2022 (3) TMI 1589 - SC - Indian Laws

Interference in contract awarded to the Appellant - power of judicial review - HELD THAT - The interference in contract awarded to the Appellant is wholly unwarranted and has caused loss to public interest. Construction of roads is an essential part of development of infrastructure in any State. The learned Single Bench and the Division Bench of the High Court were exercising power of judicial review to find out whether the decision of the State was manifestly arbitrary or unjust as laid down by this Court in TATA CELLULAR VERSUS UNION OF INDIA 1994 (7) TMI 307 - SUPREME COURT and to act as appellate authority over the decision of the State. In AFCONS INFRASTRUCTURE LTD. VERSUS NAGPUR METRO RAIL CORPORATION LTD. ANR. 2016 (9) TMI 1292 - SUPREME COURT , this Court held that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The satisfaction whether a bidder satisfies the tender condition is primarily upon the authority inviting the bids. Such authority is aware of expectations from the tenderers while evaluating the consequences of non-performance. In the tender in question, there were 15 bidders. Bids of 13 tenderers were found to be unresponsive i.e., not satisfying the tender conditions. The writ Petitioner was one of them. It is not the case of the writ Petitioner that action of the Technical Evaluation Committee was actuated by extraneous considerations or was malafide. Therefore, on the same set of facts, different conclusions can be arrived at in a bona-fide manner by the Technical Evaluation Committee. Since the view of the Technical Evaluation Committee was not to the liking of the writ Petitioner, such decision does not warrant for interference in a grant of contract to a successful bidder. The Writ Court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present-day economic activities of the State and this limitation should be kept in view. Courts should be even more reluctant in interfering with contracts involving technical issues as there is a requirement of the necessary expertise to adjudicate upon such issues. The action of the Respondent in setting aside the letter of acceptance granted to the Appellant suffers from manifest illegality and cannot be sustained. Consequently, the appeal is disposed of with a direction to the Respondent State to allow the Appellant to resume and complete the work by excluding the period spent in the stay of execution of the contract. Appeal disposed off.

Summary

Issues Involved:
1. Validity of the Bank Guarantee submitted by Respondent No. 1.
2. Evaluation of technical bids by the Tender Evaluation Committee.
3. Judicial review of administrative decisions in tender processes.
4. Impact of judicial interference on public infrastructure projects.

Issue-wise Detailed Analysis:

1. Validity of the Bank Guarantee Submitted by Respondent No. 1:
The primary issue revolved around the Bank Guarantee submitted by Respondent No. 1. The Tender Evaluation Committee found the Bank Guarantee non-compliant with the prescribed format in the Standard Bidding Document (SBD). It was noted that the Bank Guarantee was valid from 8.7.2019 to 7.3.2020, which was prior to the Notice Inviting Tender (NIT) issued on 20.8.2019. Additionally, discrepancies were observed in the amounts mentioned numerically and in words. The High Court's interference in the contract awarded to the Appellant was deemed unwarranted as it caused a loss to public interest. The Supreme Court emphasized that the format for a Bank Guarantee is an essential condition of the contract, and any substantial variation, such as the one submitted by Respondent No. 1, creates an onerous burden on the tendering authority to verify the validity of the amendment.

2. Evaluation of Technical Bids by the Tender Evaluation Committee:
The Tender Evaluation Committee's decision to reject Respondent No. 1's bid was based on several factors, including the non-compliance of the Bank Guarantee with the SBD format, negative bid capacity, and improperly notarized affidavit and undertaking. The technical bid of the Appellant was declared substantially responsive, leading to the award of the work contract. The Supreme Court held that the satisfaction of whether a bidder meets the tender conditions is primarily upon the authority inviting the bids. The Court found no evidence of extraneous considerations or mala fide actions by the Technical Evaluation Committee, thus concluding that the decision did not warrant interference.

3. Judicial Review of Administrative Decisions in Tender Processes:
The Supreme Court reiterated that judicial review in tender matters is limited to preventing arbitrariness, irrationality, unreasonableness, bias, and mala fides. The Court emphasized that it should not act as an appellate authority over the decisions of the State or the Tender Evaluation Committee. The decision-making process should be examined for compliance with the tender conditions, and courts should refrain from substituting their opinion for that of the tendering authority. The Court cited several precedents, including Tata Cellular v. Union of India, to highlight the inherent limitations of judicial review in contractual matters.

4. Impact of Judicial Interference on Public Infrastructure Projects:
The Supreme Court underscored the importance of minimizing judicial interference in public infrastructure projects. The Court noted that such interference leads to additional costs for the State and delays in project completion, ultimately causing a loss to public interest. The Specific Relief Act, 1963, as amended, emphasizes that infrastructure projects should not be stayed to avoid impeding progress. The Court highlighted the need for courts to exercise restraint and caution in granting interim orders that could derail public service contracts. The Court directed the Respondent State to allow the Appellant to resume and complete the work, excluding the period spent under the stay of execution.

Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's order and directing the Respondent State to permit the Appellant to complete the project without claiming escalation for the period the matter was pending before the Court. The judgment emphasized the principles of judicial restraint in administrative actions, the importance of adhering to tender conditions, and the need to avoid unnecessary interference in public infrastructure projects.