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TMI Blog1993 (3) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... nt level of ten aircraft moments, per hour to forty aircraft moments per hour and other connected facilities. On clearance of the scheme in June, 1990 by the Cabinet Committee of Economic Affairs, detailed tender documents were prepared and eventually the first respondent by a public notice dated January 24, 1991 invited global tenders for the installation of the aforesaid equipment and for providing services required for modernisation of air traffic control system at Bombay and Delhi Airports on turn key basis. According to the notice, the officers were required to give their bids in four parts, namely, Part I: Pre-qualification bid Part Ii : Technical bid. Part III: Commercial bid. Part IV: Financial bid. (5) The first petitioner, Thomson-CSF, and Sofreavia S.A., Consortium of French companies (for short 'Consortium') and the third respondent Raytheon Incorporated, an American Company, submitted their tenders on June 25,1991. Alenia, yet another foreign enterprise also submitted its bid. (6) On August 21, 1990, the Board of first respondent appointed a Tender Committee to examine the various bids. In this task it was assisted by a Technical Committee. The pre-qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (10) On the application of Sofreavia S.A. it was impleaded as a party-respondent to the writ petition. Mr.Sanghi. learned counsel for Sofreavia S.A. made an oral prayer before us that Sofreavia may be transposed as a co-petitioner in the writ petition. This was not objected to by the parties and accordingly Sofreavia S.A. was allowed to be transposed as the third petitioner, the first petitioner, as already noticed, being Thomson C.F, and second petitioner being an employee of the first petitioner. (11) MR.DESAI and Mr.Sanghi, learned counsel, appearing for the petitioners submitted that the third respondent was wrongly short-listed as it had taken exception to the five clauses relating to conditions of eligibility, namely, performance guarantee , penalty/liquidated damages, force majeure, warranty/guarantee and arbitration. They also contended that the consortium was not treated fairly in as much as terms of the tender document relating to project time schedule, training and central workshop have been allowed to be deviated by third respondent while no such opportunity was given to the petitioners. Besides it was contended that (here has been an error in calculation of adjuste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al irrespective of the fact that he is a foreigner or a citizen or an alien or it is an artificial person. (15) Like a citizen, a foreigner is also entitled to avail the personal rights which are enshrined in Article 14 of the Constitution. In Basheshar Nath Vs. Commissioner of Income Tax, Delhi and Rajasthan and another 1959 Sc 149, the Supreme. Court laid down that the benefit of Article 14 is not limited to citizens alone but is also available to any person within the territory of India. (16) The first respondent did not dispute the applicability of Article 14 to any person, weedier a foreigner or a citizen, within the territory of India, but its contention was that under Article 19(1)(g), the first and third petitioners have no fundamental right to carry on any trade, business or profession in this country and the plea of the petitioners under Article 14 of the constitution cannot be considered by itself and they will have to fall back upon the fundamental right guaranteed by Article 19(l)(g) of the Constitution. For this submission Mr.Venugopal sought sustenance from the decision of the Supreme Court in Indo China Steam Navigation Co. Ltd. Vs . Jasjit Singh, Additional C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a that Art, 14 is contravened also must take in Article 19 if it has to succeed. The plain truth is that certain rights guaranteed to the citizens of India under Article 19 are not available to foreigners and pleas which may successfully be raised by the citizens on the strength of the said rights guaranteed under Article 19 would, Therefore, not be available to foreigners. (18) It is significant to note that in the present case Article 14 is being invoked by the petitioners without falling back upon Article 19(1)(g). (19) In order to appreciate whether Article 14 as pleaded in the instant case is available to the first and third petitioners to challenge the decision of the Naa, it would be necessary to refer to the various nuances of Article 14 of the Constitution . (20) Article 14 prohibits hostile discrimination of any person by the State. It is well settled that Article 14 ensures that the State metes out just, fair and reasonable treatment with in the territory of India to every individual. It in habits the State from acting arbitrarily since arbitrariness is anti-thesis of equality and comes into play whenever the exercise of power by the State or its instrumentalit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irness and equality. The State need not enter into any contract with any one but if it does so, it must do so fairly without discrimination and without unfair procedure. (24) Again in Ramana Dayaram Shetty vs . The International Airport Authority of India and others, (1979)IILLJ217SC , the Court drawing support from the proposition laid down in M/s. Erusian Equipment and Chemicals Ltd. (Supra), observed as under:- THIS proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, Therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licenses or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm which is riot arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largess including award of jobs, contracts quotas, licenses, etc. must be confined and structured by rati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in submitting this document is the second question that arises for consideration. Sri Parasaran, for the appellant would have us answer this question in the affirmative on the principle enunciated by Frankfurther.J. and approved by this court in Ramana Dayaram Shetty Vs . The International Airport authority of India. (1979)IILLJ217SC . Bhagwati, J. (as bids Lordship then was) formulated in the following words a principle which has since been applied by this court in a number of cases(at pp 1635 and 165.0-51 of AIR). It is a well settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on paid of invalidation ol' an Act in violation of them. This rule was enunciated by Mr. Justice Frankfurter in Vitarelli Vs. Seaton (1959) 359 Us 535: 3 Law Ed 1012, where the learned Judge said: An executive agency must be rigorously held to the standards by which it professes its action to be judged. Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s adopted by the authorities which can be held to be State within the meaning of Article 12 of the Constitution, while awarding contracts in respect of properties belonging to the State can be judged and tested in the light of Article 14 of the Constitution, is settled by the judgments of this court in the cases of Roman Dayaram Shetty V. The International Airport Authority of India, (1979)IILLJ217SC ; M/s. KasturiLal Lakshmi Reddy vs. The State of Jammu and Kashmir, Air 1980 Sc 1192;Fertilizer Corporation Kamagar Union (Regd.) Sindri, Vs. Union of India, Air 1981 Sc 344; Ram and Shyam Company vs. State of Haryana, AIR1985SC1147 ; Haji T.M.Hasan Rawther vs. Kerala Financial Corporation, [1988]1SCR1079 , Mahabir Auto Stores vs. Indian Oil Corporation, [1990]1SCR818 and Kumari Shrilekha Vidyarthi vs. State of U.P. AIR1991SC537 . It has been said by this court: It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The Government, Therefore, cannot for example give a contract or sell or lease out its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce rule of law. Its ennobling influence and moral grandeur has enriched our polity. (33) In fact this article is a kaleidoscope of rights and restrictions in which each of them is a reflection of the equality clause. (34) Since the aforesaid rights and duties are all comprehended in Article 14 of the Constitution there is no need to fall back upon Article 19(l)(g) as it will not be necessary in case it is established that the action of the first respondent suffers from the vice of arbitrariness or unfairness, especially when the parties were invited by the respondent on the clear understanding that the tenders would be considered on their merits, thus raising a legitimate expectation on this count. Even otherwise it is legitimate to expect that the authority will act fairly. (35) Recognising the principle of legitimate expectation the Supreme Court in Food Corporation of India Vs. M/s.Kamdhenu Cattle Feed Industries AIR1993SC1601 held that State action must satisfy the test of non-arbitrariness. Due observance of this principle as a part of .good administration raises a reasonable or legitimate expectation in every person to be treated fairly in his inter-action with the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistration failed to implement its promise and the Privy council held that when a public authority promises to follow a certain procedure, it is in the interest of good administration that it should act fairly and implement its promises so long a.s implementation does not conflict with statutory provisions. (37) In the present case the Consortium was entitled to legitimately expect that their bid would be fairly considered on its merits. The access to the court will not be denied to them for making a grievance that they were not treated fairly and the merits of their bid were disregarded by the first respondent and it also failed to give due weight and consideration to their reasonable and legitimate expectation, which resulted in arbitrariness. The decision of the respondent to allot the contract to the third respondent is open to 'judicial scrutiny not for testing the merits of the inter-se bids but for being judged and tested in the light of Article 14. (38) It will be a strange logic to suggest that discretion of the State cannot be controlled by judicial review in case of a contract where competing parties are foreigners even though the Constitution does not inhibit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an independent existence apart from Article 14. It is a rule of administrative law which has been judicially evolved as a check against exercise of arbitrary power by the executive authority. If we turn to the judgment of Mr. Justice Frankfurter and examine it, we find that he has not sought to draw support for the rule from the equality clause of the United States Constitution, but evolved it purely as a rule of administrative law. Even in England, the recent trend in administrative law is in that direction as is evident from what is staled at pages 540-41 in Prof. Wade's Administrative Law 4th Edition. There is no reason why we should hesitate to adopt this rule as a part of our continually expanding administrative law. (41) Therefore, judicially evolved principles of the Administrative Law can be resorted to without recourse to Article 14 or for that matter Article 19 of the Constitution to knock out an act of the executive which is made arbitrarily and on irrelevant considerations. The Consortium can also avail of these principles to call in question the decision of the first respondent. (42) There has always been a current of opinion to the effect that there shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) On the other hand the third respondent provided for the aforesaid clause as under: Time schedule specified in clause 2.8.3 shall be maintained but the commissioning of total system after trial shall not be later than 36 months after signing of the contract . As would be seen from the above both the parties did provide for the said clause but the same was not in conformity with the prescribed form. While the Consortium offered to conduct site acceptance test within 30 months from the effective date of the contract, the third respondent specifically stipulated for the commissioning of the total system after trial within 36 months of the signing of the contract. (48) According to Mr. Desai, the site acceptance test is synonymous with the commissioning. This however, was not acceptable to the respondents. Mr.Venugopal for the first respondent submitted that site acceptance is a stage prior to the commissioning of the total system. According to him, site acceptance is a method of testing and adjusting the individual system which is a stage anterior to the commissioning of the total system. lt is not disputed that the first petitioner executed the work in Ireland at Cork, Shannon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e performed in compliance with the time schedule in connection therewith, we find that Phereas Raytheon has specifically undertaken to commission the total system within 36 months after signing of the contract, no such specific stipulation with regard to time of dimensioning of the total system is found in clause 2.8.4 of Consortium's tender. (53) If the work at Ireland was to serve as an illustration, one could legitimately conclude that the offer made by the Consortium would fall short of the requirement as envisaged in clause 2.8.4 of the tender document as it does not fix the time for total commissioning of system except for fixing the time for conducting the Site Acceptance Test. Since the Consortium has itself not adhered to clause 2.8.4 of the General Conditions of the tender document by not making an offer in conformity therewith, we do not see how it can make a grievance about the offer of the third respondent and its acceptance by the first respondent. (54) Learned counsel for the petitioners also contended that the bar chart submitted by along with the tender shows that the petitioners have undertaken to execute the with the completion of the site acceptance te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omit any one of the aforesaid clauses from its tender. It, however, while providing for each of the five clauses made certain deviations. According to the learned counsel for the petitioners, the third respondent could not make any variation while providing for the said clauses in its offer. In order to appreciate the submission of the learned counsel for the petitioners relating to construction of the aforesaid clause, it is necessary to refer to certain other clauses as well of the tender document so as to derive the meaning and import of the term exception occurring in clause 27.3.8.. (60) Clause 1.3 of the IB advises the bidders to submit offers based strictly on the terms and conditions including Qualitative Requirements for equipment container in the Tender Document without stipulating any deviations. It further provides that Naa, reserves the right to evaluate quotations containing deviations, having financial implications after adding the cost for such deviations as determined by NAA. It also postulates that if deviations become unavoidable, the bidders may give details of the deviations Along with financial implication on total price. (61) Clause 27.2.2.3 of I.B. g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised offer, modifying its original offer of June 25, 1991 by making certain variations and deviations from the said five clauses as contained in the tender documents. The first respondent has also proceeded on the footing that the parties cannot omit the said clauses from their tenders but in case they resort to deviations, it is not precluded from evaluating their quotations. We do not find any element of arbitrariness in this reasoning. As already pointed out, in G.J. Fermedez case (Supra) it has been held that if the party has bona fide construed the standards prescribed by it in a particular manner, the court should not interfere though it may be inclined to read or construe the conditions differently. It was also laid down that deviations from the guidelines may be permitted, if they do not result in arbitrariness and discrimination or result in substantial prejudice or injustice to any of the parties involved or to public interest in general. Even if we were to hold that the third respondent's tender did not conform to the instructions contained in the tender document, no case has been made out by the petitioners of prejudice and discrimination or injury to public int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Commit- tee from which it is manifest that the Committee recommended that the offer of the third respondent be accepted and the commercial offers received after July 10,1992 should not be considered for the purpose of evaluation but the commitments made by the third respondent after July 10, 1992 should be insisted upon for further negotiations with the said party while awarding the contract to it. Our attention has also been drawn to a comparative statement accompanying the Empowered Committee report from which it appears that after each and every relevant factor was taken into consideration, it was found that the revised bid of the third respondent was lower than that of the Consortium. (70) Evaluation of the bid had been committed to the judgment of the experts. What is best should be left to the discernible eye of those who have special knowledge and expertise in this behalf. The wisdom of any choice may be disputed or condemned but it is only the arbitrary exercise of power by the authority which can be struck down. Attempt of Mr.Desai to establish mistake by a long drawn process of reasoning on points, where there may be at best two opinions about the matter will not am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powered Committee clearly came to a finding that the offer of Raytheon was cheaper of the two. (73) It may also be noted that at the contract finalisation stage, it was pointed out to the third respondent that against item 4.3.2 spares for three years had not been offered. The said respondent at that stage stated that that U.S. dollars 3,98,000, viz price of the spares, be added to its bid. Despite inclusion of this amount in the bid of the third respondent it still worked out to be lower than that of the petitioner. (74) As regards the discount factor, according to the first respondent discount rate for Us dollars alone was taken into consideration and not discount factor for French Franc for the reason that under clause 25.5 of the IB.bidders were to quote only in Us dollars. It was also pointed out that the supplies from Canada and U.K. would also stand converted in to Us dollars and the same discount rate was applicable. These are all matters which were. to be determined by the Empowered Committee and there is nothing arbitrary in applying the discount factor which had been applied in evaluating the bids. It was also pointed out that even if the discount factor, loading f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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