2020 (3) TMI 1465 - SC - Indian Laws

Maintainability of the writ considering the nature of tender processes - Scope of judicial review - Auction process set aside - resultant award of tender also been quashed - BCCL vehemently contended that the present case was not one where judicial review was possible - application of standard to the facts of the present case to determine whether there were lapses on part of BCCL and C1-India. Maintainability of Writ Petition - HELD THAT - The scope of judicial review in tenders has been explored in-depth in a catena of cases. It is settled that constitutional courts are concerned only with lawfulness of a decision, and not its soundness. Phrased differently, Courts ought not to sit in appeal over decisions of executive authorities or instrumentalities. Plausible decisions need not be overturned, and latitude ought to be granted to the State in exercise of executive power so that the constitutional separation of powers is not encroached upon - merely because the accusations made are against the State or its instrumentalities doesn't mean that an aggrieved person can bypass established civil adjudicatory processes and directly seek writ relief. In determining whether to exercise their discretion, writ courts ought not only confine themselves to the identity of the opposite party but also to the nature of the dispute and of the relief prayed for. Thus, although every wrong has a remedy, depending upon the nature of the wrong there would be different forums for redress. In cases where a constitutional right is infringed, writs would ordinarily be the appropriate remedy. In tender matters, such can be either when a party seeks to hold the State to its duty of treating all persons equally or prohibit it from acting arbitrarily; or when executive actions or legislative instruments are challenged for being in contravention to the freedom of carrying on trade and commerce. However, writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty. Hence, the persons seeking writ relief must also actively satisfy the Court that the right it is seeking is one in public law, and not merely contractual. In doing so, a balance is maintained between the need for commercial freedom and the very real possibility of collusion, illegality and squandering of public resources. Regular recourse was made over the course of proceedings by learned senior Counsel for the first Respondent on terms of the NIT. Findings in the impugned order too were based upon disputed interpretation of such contractual terms. Thus, it is clear that there was neither any public law right of the first Respondent which was affected, nor was there any public interest sought to be furthered. Infirmities in the auction process - HELD THAT - In the present facts, it is clear that BCCL and C1-India have laid recourse to Clauses of the NIT, whether it be to justify condonation of delay of Respondent No. 6 in submitting performance bank guarantees or their decision to resume auction on grounds of technical failure. BCCL having authored these documents, is better placed to appreciate their requirements and interpret them. The High Court ought to have deferred to this understanding, unless it was patently perverse or mala fide. Given how BCCL's interpretation of these clauses was plausible and not absurd, solely differences in opinion of contractual interpretation ought not to have been grounds for the High Court to come to a finding that the Appellant committed illegality. The appeal filed by Bharat Coking Coal Ltd., as well as connected appeals filed by M/s. R.K. Transport and M/s. C1 India Pvt. Ltd., are allowed. Resultantly, the appeal filed by AMR-Dev Prabha is dismissed.

Summary

Issues Involved:
1. Maintainability of the writ petition in tender matters.
2. Alleged procedural lapses and arbitrariness in the auction process conducted by BCCL and C1-India.

Issue-wise Detailed Analysis:

(I) Maintainability of Writ Petition

The Supreme Court examined the scope of judicial review in tender matters, emphasizing that constitutional courts should focus on the lawfulness of a decision rather than its soundness. The court referenced several cases, including *Central Coalfields Ltd. v. SLLSML* and *Siemens Aktiengeselischaft & Siemens Ltd. v. DMRC Ltd.*, to establish that judicial review is limited to checking for illegality, irrationality, and procedural impropriety. The court noted that while judicial review is intended to prevent arbitrariness and irrationality, it should not be used to protect private interests at the cost of public interest. The court cited *Jagdish Mandal v. State of Orissa* to emphasize that judicial review should be exercised with caution, especially in commercial transactions. The court concluded that the interest of Respondent No. 1 was purely private and monetary, as evidenced by their shifting priorities during the litigation. The court also noted that being declared the lowest bidder (L-1) does not bestow a public law entitlement to the award of the contract, referencing *Maa Binda Express Carrier v. North-East Frontier Railway*. The court found that Respondent No. 1 failed to demonstrate any public law right or public interest that was affected, thereby questioning the maintainability of the writ petition.

(II) Infirmities in the Auction Process

On the merits, the Supreme Court disagreed with the High Court's conclusion that there were substantial procedural lapses amounting to arbitrariness by BCCL and C1-India. The court referred to a detailed inquiry report by the Central Vigilance Commission (CVC), which found no evidence of mala fide actions by BCCL and noted that C1-India's conduct was unsatisfactory but not fraudulent. The court highlighted that technical problems, such as limited bandwidth, were established by multiple independent authorities, including the second IEM, CERT-In, TCL, and the CVC. The court also addressed the issue of condonation of delay in producing guarantees by Respondent No. 6, stating that public authorities are permitted to grant relaxations for bona fide reasons. The court cited *Shobikaa Impex (P) Ltd. v. Central Medical Services Society* to support this view. The court found no merit in the argument regarding the quantum of extension of time, as the same message was communicated uniformly to all bidders. The court also dismissed the justification for delay in filing the writ petition by Respondent No. 1, noting that the cause of action claimed was not sufficient to challenge the entire auction process.

(III) Deference to Authority's Interpretation

The Supreme Court emphasized that judicial interpretation of contracts in commercial matters should defer to the understanding of the authority that authored the documents, unless the interpretation is patently perverse or mala fide. The court noted that BCCL and C1-India had recourse to clauses of the NIT to justify their actions, and their interpretation was plausible and not absurd. The court cited *Afcons Infrastructure Ltd v. Nagpur Metro Rail Corporation Ltd.* to support this view and concluded that the High Court should have deferred to BCCL's interpretation.

Conclusion

The Supreme Court allowed the appeals filed by Bharat Coking Coal Ltd., M/s. R.K. Transport, and M/s. C1 India Pvt. Ltd., and dismissed the appeal filed by AMR-Dev Prabha. The Division Bench judgment of the High Court dated 12.04.2018 was set aside, and the writ petition filed by AMR-Dev Prabha was dismissed. No order as to costs.