(Prayer: Writ Petition filed under Article 226 of the Constitution of India for issuance of a Writ of certiorarified mandamus to call for the entire records relating to the cancellation of e-tender reference No.AAICLAS/MAA/3309/2018 dated 25.06.2018 on the file of the third respondent and quash the same and directing the respondent to award the tender in favour of the petitioner since he is the highest bidder.)
1. The present writ petition is filed against the proceedings of the third respondent dated 25.06.2018 in canceling the tender issued for the work of granting license for management of car/truck parking service at Integrated Air Cargo Complex and Allied areas, AAICLAS at Chennai Airport. Consequently, the petitioner seeks for a direction to the respondents to award the tender in their favour, being the highest bidder.
2. The case of the petitioner is as follows:
The petitioner has been handling parking managements both in passengers and cargo airports for several years in almost all airports spreaded over India. The third respondent called for E-tender for license for management of car/truck parking services at Integrated Air Cargo complex and allied areas, AAICLAS, Chennai Airport vide Reference No.AAICLAS/MAA/3309/2018. The petitioner submitted their E-tender on 19.05.2018 along with necessary fees. There were two other bidders apart from the petitioner. The petitioner followed all the procedures and submitted all the required documents with a tender application. After scrutinizing the E-tenders submitted by all the three tenderers, the Airport Authorities had accepted the petitioner's technical bid on 22.06.2018, while rejecting the other two tenderers for the reason that they have not submitted documents as per notice inviting tender. After finalizing the technical bid on 22.06.2018, the petitioner's financial bid was also opened and the same was also accepted by the Authorities. The petitioner has quoted a sum of Rs.40,10,940/- per month, which is much higher than the basic price of Rs.33,52,500/- fixed by the Authorities. Once the financial bid is accepted, the tender process has become final. The petitioner had executed and submitted an affidavit as required by the third respondent describing the details of their contracts at Airports/offices controlled by the Airport Authority of India. After finalising the financial bid, the third respondent forwarded the tender documents to the second respondent for issuing necessary orders. However, in the website of the third respondent, it was noted that the subject matter tender has been cancelled followed by returning the earnest money deposited by the petitioner. The third respondent also sent a letter to the petitioner on 25.06.2018 stating that the subject tender is cancelled. Such cancellation is without any notice, reasonable cause or reason. After canceling the E-tender, the third respondent called for new E-tender on 02.07.2018. Hence, the present writ petition.
3. The second and third respondents filed a counter affidavit.
4. The case of the respondents is as follows:
It is true that the set off price for tender was fixed to Rs.33,52,500/-. It is also admitted that the financial bid of the petitioner was Rs.40,10,940/-. The other two tenderers, who participated in the tender, did not qualify even in the technical bid and thus, the financial bid of the petitioner could not be accepted, as there was no competitive pricing. The tender bid of the petitioner was not accepted as per general information/guidelines and specific instructions of the notice inviting tender. The third respondent is well within its right to cancel the tender at any stage and the petitioner has no vested right to demand acceptance. After canceling the tender, the earnest money deposited by the petitioner was also returned to them. There is no necessity to issue a separate notice to the petitioner before canceling the tender, as the cancellation was more in the public interest and from the revenue perspective rather than for any default on the side of the petitioner. There is no need to assign any reason for cancellation of the tender in view of Clause 22 of the specific instructions of the notice inviting tender, which reserves its right to reject any or all the tenders in part or full without assigning any reasons. After canceling the subject matter tender, new E-tender dated 02.07.2018 was floated. It is not with a view to favour or disfavour anyone. The petitioner is in no way prejudiced or incurred any loss due to the cancellation of the tender, as it is always open to them to participate in the new tender provided to meet the conditions of notice inviting tender. Hence, there is no cause of action for the petitioner to file the present writ petition. Due to the interim order granted by this Court in this writ petition, the respondents are not able to proceed further in the tender, that has been floated already on 02.07.2018.
5. Mr.ARL.Sundaresan, learned Senior Counsel for the petitioner submitted as follows:
The petitioner's technical bid was accepted. The price quoted by the petitioner is admittedly more than the upset price fixed by the respondent. Therefore, they cannot cancel the tender without assigning any reason. Therefore, the cancellation without reason is an arbitrary action and consequently, this Court can interfere with the same. The efficacious of public tender cannot be defeated by canceling the same without any reason. In support of his contention, the learned Senior Counsel relied on the following decisions:
i) 1996 (6) SCC 173, State of Punjab vs Yoginder Sharma Onkar Rai & Co;
ii) 2016(1) SCC 724, State of Punjab vs Bandeep Singh;
iii) Order of Orissa High Court made in W.P(C) No.2656 of 2016 dated 18.05.2016.
6. On the other hand, Dr.Fr.Xavier Arulraj, the learned Senior Counsel for the respondents 2 and 3 submitted as follows:
Clause 22 of the tender conditions empowers the Authority to cancel the tender without assigning any reason. The petitioner has accepted the terms and conditions and participated in the tender and consequently, they are not entitled to question the cancellation. The cancellation of tender was not made to favour anybody. Since there was only one bid qualified for considering the financial bid, the Authority felt that there is no competency in the pricing and therefore, fresh tender can be invited. Since it happened to be a single tender, as two out of three participated were disqualified, the Authority, in the interest of augmenting more revenue, has chosen to reject the tender in the absence of competency. In support of his contention, the learned Senior Counsel relied on the following decisions:
i) 2005 (6) SCC 138, Master Marine Services (P) Ltd. vs Metcalfe & Hodgkinson (P) Ltd;
ii) 2000 (2)1 SCC 617, Air India Ltd. vs. Cochin International Airport Ltd.,
iii) 2012 (8) SCC 216, Michigan Rubber (India) Limited vs. State of Karnataka and others;
iv) 2017 (4) SCC 318, Tamilnadu Generation and Distribution Corporation Limited (TANGEDCO) VS. CSEPDI-TRISHE CONSORTIUM Rep. by its Managing Director.
v) 2018 (2) SCC 481, TDI International India (P) Ltd. vs. Airport Director, Airports Authority of India.
7. Heard the learned Senior Counsel for the petitioner and the learned Senior Counsel for the respondents. There is no representation for the first respondent.
8. The petitioner is aggrieved against the cancellation of tender. The third respondent called for E-tender for issuing license for management of car/truck parking services at Integrated Air Cargo Complex and Allied areas, AAICLAS, Chennai airport. It is seen that the petitioner and two other persons submitted their bids. The bidders are required to submit their technical and financial bids in the format provided. Technical bid will be opened first and only those who qualified the technical criteria, the financial bid of those persons will be opened subsequently. The specific instructions provided to the tenderers under Clause 22 contemplates that tender inviting authority reserves its right to reject any or all tender(s) in part or full without assigning any reason. Accepting the terms and conditions stipulated in the tender notification and the tender document, the petitioner along with two others, as stated supra, participated in the tender process and submitted their respective technical bid and financial bid. There is no dispute to the fact that on opening and considering the technical bids submitted by all the three participants, the other two bidders were disqualified at the technical stage itself and the petitioner alone was found to be qualified for opening and considering their financial bid. Therefore, it is apparent that the tender invited by the third respondent has ultimately resulted in considering a single bid.
9. It is true that the petitioner has offered a sum of Rs.40,10,940/- in their financial bid, which is admittedly above than the set off price fixed by the tender inviting authority. Therefore, the petitioner claims that the said amount quoted by the petitioner, being the highest ought to have been accepted by the respondents and consequently ought to have awarded the contract to the petitioner, instead of canceling the tender itself. I am unable to either accept or appreciate the claim made by the petitioner for the following reasons:
a) Admittedly, the tender process has resulted in considering the single bid of the petitioner. Therefore, it is apparent that there is no competition in price bidding. In other words, the price quoted by the petitioner alone is available before the owner/ employer, who floated the tender. Certainly, under such circumstances, the owner/employer is entitled to cancel the entire tender process and go for fresh one in order to get more money in anticipation of competitive bidding process in pursuant to the issuance of such fresh tender. In other words, the tender inviting authority cannot be faulted in expecting a competition in the bidding price so as to enable them to select the person, who quotes the highest price.
b) Merely because the petitioner has quoted the price over and above the set off price fixed by the tender inviting authority, does not mean that the price quoted by the petitioner is the highest bid amount, in the absence of any competitive price bid available before the Authority for his consideration. "Higher amount" is certainly not the "highest amount". The question of considering the highest value would arise only when there is a competition in quoting the price. In the absence of such competition, howsoever the price quoted by the petitioner may be high, still the tender inviting authority is entitled to expect reasonably that they would fetch more money than the amount quoted by the petitioner, if a fresh tender is floated. After all, the owner is the best suited person to decide as to what would be the best money he should get for licensing the person.
c) Further, it is to be noted that clause 22 of the specific instructions to the tenderers specifically entitles the tender inviting Authority to reject any or all the tenders in part or full without assigning any reason. The petitioner participated in the tender process accepting the terms and conditions, which include the above condition as well. Therefore, having accepted those conditions, the petitioner is not entitled to question the cancellation, more particularly when the petitioner is not put to any prejudice or hardship by such cancellation, as admittedly the earnest money deposited by the petitioner was also returned to them by the tender inviting authority in pursuant to such cancellation. It is also not the case of the petitioner that they could not participate in the fresh tender. Hence, absolutely there is no prejudice.
10. The scope of interference with commercial contracts by the Court exercising the jurisdiction under Article 226 has been considered in very many cases by this Court and the Apex Court. It is settled position that such judicial interference in commercial contracts is with very limited scope. In 2007 (14) SCC 517, Jagdish Mandal v. State of Orissa, the Hon'ble Supreme Court has observed at paragraph No.22 as follows:
“.....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 contract is bonafide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/ procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or
Whether the process adopted or decision made is so arbitrary and irrational that the Court can say; 'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached';
(ii) Whether the public interest is affected.
If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of Licences, Dealerships and Franchises) stand on a different footing as they may require a higher degree of fairness in action.”
11. In 2017(4) SCC 170 (JSW Infrastructure Ltd. v. Kakinada Seaports Ltd.), the Honourable Apex Court at paragraph No.10 has held as follows:
“10. In Afcon Intrastructure Ltd. vs. Nagpur Metro Rail Corpn.Ltd., this Court held as follows:
“13. ... 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.
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 acceptable to the Constitutional Courts but that by itself is not a reason for interfering with the interpretation given.
16. in the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or malafide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court.”
This view taken in Afcons was followed in Montcarlo Ltd. v. NTPC Ltd. Thus, it is apparent that in contractual matters, the writ courts should not interfere unless the decision taken is totally arbitrary, perverse or malafide.”
12. In 2017(4) SCC 318, Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) VS CSEPDI- TRISHI CONSORTIUM, the Apex Court at paragraph No.36 has observed as follows:
"36......At this juncture, we are obliged to say that in a complex fiscal evaluation the Court has to apply the doctrine of restraint. Several aspects, clauses, contingencies, etc., have to be factored. These calculations are best left to experts and those who have knowledge and skills in the field. The financial computation involved, the capacity and efficiency of the bidder and the perception of feasibility of completion of the project have to be left to the wisdom of the financial experts and consultants. The courts cannot really enter into the said realm in exercise of power of judicial review. We cannot sit in appeal over the financial consultant's assessment. Suffice it to say, it is neither ex facie erroneous nor can we perceive as flawed for being perverse or absurd."
13. In 2000 (2) SCC 617, Air India Ltd. vs Cochin International Airport Ltd., it is observed at paragraph No.7 as follows:
“7. The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in Ramana Dayaram Shetty v. International Airport Authority of India, Fertilizer Corpn. Kamgar Union (Regd.) v. Union of India, CCE v. Dunlop India Ltd., Tata Cellular v. Union of India, Ramniklal N. Bhutta v. State of Maharashtra and Raunaq International Ltd. v. I.V.R.Construction Ltd. The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene.”
14. In 2005 (6) SCC 138, Master Marine Services (P) Ltd. vs Metcalfe & Hodgkinson (P) Ltd; the Apex Court observed at paragraph Nos.11 and 12 as follows:
“11.The principles which have to be applied in judicial review of administrative decisions, especially those relating to acceptance of tender and award of contract, have been considered in great detail by a three-Judge Bench in Tata Cellular v. Union of India. It was observed that the principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting 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.
12. After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made. The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. In other words, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.”
15. The issue as to whether the bidder is entitled to question the lodging of the tender has already been considered by this Court in a decision reported in 2017(6) CTC 785, CSEPDI-TRISHE CONSORTIUM vs. Tamilnadu Generation and Distribution Corporation Ltd. (TANGEDCO), wherein at paragraph No.38, it is held as follows:
"38. The petitioner and the fourth respondent alone have made their offer and such offer was not accepted by the TANGEDCO and consequently, both the offers were rejected, also by lodging the subject matter tender. Consequent upon such rejection of both the offers, the TANGEDCO decided to lodge the tender, which means that the invitation made by the TANGEDCO, followed by the submission of tenders by the petitioner and the fourth respondent, is put to rest. On the other hand, if anyone of the offers was accepted by rejecting the other, certainly the aggrieved party may have a cause of action to question such rejection and the acceptance. If the owner viz., the TANGEDCO, who invited the offer, has decided to reject all the offers based on certain technical defects/deficiencies found by the independent Expert/Consultant followed by the decision taken in the Board Meeting, in my considered view, none of the party will have any vested right or any cause of action to maintain a litigation against the TANGEDCO, that too, to seek for a direction to accept such tender submitted by such party and to award the contract only to such party. In effect, what is sought for in the present writ petition, is nothing but a positive direction to the TANGEDCO to accept the offer made by the petitioner and conclude the contract. I do not think that such relief, as sought for in this writ petition, is maintainable, as it opposes to the very basic element of principles of contract, as no one can compel the owner/invitee to accept a particular offer, as it is always open for such person, who invited such offers, either to accept or to reject, based on the reasons, which according to such owner, cannot make the contract viable or successful, in view of deficiencies or defects in the offer. The reasons set out for taking such decision may be, according to the offeror, irrelevant or negligible or not fatal. Yet, if the invitee has chosen to reject not only a particular offer but all the offers made by the parties and decide to go for fresh invitation, the parties, whose offers were rejected cannot claim to be aggrieved parties, as no event of pick and choose has taken place. Needless to say that an agreement for sale is totally different and distinguishable from an invitation to make offer. While, in the former case, a vested right is conferred on the respective parties based on such agreement to seek for specific performance of their respective obligation under such agreement, in the latter case, it is not so."
16. In a decision reported in 2018 (4) CTC 47, Hero Ecotech Ltd. vs. Commissioner of Backward Classes Welfare, this Court has observed at paragraph No.21 as follows:
"21. What to be seen while dealing with such commercial contractual matters under writ jurisdiction, is as to whether the process of decision making was in order, without any discrimination, illegality and arbitrariness. In other words, interference is called for only when there is an error in the decision making process and not in the decision itself."
17. Learned Senior Counsel for the petitioner relied on the decision of the Apex Court made in 1996(6) SCC 173, State of Punjab vs Yoginder Sharma Onkar Rai, wherein at paragraph No.18, it is observed as follows:
"18. The Division Bench was, in the circumstances, in error in reaching the conclusion that the auction was not fairly and properly held with the result that the State exchequer had been subjected to a huge loss. In any event, loss to the exchequer is a factor which may be taken into account in genuine cases, as it was in the case of Rajshila cited by the learned counsel for the first respondent. At the same time, the finality of auctions must also be recognised to be in the interests of the exchequer. If auctions are set aside and reauctions ordered on less than satisfactory material, the loss of the exchequer would be far greater."
18. I failed to understand as to how the above decision would help the petitioner in any manner, when it is not the proven case of the petitioner that cancellation of the tender would result in far greater loss of exchequer. In other words, this Court cannot presume that the amount quoted by the petitioner alone will be the highest at any point of time, even when fresh tender is called for. In this case, admittedly, the tender process has resulted in considering a single tender of the petitioner alone. Therefore, it cannot be said that by not considering the petitioner's tender and awarding the contract based on the price quoting by them, the respondents have faced far greater loss of exchequer, in the absence of any competency in the p
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rice bidding. 19. The next decision relied on in support of the petitioner's case is reported in 2016(1) SCC 724, State of Punjab vs. Bandeep Singh, to contend that the Authority cannot take any decision it chooses to and that it cannot take a capricious or arbitrary or prejudicial decision. At paragraph No.7, it is observed as follows: "7. The same principle was upheld more recently in Ram Kishun v. State of U.P. However, we must hasten to clarify that the Government does not have a carte blanche to take any decision it chooses to; it cannot take a capricious, arbitrary or prejudiced decision. Its decision must be informed and impregnated with reasons. This has already been discussed threadbare in several decisions of this Court, including in Sterling Computers Ltd. v. M & N Publications Ltd., Tata Cellular v. Union of India, Air India Ltd., v. Cochin International Airport Ltd., B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. and Jagdish Mandal v. State of Orissa." 20. I have already pointed out that the reasons stated by the tender inviting authority to cancel the tender is justifiable, as admittedly there was no price competition. Therefore, such cancellation based on such reason cannot be construed as capricious, arbitrary or prejudiced decision. In fact, in the very same decision, the Apex Court extracted the finding rendered in Anil Kumar Srivastava case reported in 2004 (8) SCC 671 to the effect that notwithstanding the fixation of upset price and notwithstanding the fact that a bidder has offered an amount higher than the reserve/upset price, the sale is still open to challenge on the ground that the property has not fetched the proper price and that the sale be set aside. Therefore, I find that the above decision is also not helping the petitioner in any manner. 21. The unreported decision of the Orissa High Court in W.P.(C) No.2656 of 2016 dated 18.05.2016 is also relied on by the petitioner side to contend that the cryptic order of cancellation without assigning any reason cannot be sustained. I do not think that the petitioner is entitled to canvas such point in view of the admitted position that tender condition No.22, as extracted supra, empowers the tender inviting authority to reject the tender without assigning any reason, especially, when the petitioner has participated in the tender process, after accepting the terms and conditions of the tender, which includes the above condition as well. 22. Considering all these aspects, this Court is of the view that the petitioner has not made out a case for interference with the impugned proceedings of the respondents in canceling the tender. Accordingly, the writ petition fails and the same is dismissed. The interim order already granted is vacated. It is made clear that if fresh tender is called for, it is open to the petitioner to participate in the tender process, if they satisfy the qualification criteria stipulated therein. No costs. The connected miscellaneous petitions are closed.