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TMI Blog2022 (3) TMI 1589X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment/Order to follow. 3. The Road Construction Department of Jharkhand invited tenders on 7.6.2019 for reconstruction of Nagaruntari - Dhurki - Ambakhoriya Road. Respondent No. 1 participated in the tender process and also submitted Bank Guarantee as bid security but such tender was cancelled on 20.8.2019 and fresh Notice Inviting Tender [For short, the 'NIT'] was invited for reconstruction of the said Nagaruntari - Dhurki - Ambakhoriya road. 4. The Tender Evaluation Committee held a meeting for technical evaluation of bids and 13 out of 15 bids were held to be non-responsive in terms of Standard Bidding Document [For short, the 'SBD'], including that of Respondent No. 1. The reason for arriving at such conclusion was that Respondent No. 1 submitted a letter along with the amended Bank Guarantee to the effect that such letter forms an integral part of Bank Guarantee. Such Bank Guarantee was not in the format as prescribed in the SBD. It was also found that the Bank Guarantee was valid from 8.7.2019 to 7.3.2020, which was prior to the date on which NIT was issued on 20.8.2019, apart from the fact that the amount mentioned in numerical and in words were different. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. N.G. Projects Limited is also quashed. The State Respondents are directed to issue fresh tender for the said work and to proceed accordingly. (iii) xx xx xx 9. The Division Bench of the High Court dismissed two appeals against two other tenders on 7.10.2021. However, in appeal against the work in question, the Division Bench of the High Court noticed the fact that the Appellant had already started the execution of the work and that part of the work had already completed but held that there was no valid distinction with the case of other two works against which Letters Patent Appeal was dismissed on 7.10.2021. The Division Bench of the High Court returned the following findings: 22. On a comprehensive comparison of the bid security document submitted by the writ Petitioner and the Appellant, we gather that the bid security document submitted by both the tenderers failed to adhere to the specifications professed by the employer. While the Appellant in the final paragraph of the bid security document made the bank guarantee extendable at the bank's sole discretion contrary to the requirement of the format and the bid document whereunder the employer had the right reserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. xx xx xx 77. The duty of the court is to confine itself to the question of legality. Its concern should be: 1. Whether a decision-making authority exceeded its powers? 2. Committed an error of law, 3. committed a breach of the Rules of natural justice, 4. reached a decision which no reasonable tribunal would have reached or, 5. abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality: This means the decision-maker must understand correctly th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that it was not for the Court to substitute its opinion in respect of acceptance of bank guarantee. It was held that when a particular format for a bank guarantee is prescribed, then the bidder is required to stick to that particular format alone with the caveat that the State reserves the right to deviate from the terms of the bid document within the acceptable parameters. This Court held as under: 32. The core issue in these appeals is not of judicial review of the administrative action of CCL in adhering to the terms of NIT and the GTC prescribed by it while dealing with bids furnished by participants in the bidding process. The core issue is whether CCL acted perversely enough in rejecting the bank guarantee of JVC on the ground that it was not in the prescribed format, thereby calling for judicial review by a constitutional court and interfering with CCL's decision. xx xx xx 37. For JVC to say that its bank guarantee was in terms stricter than the prescribed format is neither here nor there. It is not for the employer or this Court to scrutinise every bank guarantee to determine whether it is stricter than the prescribed format or less rigorous. The fact is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Limited and Anr. (2016) 16 SCC 818, 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. It was held as under: 13. In other words, a mere disagreement with the decision-making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision-making process or the decision. xx xx xx 15. We may add 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer. 20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the state instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realize that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court Under Article 226 of the Constitution. The Court held as under: 2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at a distance. [Jagdish Mandal v. State of Orissa (2007) 14 SCC 517] 3. We cannot lose sight of the fact that a tenderer or contractor with a grievance can always seek damages in a civil court and thus, "attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural viol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid position of law to the present case, it has been the contention of Respondent No. 1 that the format for bank guarantee was not followed strictly by the State and that the relaxation given was not uniform, in that Respondent No. 1 was singled out. The said contention has found favour with the Courts below. 18. In the present matter, Respondent No. 1 submitted its first bank guarantee on 8.7.2019 in relation to the first tender for the same project. However, this first tender was cancelled through a notice, as acknowledged by Respondent No. 1. This being the case, being fully aware of the fact that the first tender was no more in force and given that there was specifically a new tender in place, Respondent No. 1 was required to submit a bank guarantee in the format specified as per the Agreement. However, Respondent No. 1 opted to use the same bank guarantee which was drawn on 8.7.2019, albeit with a letter from the bank indicating that there is now an amendment with regard to the dates and the contract therein. It is patently clear that if the format for a bank guarantee is an essential condition of the Contract, the format in which the Respondent has opted to submit it is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g performance and injunctive reliefs. iii. To introduce provisions for rights of third parties (other than for Government contracts). iv. To consider addressing unconscionable contracts, unfair contracts, reciprocity in contracts etc., and implied terms. The committee observed that there is a need to classify diverse Public utility Contracts as a distinct class recognising the inherent public interest/importance to be addressed in the Act. Any public work must progress without interruption. This requires consideration whether a court's intervention in public works should be minimal. Smooth functioning of Public works projects can be effectively managed through a monitoring system and regulatory mechanism. The role of courts in this exercise is to interfere to the minimum extent so that public works projects will not be impeded or stalled. 21. Since the construction of road is an infrastructure project and keeping in view the intent of the legislature that infrastructure projects should not be stayed, the High Court would have been well advised to hold its hand to stay the construction of the infrastructure project. Such provision should be kept in view even by the Writ C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to work. 24. The State has paid over a sum of Rs. 3,98,52,396/- to the Appellant till date, though the stand of the Appellant is that it had submitted bills of work of Rs. 8.5 crores. The termination of contract would cause additional financial burden on the State and also deprive the amenity of road for a longer period. Learned Counsel for the Appellant has stated that it shall not claim escalation of costs for the period when the writ petition before the High Court was pending and there was a stay granted. 25. In view thereof, we find that 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. 26. A word of caution ought to be mentioned herein that any contract of public service should not be interfered with lightly and in any case, there should not be any interim order derailing the entire process of the services meant for larger public good. The grant of interim injunct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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