2014 (2) TMI 1427 - SC - Indian Laws

Denial to interfere with the award of a contract for the supply of 486 Standard Gauge Cars Electrical Multiple Units meant for use in Phase-III of the Mass Rapid Transit System (MRTS) for Delhi and its extension corridors - process of evaluation of the bids received from eligible bidders culminating in the award of a contract in favour of Respondent No. 2-Hyundai Rotem Company. Appellant sought a restraint order against the award of the contract before the High Court who in turn accepted an undertaking given by the counsel for the DMRC and HR that they will not act in pursuance of the letter of award pending disposal of the writ petition. HELD THAT - The High Court has in the case at hand undertaken that exercise and concluded that there was neither any illegality nor any irregularity in the process of evaluation of the bids or the final allotment of the contract. That view has come to be assailed by the Appellant on what is essentially a short point raised by Mr. Lalit in support of the appeal. The contention is that while no malafide or extraneous considerations have prevailed to vitiate the decision of the DMRC allotting the contract in favour of HR the process of evaluation of the bids offered by the eligible bidders should have in the facts and circumstances of the case included validation of the GEC values offered by HR to determine whether they were achievable having regard to the ground realities and the laws of physics relevant to the consumption of energy. It is common ground that the price bid offered by the tenderers was not itself determinative. What was equally important was the GEC values comprising X and Y factors which the tenderers had to disclose in their technical bids. That the values offered had to be converted into Indian Rupees and loaded to the price bid of the tenderers is also beyond question. That each one of the bidders had offered their GEC values comprising X and Y factors separately was also beyond doubt. There is no error even in the conversion of such values in terms of Indian Rupees nor is there any dispute about the effect of such loading of values to the price bid of all the tenderers because of which loading the bid offered by HR eventually emerged as L-1 with Appellant-Siemens sliding to L-4 position - there are no real basis for the contention that the DMRC was supposed to go any further than it did in protecting its interest. In the absence of any specific stipulation or requirement for validation of the GEC values by the DMRC and its experts or by any outside agency such a requirement could not be implied into the tender process. Inasmuch as the DMRC found the bid offered by HR to be acceptable keeping in view the GEC values offered by it the former had committed no illegality in the evaluation of the bids or in making its choice of the contractor. There are no manner of doubt that the terms of reference give a clear indication that the process initiated by the Government was a parallel process of the adjudication of the very same issue as fell for consideration before the High Court and at a later stage before this Court - Continuance of the process of review even after the High Court had delivered its judgment amounted to subjecting the judicial pronouncement to an administrative review. There was no question of any such judicial determination or adjudication being subjected to any administrative review albeit in the name of a Committee constituted for the purpose. In the absence of any such opportunity to the party whose GEC values were being test checked for their achievability the report can hardly provide a sound basis for a writ court to upset a decision which the competent authority has taken after due deliberations by not one but four different Committees including experts in the field - the preparation and submission of a report that does not even take the view point of the party affected by it into consideration can hardly provide to this Court a good reason to scuttle the entire process at this stage when HR the successful bidder has already taken substantial steps in the direction of executing the works allotted to it. This appeal fails and is hereby dismissed with costs of Rs. 5, 00, 000/- to be deposited within six weeks from today with the Supreme Court Advocates-on-Record Welfare Fund.

Summary

Issues Involved:
1. Evaluation of bids and GEC values
2. Transparency and fairness of the tender process
3. Legality and regularity of the decision-making process
4. Role of Government-appointed Committee and its implications
5. Judicial review of administrative decisions

Detailed Analysis:

1. Evaluation of Bids and GEC Values:
The core issue revolved around the evaluation of bids for the supply of 486 Standard Gauge Cars Electrical Multiple Units for Phase-III of the Delhi Mass Rapid Transit System (MRTS). The bids were evaluated based on both price and General Energy Consumption (GEC) values, which included 'X' factor (electricity consumption without HVAC) and 'Y' factor (electricity consumption with HVAC). The GEC values were converted into Indian Rupees and added to the price bids. The Appellant, initially L-1 in price bid, was relegated to L-4 after GEC values were considered, while Respondent No. 2 (HR) moved from L-3 to L-1 due to its lower GEC values. The Appellant challenged the achievability of HR's GEC values, alleging they were untenable and unsustainable.

2. Transparency and Fairness of the Tender Process:
The High Court found the tender process transparent, fair, and free from any illegality, irregularity, or perversity. The bids were evaluated by multiple committees, including the Evaluation Committee, Appraisal Committee, and Tender Committee. The DMRC also constituted a sub-committee to address the representations from the Appellant and other bidders regarding HR's GEC values. The sub-committee, after thorough examination, found the explanations satisfactory and agreed with the Tender Committee's recommendations, leading to the issuance of a Letter of Acceptance to HR.

3. Legality and Regularity of the Decision-Making Process:
The Supreme Court reiterated that judicial review in tender cases is limited to examining the decision-making process and not the decision itself. The Court emphasized that the process must be fair, reasonable, and transparent. The Court found no illegality in the DMRC's process of evaluating bids and awarding the contract to HR. The evaluation was conducted as per the tender norms, and the DMRC had adequately protected itself by stipulating penalties for failure to meet the committed GEC values.

4. Role of Government-Appointed Committee and Its Implications:
The Government of India appointed a Committee to examine the tender process, which was viewed as interference with the judicial process since the matter was sub judice. The Supreme Court criticized the Government's parallel process, stating that the Committee's proceedings amounted to an administrative review of a judicial decision. The Court noted that the Committee's report, submitted ex parte and without HR's participation, could not provide a sound basis to overturn the DMRC's decision. The Government had not accepted the Committee's report, and it was placed before the Court in a sealed cover.

5. Judicial Review of Administrative Decisions:
The Supreme Court underscored the principles governing judicial review, emphasizing restraint in administrative actions. The Court does not sit as a court of appeal but reviews the manner in which the decision was made, ensuring it is free from arbitrariness, bias, or mala fides. The Court found that the DMRC's decision-making process was transparent, fair, and reasonable, with no perceptible injury to public interest. The Court dismissed the appeal, affirming the High Court's judgment and imposing costs on the Appellant.

Conclusion:
The Supreme Court dismissed the appeal, upholding the High Court's judgment that the DMRC's tender process was transparent, fair, and free from illegality. The Court emphasized the limited scope of judicial review in tender cases, focusing on the decision-making process rather than the decision itself. The Government-appointed Committee's report was deemed extraneous, and the DMRC's evaluation process was found to be in accordance with the tender norms. The appeal was dismissed with costs, reinforcing the principles of judicial restraint in administrative decisions.