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TMI Blog2022 (1) TMI 1420X X X X Extracts X X X X X X X X Extracts X X X X ..... iew as being taken by it, in acceptance of the case of the writ petitioner, was required to be substituted in place of the views of the tender inviting authority. That has been an error of law and cannot sustain itself in view of the consistent binding decisions of this Court, including the 3-Judge Bench decision in M/S GALAXY TRANSPORT AGENCIES, CONTRACTORS, TRADERS, TRANSPORTS AND SUPPLIERS VERSUS M/S NEW J.K. ROADWAYS, FLEET OWNERS AND TRANSPORT CONTRACTORS ORS. [ 2020 (12) TMI 1390 - SUPREME COURT] . The High Court, while supporting its process of reasoning, has referred to such principles which, with respect, we find entirely inapposite and beyond the periphery of the question involved in the present case. As noticed, in such matter of contracts, the process of interpretation of terms and conditions is essentially left to the author of the tender document and the occasion for interference by the Court would arise only if the questioned decision fails on the salutary tests laid down and settled by this Court in consistent decisions, namely, irrationality or unreasonableness or bias or procedural impropriety. In the case of Nabha Power Limited [ 2017 (10) TMI 1549 - SUPREME COUR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .....................................................................1 Relevant Factual Matrix and Background..................................................................3 High Court disapproves the decision of tender inviting authority.............................7 Rival Submissions....................................................................................................16 Interpretation of Tender Document: Relevant Principles.........................................23 Application of relevant principles to the case at hand.............................................28 Conclusion................................................................................................................44 Preliminary Leave granted. 2. These two appeals against the same judgment and order dated 27.09.2021, as passed by the High Court of Delhi at New Delhi in Writ Petition (C) No. 6676 of 2021, have been considered together and are taken up for disposal by this common judgment. 2.1. By the impugned judgment and order dated 27.09.2021, the High Court has accepted the writ petition filed by the respondent No. 1 of these appeals (M/s. Resoursys Telecom- hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the admission stage. 5. After the foregoing preliminary comments, we may take note of the factual aspects in brief, and insofar as relevant for the issues at hand. Relevant Factual Matrix and Background 6. The dispute in the present appeals has its genesis in a Notice Inviting Tenders ('NIT') bearing No. GEM/2021/b/1032762, as issued by the appellant-NVS on 12.02.2021 on the Government online portal i.e., Government e-market Place ('GeM') for supply of 68,940 Tablets for school children. The NIT carried with it several of the terms and conditions but, we are concerned in the present appeals with the terms and conditions pertaining to 'Experience' and 'Past Performance' of the bidders. The relevant terms and conditions may be extracted as under: - "1. Experience Criteria: In respect of the filter applied for experience criteria, the Bidder or its OEM {themselves or through reseller(s)} should have regularly, manufactured and supplied same or similar Category Products to any Central / State Govt Organization / PSU / Public Listed Company for number of Financial years as indicated above in the bid document before the bid opening date. Copies of relevant contracts to be submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actured by an Indian company namely, Lava International Limited, after having necessary approvals from the manufacturer (OEM). After opening the technical bids on 08.05.2021, the appellant-NVS rejected the bid of the writ petitioner on 25.06.2021, while stating the reason of rejection as 'technical specification mismatch'. The writ petitioner felt that the grounds for rejection were not discernible and the rejection was vague and ambiguous; and, therefore, made a representation dated 27.06.2021 seeking clarification of the reason for rejection. The appellant-NVS, in its reply dated 29.06.2021, inter alia, stated as under: - "1.Does not qualify past Performance (Page 124) of tender document for any of the FY 2018-19, 2019-20, 2020-21. Work Orders of Smart Phones, Laptops, Aadhar Kits, Printers, Power-bank, etc are not considered as same or similar category products of tablets." 7.1. The writ petitioner M/s. Resoursys Telecom, as also the said OEM Lava International Limited submitted further representations while maintaining that they were duly complying with the Past Performance clause of the tender document. The appellant-NVS stated in its response dated 01.07.2021 that they wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of fair play and logic. On behalf of the writ petitioner, strong reliance was placed on various tender notices issued by other departments and institutions, including the Electronic and Information Technology Departments of the States of Kerala, Himachal Pradesh, Bihar and Meghalaya; and it was submitted that in all such tender notices, the past experience of supply of tablets and smart phones had been treated alike. On the other hand, it was submitted on behalf of the tender inviting authority-NVS that the products like tablets, computers and smart phones were electronic goods, distinguishable on the basis of their technical, commercial and traderelated definitions, norms, and regulations provided by the authorities concerned. It was also argued that the tender inviting authority was the best person to interpret the terms of tender, and its decision could only be examined in case of it being arbitrary, biased or mala fide; and no such case being alleged, no interference was called for. The same contentions were urged on behalf of the impleaded party-Agmatel, while also raising the objection of jurisdiction. 11. While dealing with the rival contentions, the High Court of Delhi, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns; were sold and traded through the same channels and were likely to be found in the same shop; and were being sold by the large manufacturers and producers under the same brand. The High Court, thus, concluded that even if the said two products were not the "same", it would not mean that they do not belong to "similar Category of Products". The High Court further said that the interpretation prevalent in the market, where these products were treated as falling in "similar" category, was demonstrated by the writ petitioner with reference to five tenders floated by different Governments/PSUs in different parts of the country. Applying such test, the High Court concluded that NVS could not have excluded the product "Smart Mobile Phones" from the "similar" category vis-a-vis the product "Tablets". According to the High Court, the clause in question had been so worded as to provide maximum competition. These observations and findings of the High Court, forming the core of its decision, could be usefully reproduced as under: - "29. From the above, it would be seen that the author of the tender in question has consciously and repeatedly used the expression "Category" before the word " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of data. Both have facility of running programmes and applications to perform varied tasks, such as, receiving and sending messages/ e-mails, surfing internet, downloading content from the internet, viewing audio-visual content, transmitting audio-visual and the like. Both also have the facility to make audio calls through data networks - though, mobile phones use the mobile call network for regular calls. Both these products are sold and traded through the same channels. In the same shop, which sells smart mobile phones, one is likely to find Tablets, and vice versa. In fact, the larger manufacturers and producers of electronic goods produce and sell both - smart mobile phones, and tablets under the same brand. There are bound to be differences, since these two products are not "same". They may not even belong to the "same category" of products. However, merely because they are not "same", it does not mean that they do not belong to "similar category of products". 31. The terms of tender must receive the natural and commonly understood interpretation, which has been prevalent in the trade. What is prevalent in the trade has been demonstrated by the petitioner - by reference t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar category products, as that of the tablets. However, the TEC of the respondent NVS could not have gone outside the scope of the tender to lay down its own criteria to determine the eligibility of the bidders. They were bound to adhere to, and strictly comply with the terms and conditions stipulated in the tender floated by NVS. The decision taken by the TEC to exclude from consideration all other similar category products - for the purpose of evaluating past performance of the bidders, was wholly incompetent and beyond the authority of the TEC. 37. From the counter affidavit, we also find that at various places, the respondent has averred that Tablets and smart mobile phones are not the same product, or similar product. It appears to us that the respondent has forgotten the eligibility criteria set out in the NIT, which is, "same or similar category products", and not "same product" or even "similar products." 38. If that interpretation as given by the respondent NVS were to be accepted, the word "similar category of products" becomes a surplusage, which cannot be the intention attributed to the tender framing authority. 39. To arbitrarily and whimsically change the goalp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith reference to the decision of this Court in Tata Cellular v. Union of India: (1994) 6 SCC 651, that the tender floating authority was the best person to interpret the terms of the tender but the said authority cannot act arbitrarily, whimsically or contrary to the terms and conditions of the tender. The High Court reiterated that in the first place, the terms and conditions were clear and if at all they were ambiguous, it could not be left to the option of tender floating authority to interpret it in a manner which is contrary to their plain meaning. The High Court said thus: - "47. We are conscious of the scope of judicial scrutiny in tender matters. We are also conscious that the tender floating authority is best person to interpret the terms of the tender, as they know what best is the requirement and how to achieve the same. (see Tata Cellular v. UOI (1994) 6SCC 651) However, the authorities cannot act arbitrarily, whimsically and contrary to the terms and conditions of the tender. As noticed hereinabove, the terms and conditions of the tender are clear. However, even if the terms of the tender are unclear and ambiguous, can it be left to the option of the tender floating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merce and Industry, Government of India. It has been submitted that on the said portal, "Smart Phones" and "Tablets" have been placed in totally different categories inasmuch as "Tablets" fall under the category "Computer Equipment and Accessories" within sub-category "Computers" whereas "Smart Phones" fall under the category "Communication Devices and Accessories" within sub-category "Personal Communication Devices". The "Smart Phones" also fall under the category "Data Voice or Multimedia Network Equipment or Platforms and Accessories" within subcategory "Digital Mobile Equipment and Components". With such categorisation, the learned Solicitor General would argue, the stand of the appellant-NVS is fortified that "Smart Phones" do not fall under same or similar category products as "Tablets". It has further been argued that the terms were clear and none of the participating bidder found any ambiguity therein and hence, provided the requisite details of the supplies pertaining to "Tablets" only, except the writ petitioner. There was neither any ambiguity nor anyone asked for any clarification including the writ petitioner and only request was for reducing the past performance quant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the appellant-NVS is based on the pre-dominant purpose of the goods sought to be procured and no arbitrariness or irrationality could be imputed therein. 12.6. In its written submissions, the appellant-NVS has also adverted to the other purchases/tenders referred by the writ petitioner in a tabular form; and has pointed out the distinguishing features. We shall refer to the relevant contents of this table too hereafter later. 13. More or less similar submissions have been made by the learned senior counsel appearing on behalf of the appellant-Agmatel (successful bidder) while supplementing that the High Court has erred in going into the technical evaluation of two products and their similarity; and this remains an impermissible area for judicial review, as held by this Court in the case of Galaxy Transport Agencies v. New J K Roadways: 2020 SCC OnLine SC 1035. The learned senior counsel has further argued that the view taken by the tender inviting authority and its evaluation committee remains a reasonable view that "Smart Phones" are not similar to "Tablets". In this regard, the learned senior counsel has, apart from reiterating the categories specified on the online port ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to the Government portal e-pathshala which provides for e-pub, an android based application, which is required for tablets and smart phones alike whereas for laptops and desktops, it provides for flip-book, which is a Windows based programme. It has also been pointed out that MSME, Kolkata has issued common training programme for repair and working of smart phones and tablets. 14.2. With the aforesaid details and comparisons, it has been contended on behalf of the writ petitioner that the interpretation sought to be suggested by the tender inviting authority in the present case is entirely unreasonable and has rightly been interfered with by the High Court. It has also been submitted that in the present case, the tender inviting authority has attempted to exercise its discretion to suit a particular bidder and to curb the competition on rather inconsistent grounds by attempting to distinguish between otherwise identical products. It is contended that when the tender inviting authority was conscious of the terms stated in a particular manner, it cannot be permitted to change such terms by way of interpretation to suit a particular bidder or by taking away the level playing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given." (page 825) (emphasis supplied) 15. In the judgment in Bharat Coking Coal Ltd. v. AMR Dev Prabha 2020 SCC OnLine SC 335, under the heading "Deference to authority's interpretation", this Court stated: "51. Lastly, we deem it necessary to deal with another fundamental problem. It is obvious that Respondent No. 1 seeks to only enforce terms of the NIT. Inherent in such exercise is interpretation of contractual terms. However, it must be noted that judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes. 52. In the present facts, it is clear that BCCL and India have laid recours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared to be ineligible, is set aside. 18. Insofar as Condition No. 27 of the N.I.T. prescribing work experience of at least 5 years of not less than the value of Rs. 2 crores is concerned, suffice it to say that the expert body, being the Tender Opening Committee, consisting of four members, clearly found that this eligibility condition had been satisfied by the Appellant before us. Without therefore going into the assessment of the documents that have been supplied to this Court, it is well settled that unless arbitrariness or mala fide on the part of the tendering authority is alleged, the expert evaluation of a particular tender, particularly when it comes to technical evaluation, is not to be second-guessed by a writ court. Thus, in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, this Court noted: "22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vited for highly complex technical subjects. It requires understanding and appreciation of the nature of work and the purpose it is going to serve. It is common knowledge in the competitive commercial field that technical bids pursuant to the notice inviting tenders are scrutinised by the technical experts and sometimes third-party assistance from those unconnected with the owner's organisation is taken. This ensures objectivity. Bidder's expertise and technical capability and capacity must be assessed by the experts. In the matters of financial assessment, consultants are appointed. It is because to check and ascertain that technical ability and the financial feasibility have sanguinity and are workable and realistic. There is a multi-prong complex approach; highly technical in nature. The tenders where public largesse is put to auction stand on a different compartment. Tender with which we are concerned, is not comparable to any scheme for allotment. This arena which we have referred requires technical expertise. Parameters applied are different. Its aim is to achieve high degree of perfection in execution and adherence to the time schedule. But, that does not mean, these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Energy Ltd. (supra) that when tenders are invited, terms and conditions must indicate norms and benchmarks with legal certainty. In that case, the said observations came in the backdrop of the facts that in the eligibility conditions of the tender before the Court, one of the criteria had been of the consortium net cash profit of Rs. 200 crores but, the State had not specified the accounting norms with clarity for calculation of net cash profit; and one of the two acceptable methods of calculation of net cash profit was not taken into account without any reason. In the given facts, the decision of the authority concerned was found to be arbitrary, whimsical and unreasonable. The said decision in Reliance Energy Ltd. (supra) has no direct application to the facts of the present case and even otherwise, it has not been the finding of the High Court that the term stated by the tender inviting authority-NVS was lacking in certainty. However, beyond this, as to which particular product was to be treated as similar category product, could not have been a matter of interpretative exercise by the Court, particularly when the view taken by the tender inviting authority and its evaluation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e two products, namely, "Smart Phones" and "Tablets". Suffice it to notice for the present purpose that even if both are electronic devices and even if several of their utility features are the same or similar, their categorisation under different headings is also a fact not unknown to the parties, as would appear from the categorisation on the Government online portal itself. Beyond this aspect, in our view, no adjudicatory process is called for and the interpretation as put by the tender inviting authority-NVS does not deserve interference. Similarly, if in some of the notice inviting tenders, both smart phones and tablets were stated, or in some of the tenders, specific product tablet alone was stated, that would also not be decisive because that would, obviously, depend on the purpose for which the procurement was being made; and the procuring party, i.e., the tender inviting authority, ought to be extended the latitude to decide on its requirements. 22. In the same context, we may also deal with another feature of this case related with the supplies made by the writ petitioner to different organisations pursuant to different tender notices. 22.1. As noticed, the writ petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the clause 4 of the bid document. Further it was found that the data and documents provided by the Respondent No. 1 for the three Financial Years viz., FY 2018-19, 2019-20 and 2020-21, maximum quantities of Tablets supplied by the Respondent No. 1 were in the FY 2019-20 i.e. 37141 nos. which was short by 10.20% of the 60% criterion [60% of 68490 = 41364] for satisfying the past performance clause 4 of the bid document. 5. I submit that due to shortfall of 10.2% of the required quantity of same or similar category products as per past performance clause, the Respondent No. 1 was declared disqualified in technical bid." 22.3. The writ petitioner has also referred to the several such contracts where both the products, tablets and smart phones, have been procured simultaneously while suggesting that these terms have even been used interchangeably. On the other hand, the appellant-NVS has stated in detail that the supplies of Tablets by the writ petitioner fell short by 10.20% to 60% criterion and the writ petitioner was, in fact, largely supplying smart phones and not tablets. As regards the organisations and their tender processes referred by the writ petitioner, various comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category of ICT(Tablet, PC Laptop, Netbook and Desktop). **Tender clause is different however smartphones is not considered. REC Power Distribution Co. Ltd. Rate contract for supply of 1000 number of Tablet. Bidder should have desire experience of supplying Tablet/ Smart phones. **In the bid document, past performance criteria is totally distinct from the NVS bid document. Tender clause is different. **The bid process floated by RECPDCL was not floated through the GeM Portal, hence, the RECPDCL and NVS are not on similar footing. **The matter of 36 NVS is distinct as no query was raised by the anyone of prospective bidders regarding inclusion of smart phones in past experience. **The bid process was floated 6 years back. Department of Education, Govt. of Bihar Expression of interest (EOI) for selection of agencies for supply and service of Elearning tablets. In the tender documents under clause 3.7.3, the criteria is mentioned that the bidder should be either OEM or authorized supplier of Mobiles/ Tablets. **It is Expression of Interest not a Tender. **Referred bidder has prepared the documents of bid as per their need, expertise and familiarity. However, NVS has floa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the purview of same or similar category of Tablet Computers." 22.4. The aforesaid submissions on facts make this much clear that the decision, as taken by the appellant-NVS and its TEC, cannot be said to be totally baseless or absurd or irrational or illogical. It gets perforce reiterated that even if some of the organisations, in relation to their requirements, procured tablets and smart phones both under the same tender process or even used these expressions "interchangeably" or "interconnected", that by itself cannot lead to a definite conclusion by the Court that "Smart Phones" and "Tablets" are to be taken as similar category products for the tender process in question. 23. Viewed from any angle, interference by the High Court in this matter does not appear justified, particularly when no case of mala fide or bias is alleged. Every decision of the administrative authority which may not appear plausible to the Court cannot, for that reason alone, be called arbitrary or whimsical. The High Court, in the present matter has obviously proceeded with an assumption that the view as being taken by it, in acceptance of the case of the writ petitioner, was required to be substit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by this Court from the Halsbury's Laws of England, it is clear that the said rule was applied in the case of ambiguity in the insurance policy because the policies are made by the insurer and its ambiguity cannot be allowed to operate against the insured. This rule, in our view, cannot be applied to lay down that in case of any ambiguity in a tender document, it has to be construed in favour of a particular person who projects a particular view point. The obvious inapplicability of this doctrine to the eligibility conditions in a notice inviting tender could be visualised from a simple fact that in case of ambiguity, if two different tenderers suggest two different interpretations, the question would always remain as to which of the two interpretation is to be accepted? Obviously, to avoid such unworkable scenarios, the principle is that the author of the tender document is the best person to interpret its documents and requirements. The only requirement of law, for such process of decisionmaking by the tender inviting authority, is that it should not be suffering from illegality, irrationality, mala fide, perversity, or procedural impropriety. No such case being made out, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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