresh Tender Process:

The High Court directed BEST to undertake a fresh tender process, stating that the technical evaluation did not depict fairness. The Supreme Court, however, held that the High Court should not have reversed the action of BEST in permitting EVEY to submit a revised Annexure Y and that the decision to allow EVEY to correct a clerical error did not render the entire bid unlawful. The Court emphasized the need for judicial restraint in commercial matters and noted, "To set at naught the entire tender process at the stage when the contract is well underway, would not be in public interest." The Supreme Court set aside the High Court's direction for a fresh tender process, allowing the appeals filed by EVEY and BEST.

Conclusion:

The Supreme Court dismissed the appeal filed by TATA Motors and allowed the appeals filed by EVEY and BEST, thereby upholding the tender awarded to EVEY. The Court emphasized the importance of judicial restraint in commercial matters and the need to avoid unnecessary interference that could result in financial loss to the public exchequer.