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The Bihar State Power ( Holding) Co. Ltd. & Others v/s M/s. Gkc-Sseljv, A Joint Venture Between Gkc Projects Ltd. With Sse Limited & Others

    Letters Patent Appeal Nos. 807, 808, 827, 829, 861, 870 & 855 of 2013 In Civil Writ Jurisdiction Case No. 9617, 9448, 6551, 9326, 6553, 6552 & 9617 of 2013

    Decided On, 09 September 2013

    At, High Court of Judicature at Patna


    For the Appearing Parties: Chitranjan Sinha, S.A. Narain, Lalit Kishore, Sr. Advocate, Anand Kumar Ojha, S.D. Sanjay, Prabhat Ranjan Singh, Arun Kumar, Advocates.

Judgment Text

Navin Sinha, J.

The Bihar State Power (Holding) Co. Ltd.( hereinafter referred to as ‘the Power Company’) published a tender notice on 10.7.2012 for Rural Electrification Works under the Rajeev Gandhi Gramin Vidyut Karan Yojna (hereinafter referred to as ‘RGGVY’) in 11 Districts of the State under the 12th plan.

The Rural Electrification Corporation (hereinafter referred to as ‘REC’) was the Nodal Agency. The tender was cancelled by the Power Company on 8.3.2013. A fresh tender notice was published on 26.3.2013. The aggrieved bidders challenged the cancellation and the fresh advertisement. The Rural Electrification Department of the Power Company submitted a Detailed Project Report [DPR] under the RGGVY for rural electrification of 26 Districts in the State. The REC examined the DPR and sanctioned it for 11 Districts only. The REC also modified the DPR for HT /LT connections by restricting it to providing of domestic connections only. It did not accept 33/11 KVA sub-stations to be set up as mentioned in the DPR. A Village or part of a Village having a population of less than hundred was also excluded by it from rural electrification. Transformers of 63 KVA mentioned in the DPR were reduced to 25 KVA. The Power Company then published a notice inviting tenders on 10.7.2012 in sealed cover for rural electrification work comprising supply of materials and equipment's in the Districts of Patna, Banka, Rohtas, Gaya, Purnea, Araria, Bhojpur, Nawada, Siwan, Kishanganj and Nalanda on a turnkey basis. The tender notice comprised of two parts, Part- A and Part- B. The DPR works component approved by REC formed Part- A to be funded by the Central Government. The work component in Part-B comprised of works in the DPR not approved by the REC and was to be funded by the State Government.

The notice inviting tenders published by the Power Company was composite for both part A and B for supply of materials and equipment’s. A bidder was required to offer for the complete works of the package in both parts. The tender price to be quoted was required to include all expenses relating to labour also. It therefore mentioned the total estimated cost of the project for a District cumulatively. For example, the total estimated costs for the District of Bohjpur was Rs.1 9083.28 lacs. The tender notice also mentioned the break- up of the estimated cost of the project for Part- A as Rs. 15983.28 Lacs and for Part- B as Rs. 3415.34 Lacs. Clause 1.2.1 off the tender notice provided that works shall be executed strictly as per REC specifications and guidelines. Items not covered by REC guidelines/specifications would be as approved by the Power Company. Clause 2.3.2 of the tender notice provided that sealed tenders for each district should be submitted in two parts (a) technical and Commercial offer (Part I) and Price offer (Part II) in separate envelopes superscribed Part I and Part II. A tenderer could bid for a maximum of two Districts only. A total of 42 bids were received.

All Technical / Commercial Bids (Part I) were opened on 27.9.2012. The Central Purchase Committee of the Power Company received complaints against some of the bidders regarding their work performance records under other contracts including those forwarded through the REC. No formal orders were passed regarding the acceptance or rejection of individual Technical / Commercial bids. Nonetheless on 9.11.2012 Financial bids (Part II) were opened for only 7 Districts comprising of such bidders against whom no complaints had been received. The rest were deferred. All financial bids for Patna, Banka and Rohtas were opened on 9.11.2012 and for Gaya on 21.11.2012, since there were no complaints against any of the bidders for these Districts. The remainder financial bids were opened on 22.11.2012 and that for one District was opened on 21.12.2012. Consequently the status of an L 1 bidder on basis of financial bids opened on 9.11.2012 underwent a change of status after opening of other financial bids for the same District on 22.11.2012/21.12.2000.

The REC on 19.2.2013 wrote to the State government that the award cost proposal for RGGVY works (supplementary) at Patna and Rohtas districts had been approved by the Competent Authority based on L 1 bid. This was subject to the condition that the Power Company shall place separate award for the works in Part-A and Part-B, other conditions remaining the same. The Board of the Power Company on 8.3.2013 ordered :-

'RESOLVED THAT in the context of complexities in Board in complying with REC’s letter number REC/PO/PAT/RGGVY/Patna-Rohtas (Suppl)/1002 dated 19.2.2013, twice opening of financial bid and difficulties are arising due to non-availability of fund for the State component included in the tender, it was resolved to cancel the tender and float fresh tender for RGGVY component only with +_ 30% quantity variation.' RESOLVED FURTHER THAT concerned Managing Director of the Distribution companies be and are hereby authorized to bring modifications as it may deem fit in order to have better participation and competitiveness in the tender process.'

A web publication was made on 8.3.2013 that the tender for all eleven locations was cancelled for unavoidable reasons. This led to the institution of CWJC No. 6293 of 2013, CWJC No. 6551 of 2013, CWJC No.6552 of 2013 and CWJC No. 6553 of 2013 by those who had bid for the districts of Bhojpur, Banka, Nawada and Purnea. A fresh tender notice was published by the Power Company for Part-A only for all eleven districts on 26.3.2013 during the pendency of the applications. The writ applications were allowed by common order dated 26.4.2013. The Learned Single Judge held that the primary purpose of the tendering process was to ensure utilisation of funds to be received under the central scheme for rural electrification. The State component was an afterthought without any commitment from the State government with regard to funds for the same. Part A and Part B consisted of different works. The estimated cost for the two was also mentioned separately. Accounting was also to be done separately. A bidder having disclosed his offer for the Part-A component could be prejudiced in the fresh bidding for Part-A by a rival quoting lesser figures. Separate L 0 A required by the REC for the two components was a mere technicality. The letter of REC dated 19.2.2013 did not state anything new not known to the Power Company earlier. If funds were not available for the State component, the L 1 tenderer being willing to proceed with Part -A of the contract only without any change in the bid offer and not raising any objection, in the facts and circumstances, there was no justification for annulment of the complete tender notice. The contention of the Power Company that the fresh tender notice for Part- A only would render more persons eligible allowing more participation was an afterthought. There was no complexity mentioned or involved in the letter of REC dated 19.2.2013. The cancellation of the tender notice was not in public interest. The fresh tender notice for Part- A only, eight months later would lead to inflation and higher bids. The cancellation of the tender dated 8.3.2013 and the fresh advertisement dated 26.3.2013 for Part-A only were both set aside and the applications allowed.

CWJC No. 9301 of 2013, CWJC No. 9302 of 2013, CWJC No. 9304 of 2013, CWJC No. 9326 of 2013, CWJC No. 9448 of 2013, and 9617 of 2013 was preferred thereafter by those who had bid for the Districts of Patna, Gaya, Rohtas, Nalanda, Araria and Siwan. The objection taken by the Power Company before the Learned Single Judge of waiver, delay, suppression regarding withdrawal of earnest money and submission of fresh bids after cancellation by two of them, in response to the fresh advertisement have been given up in Appeal before us and thus need not be considered. Similar relief was granted to them following CWJC No. 6293 of 2013 and analogous case. But, CWJC No. 9326 of 2013 filed by bidder for Nalanda district was dismissed holding that even if he was the L 1 tenderer overall , no relief could be granted as he was the second lowest tenderer for Part- B.

The Principal Additional Advocate General appearing in Appeals on behalf of the Power Company submitted that opening of the financial bids on more than one dates, the consequent change in L 1 status of tenderers vitiated the entire tender process. Even if one part of the order dated 8.3.2013, with reference to the complexities of REC letter dated 19.2.2013 was not sustainable, still the order of annulment was independently sustainable for the errors in procedures committed at the stage of opening of financial bids. The Learned Single Judge has erred in not appreciating the same in so far as Districts of Purnea, Bhojpur, Nawada, Araria and Siwan are concerned. Since all financial bids for Districts of Patna, Banka, Rohtas and Gaya were opened on a single day, and the subsequent availability of funds for the State component, the Power Company in accordance with the findings of the Learned Single Judge was justified in distinguishing the successful L 1 tenders in the aforesaid four districts as a separate class for going ahead with regard to them. The writ petition by the bidder at Nalanda had been dismissed and the selection at Kishanganj had been challenged by none.

Learned Principle Additional Advocate General further contended that the jurisdiction of the Court under Article 226 in judicial review of tender decisions was confined to errors in the decision making process and not the final decision itself. No bidder had a vested right to award of works merely because he was L 1 bidder. If the reasons for cancellation were germane and not arbitrary the Learned Single Judge should not have interfered. It was a settled principle of law that if an order was founded on more than one ground and even if one or more ground was bad, but the bad part of the order could be segregated with the other remaining part of the order being valid and sustainable on its own, the Court should not interfere.

Learned Senior Counsel Sri S. A. Narain appearing on behalf of the respondent successful bidders for Bhojpur and Araria ( in L P A no. 870 of 2013 arising from CWJC No. 6552 of 2013 and LPA No. 808 of 2013 arising out of CWJC No. 9448 of 2013) submitted that the cancellation of the tender notice was made on three grounds, [a] Complexities due to REC letter dated 19.2.2013 [b] Irregularities at the stage of Technical /financial bids and [c] non-availability of State funds for Part- B of the Tender. The letter of REC did not contain any objection or direction for cancellation of the common tender published by the Appellant for the two components of the works. It only required issuance of separate L O A for the two components. The Learned Single Judge has given a finding that the two components of the tender were completely separable.

The Appellant Power Company in their counter affidavit before the Learned Single Judge justified the opening of financial bids on more than one date citing availability of complaints, examination of the same and finally asserted that it was done in a fair and transparent manner in as much as the earlier L 1 tenderer was also asked to be present on the subsequent date. No objections had been raised by any to the same. There were no allegations of arbitrariness or malafides in the process. It was wrong and impermissible for the Power Company to contend in Appeal that the Learned Single Judge had failed to consider the issue when it was not raised before the Court. The order cannot be attacked on a ground not urged before the Learned Single Judge and which he had no occasion to consider. The second ground mentioned in the impugned order was expressly given up by the Appellants. The Power Company cannot be permitted to blow hot and cold. It is not open for them now to make it a ground of attack by taking a contradictory stand when the order has gone against them on another ground. The classification now sought to be made by the appellant Power Company between those whose bids were opened on one date and others opened on more than one date is an artificial distinction sought to be made without intelligible differentia with the object to be achieved. The opening of the financial bids on two different dates was not occasioned by any conduct of the respondents, but for reasons solely attributable to the appellants. The respondents had no role in the alleged procedural irregularity. The appellants acted on frivolous complaints but for which all financial bids would have been opened on one date. The L1 tenderers for Nawada [LPA No. 827 of 2013], Purnea [LPA No. 861 of 2013] and Bhojpur [LPA No. 870 of 2013] did not change even after the opening of financial bids on the second date.

It was submitted that it was not a case for twice opening of financial bids. If the Power Company erroneously did not open all bids on the earlier date, and sought to rectify its mistake at a later date in presence of the L1 bidder of the earlier date, it has to be deemed that all financial bids were in fact opened on one date only. The Central Purchase Committee of the appellant Power Company is the competent authority to decide regarding acceptance of bids and related financial decisions. It consists of the Chairman and Directors of the Company with the only exception of the Principal Secretary, Department of Energy, Government of Bihar, who is the government nominee. The Central Purchase Committee after due application of mind decided upon and approved the twice opening of financial bids at its meeting dated 14.1.2013 and recommended award of tender to the final overall L 1 tenderers for both components. Barely days later on 8.3.2013, the same Chairman and Directors of the Company for inexplicable reasons took a different decision. The only fresh circumstance was the presence of the government nominee at this meeting. The change of decision without any fresh developments is per se evidence of arbitrariness. To make it a ground for artificial distinction and then adopt a policy of pick and choose vis--vis the bidders from Banka, Patna, Gaya and Rohtas violates the constitutional right to guarantee for equality of the L1 tenderers for the remaining districts. The stand in the counter affidavit regarding the opening of financial bids from that taken in the impugned order dated 8.2.2013 was the result of a conscious and deliberate decision-making process. Reliance was placed on A.I. R. 2004 Jharkhand 105 [M/s. Mahto Automobiles V. Union of India] to canvass that the appellants had in fact followed fair and transparent procedures in opening of the bids on two dates.

The action of the Power Company in accepting the judgement in part on basis of a self-made classification with regard to Banka, Patna, Gaya and Rohtas and challenging it with regard to others is arbitrary in the facts of the case. The bid for Banka is covered by the first order in CWJC 6293 of 2013 and analogous cases. Those for Patna, Gaya and Rohtas are covered by the subsequent order in CWJC 9301 of 2013 and analogous cases. The objection taken by the appellant Power Company with regard to the latter of waiver by withdrawal of earnest money, delay and suppression of facts did not meet the approval of the Learned Single Judge. The Power Company has given up all these grounds in the Appeal. The bidders of Purnea, Bhojpur, Nawada, Araria and Siwan who are respondents in separate Appeals are also overall L 1 tenderers for these districts.

It was the specific case of the Power Company before the Learned Single Judge that no funds were available for the State component of the project to justify the cancellation. Any new developments by way of alleged availability of funds for the State component of works at Part- B, cannot be urged at the appellate stage to assail the order on a ground to which the Court had no occasion to apply its mind. The order for cancellation had to be tested on basis of the recitals contained in the order. Availability of funds subsequently was a question of fact. There are no pleadings to that effect in the Appeals with documentary evidence in support. Without prejudice to the same, if the REC did not object to the publication of a common tender, but only desired separate L O A to be issued for the two components of the tender, it not being an essential part of the tender process, does not vitiate the tender process. An alternative submission was made that in view of the fresh development by availability of funds for Part- B of the component is all the more reason that the impugned order for cancellation is completely arbitrary and the appellants must proceed to award works to the overall L 1 tenderer in accordance with the decision of the Central Purchase Committee dated 14.1.2013 at each of the 11 locations. A judgment was not to be interpreted as a statute but with flexibility in the facts and circumstances of a case as held in [2006] 2 SCC 747(State of Karnataka V. C.Lalitha)

The financial implications of the arbitrary decision taken by the appellants may not be ignored by the court. The offer of the respondent Vijay Electricals limited in L P A No. 808 of 2013, for Araria was 7.94% above the estimated cost while the erstwhile L 1 tenderer before the financial bid of the former was opened on the 2nd date was 47.31% above the estimated cost. The former L1 tenderer now became L2 tenderer. The difference in estimated costs between the two, is 132 crores, saving for the appellants. In judicial review, the court is only concerned with infirmities in the decision making process as held in [1991] 1 SCC 212 (Shrilekha Vidyarthi V. State of U.P.) and [2013] 7 SCC 1 [Arun Kumar Agrawal V. Union of India].

Learned Counsel for the respondent bidders in L P A 827 of 2013 and LPA 861 of 2013 submitted that they were overall L1 tenderers in the final bid after twice opening of the bids and are covered by the judgements in CWJC 6293 of 2013 and analogous cases. They adopt the arguments made by Learned Senior Counsel Sri Narain.

Learned Counsel Sri S. D. Sanjay for the respondent in L P A 807 of 2013 submitted that he was the final overall L1 bidder after twice opening of bids for Siwan. His case was covered by the discussions in the second batch led by CWJC 9301 of 2013 and analogous cases. He adopts the arguments of Learned Senior Counsel Shri Narain to that extent. Our attention was invited by him to the resolution of the appellant Board dated 15.6.2013 to submit that after the judgment in CWJC No. 9301 of 2013, the second batch of cases, a conscious decision was taken by the Board to accept the verdict of the court with regard to the bidders for Banka, Patna, Gaya and Rohtas. The decision for challenging the verdict was restricted only to those districts where the tenderers were opened twice. But, after reconsideration even that ground was given up in the Counter affidavit. The decision to open the bids on two different dates was not that of the Central Purchase Committee, but it was taken by the Board itself evident from the pleadings in the counter affidavit.

Learned Counsel Shri S. D. Sanjay appearing for the appellant in LPA 829 of 2013( arising out of CWJC 9326 of 2013), a bidder for Nalanda, where also the bids were opened on two dates, submitted that his case was covered by the decision in CWJC No. 9301of 2013. He was also the only overall L1 bidder. The Learned Single Judge wrongly denied him relief on the .ground that he was the second lowest bidder for Part –B of the works. If the cancellation of the tender by the company was bad, the appellant was entitled to the same relief as the other overall L1 respondents. Learned Senior Counsel Shri Chittaranjan Sinha, appearing for the appellant in L P A 855 of 2013 [intervener in CWJC 9617 of 2013] submitted that he was a new bidder for Siwan pursuant to the fresh tender notice published on 26.3.2013 for Part-A. The writ petition filed by respondent number 6 (Appellant in L P A 807 of 2013 arising out of CWJC 9617 of 2013) was fit to be dismissed outright on the ground for suppressing that he had withdrawn the earnest money deposit after cancellation of tender on 8.3.2013 and submitted fresh bid in response to the new tender notice. The writ petition was filed by him subsequently on 3.5.13 after judgment was delivered in CWJC 6293 of 2013 on 26.4.2013. Respondent number 6 was therefore a fence sitter waiting and watching the outcome of litigation by others to decide his own course of action. The Learned Single Judge erred in holding that no 3rd party rights had been created. In the facts of the case, the district of Siwan had to be segregated from the entire discussion and dealt with separately as respondent number 6 was not similarly situated as the others to demand protection under Article 14 of the Constitution.

In reply, Shri S. D. Sanjay for respondent number 6 submitted that the appellant in L P A No. 855 of 2013 was a mere applicant in the fresh tender process. He had a right to be considered only under a tender notice which never saw the light of the day and has been set aside by the Learned Single Judge. In any event the Appellant was a tenderer for Part –A only while the respondent number 6 was staking his claim in the present proceedings both to Part-A and Part -B of the first tender. Even if the Court upholds the action of the Power Company in cancelling the first tender, in view of the subsequent development for availability of state funds with regard to Part-B fresh bids shall have to be invited. The alleged delay in preferring the writ petition of approximately two months was not excessive and was reasonable considering that the companies are all situated outside the State. The Power Company had given up the objection regarding withdrawal of earnest money and the Appellant had no locus to question the same. In the facts of the case, the question of suppression of a material fact does not arise for which reliance was placed on [2004] 7 SCC 166 (S.J.S.Business Enterprises (P) Ltd. V. State of Bihar). The appellant in L P A No. 855 of 2013 can challenge only the second judgment in CWJC No. 9301 of 2013 and not the previous judgment in CWJC No. 6293 of 2013. But the former is only a sequel to the latter and follows it.

Learned Principal Additional Advocate General, in reply, submitted that the lis for determination before the Learned Single Judge was the correctness of the order cancelling the earlier tender notice and publication of the fresh tender. Judicial review had to be confined to the decision making process only and not the decision itself. Even if the decision was to be seen, all that the Court would examine was if the reasons for the same were arbitrary or irrational. Otherwise the Court cannot substitute its own views. The Board bona fide opined of the difficulties in going ahead with the earlier tender notice in view of the difficulties in compliance with the REC direction for issuance of separate L 0 A with regard to Part-A and Part-B of the works. A common N I T having been issued, with a common estimated cost, and a common bid received, as part of normal commercial practice separate L 0 A could not be issued for the two. The reason cannot be classified as arbitrary, irrational or not germane. On the date common N I T was cancelled justifiably, State funds were not available for Part-B of the works. The two reasons combined constitute a bona fide subjective satisfaction of the appellants who were required to work the tender. The decision that twice opening of financial bids for the same works constituted an irregularity, likewise cannot be construed as arbitrary or irrational. After State funds were made available for Part-B of the works, matters were reconsidered in changed circumstances. The objection of the R E C was not considered relevant anymore as impediment in award of works separately.

The counter affidavit filed by the Appellant Power Company before the Learned Single Judge reflected the views of the Central Purchase Committee only and not that of the Board of Directors who were the final decision-making authority. The words 'Board' mentioned in the counter affidavit had been loosely used as the counter affidavit was never formally approved by the Board of Directors. Merely because a majority of the Board of Directors consisted of the members of the Central Purchase Committee with exception of the Government nominee, cannot be a ground to hold otherwise. The identity of the Board of Directors was separate from the Central Purchase Committee. There are no allegations that the Board of Directors acted with any ulterior motives. If there were any defect in the pleadings it cannot be read and understood in a manner to mean something which was never intended to be said. Even if the decision by them to cancel the tender notice was wrong, the Court should not interfere with bona fide decisions.

A separate counter affidavit has been filed by the R E C which is absolutely of no help to us in adjudication as it merely mentions the facts of the case without any clear stand on its behalf. As a Government body and the Nodal Agency in the RGGVY the least that was expected from it was to fulfill its constitutional duty for assisting the Court appropriately in matters related to public projects meant for public good.

We have considered the submissions on behalf of the parties. The Notice Inviting Tenders, the conditions incorporated in the same, the working of the N I T, are commercial matters based on commercial decisions taken for commercial considerations. It is not the jurisdiction of this Court under Article 226 to interfere with commercial matters and commercial decisions for the mere asking merely because the Court may be of a different view. Merely because one of the parties to the contract was a government body, it cannot be deprived of certain flexibility to take commercial decisions in its financial interests. But, because it is a governmental body, there shall be a limited restraint on its decision making process to ensure that it acts by the constitutional limitations. The extent of freedom available to a private body shall not be the same as available to a government body. Award of contracts by state authorities and cancellation of the same have been the subject matter of judicial consideration more than once. The parameters for judicial consideration stand well entrenched. We shall briefly notice them before adverting to the facts of the case.

In [1993] 1 SCC 445 [Sterling computers Limited v M& N publications limited] on a challenge to the supplemental agreement executed by it with a rival contender, the respondent MTNL before the High Court contended that it was bona fide commercial decision taken without any malice. Interestingly, in the Appeal before the Supreme Court, MTNL accepted the findings of the High Court that execution of the supplemental agreement by it was contrary to Article 14 of the Constitution of India. The only defence was that it was a bona fide decision. Applying the 'irrelevant considerations doctrine' vitiating the decision making process, it was observed as follows :-

'12. At times it is said that public authorities must have the same liberty as they have in framing the policies, even while entering into contracts because many contracts amount to implementation or projection of policies of the Government. But it cannot be overlooked that unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the Constitution in many cases for years. That is why the courts have impressed that even in contractual matters the public authority should not have unfettered discretion. In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognised by courts while dealing with public property. It is not possible for courts to question and adjudicate every decision taken by an authority, because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi-judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of 'play in the joints' to the executive.' '15. There is nothing paradoxical in imposing legal limits on such authorities by courts even in contractual matters because the whole conception of unfettered discretion is inappropriate to a public authority, who is expected to exercise such powers only for public good.'

The limits for judicial review in matters relating to contracts and tenders, the extent to which the Courts may interfere with the same in the changing commercial scenario was considered in [1994] 6 SCC 651 [Tata Cellular v. Union of India]. The guidelines laid down are as follows:-

'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 the law that regulates his decision-making power and must give effect to it.

(ii) Irrationality, namely, Wednesbury unreasonableness.

(iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, 'consider whether something has gone wrong of a nature and degree which requires its intervention'.

'94. The principles deducible from the above are:

(1) The modern trend points to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) 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.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a 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 principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

In (2007) 14 SCC 517 (Jagdish Mandal v. State of Orissa) considering the extent of judicial review permissible in contract matters it was observed:-

'22…..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 public interest is affected.

The principles for judicial review with regard to contractual matters finds reference more recently in (2012) 10 SCC 1 (Natural Resources Allocation, In re, Special Reference No. 1 of 2012 holding as follows:-

'170.1. Firstly, State actions in the contractual field are meant for public good and in public interest and are expected to be fair and just.

170.2. Secondly, it would be alien to the constitutional scheme to accept the argument of exclusion of Article 14 of the Constitution of India in contractual matters.

170.3. Thirdly, the fact that a dispute falls in the domain of contractual obligation, would make no difference to a challenge raised under Article 14 of the Constitution of India on the ground that the impugned act is arbitrary, unfair and unreasonable.

170.4. Fourthly, every State action must be informed of reason and it follows that an act uninformed by reason is arbitrary.

170.5. Fifthly, where no plausible reason or principle is indicated (or is discernible), and where the impugned action ex facie appears to be arbitrary, the onus shifts on the State to justify its action as fair and reasonable.

170.6. Sixthly, every holder of public office is accountable to the people in whom the sovereignty vests. All powers vested in a public office, even in the field of contract, are meant to be exercised for public good and for promoting public interest.

170.7. And seventhly, Article 14 of the Constitution of India applies also to matters of governmental policy even in contractual matters, and if the policy or any action of the Government fails to satisfy the test of reasonableness, the same would be unconstitutional.'

We shall now advert to the facts of the present case for application of the aforesaid principles for exercise of powers for judicial review in the present case. Significantly, the works consisted of the Government of India component, Part-A, and the State component Part-B. The scope of works in the two and the cost estimate were separate. Bids had to be submitted for the two in a composite manner but with different rates. A bidder could not submit a bid for part of the works only. The R E C in its letter dated 19.2.2013 had not raised any objection to the publication of a common NIT with common estimate inviting composite bid and award of works to the overall L1 tender based on the same. Since the nature of works and liability for payments of the two parts of works were separate, in our opinion, the R EC very reasonably and legitimately only required the L 0 A for the two components to be awarded separately. It had no impact or relevance to the validity of the tender process. Even before us, no stand has been taken by the R E C that it has any objection to the process. The Learned Single Judge rightly held that the letter dated 19.2.2013 of the R E C did not state anything new which was not known to the appellants earlier. The nature of 'complexities' due to the same has neither been mentioned in the order, nor explained in the Counter affidavit. Even before us no reasons to opine as such by the Power Company was explained. The attempt to explain before us orally that it related to the non- availability of funds for the State Component now becomes unsustainable in view of the subsequent availability of funds for the State component as stated by the Principal Additional Advocate General. The reasoning of the Learned Single Judge, attempted to be faulted now gets re-enforced for that reason. We are therefore satisfied that the unexplained 'complexity', never existed on the date the impugned order was issued or even thereafter.

The second ground mentioned in the impugned order, and strongly canvassed before us is the twice opening of financial bids. If the issue had stood simply at that issues may have been different. Adequate precautions for transparency and fair play were taken by the Power Company in opening of the financial bids on two dates. The reasons were attributable to the Power Company exclusively. Yet there are no allegations of favouritism or malafide by any of the bidders. Rightly, the bidders whose financial bids had been opened on an earlier date and may have been of L 1 status were asked to and were present at the opening on the second date. The discussion in (M/s. Mahto Automobiles) (supra) relied upon by Learned Senior Counsel Sri Narain is apposite holding:-

'7. What is argued is that having once rejected the bid of respondent number 7 for one reason or other, it was not open to respondent number 6 to give respondent number 7 another opportunity to produce the documents and then to entertain its bid and then to open its financial bid. The question is whether because of the mistake made by respondents number 1 to 6, some of the tenderers who would not produce the relevant documents on or before 5. 4. 2003 should suffer. According to the counsel for the appellant, in view of the mistake made by the Department, what was called for was the issue of a fresh notification inviting tenders and not to complete the process which had been ever started because of the mistake.

8. Obviously, the mistake made by the Department should not prejudice the tenderers leading to the rejection of their tenderers which were otherwise qualified to be accepted. All of them were asked to produce documents. Some would not comply with the demand in time since the letters of demand were not dispatched to them in time. If in that process, the Department took the view that those tenderers should be given an opportunity to produce the relevant documents that it cannot be said to be unfair. What we have to see is whether there was a fairness in the method adopted by respondents number 1 to 6. It cannot be said to be unfair. What they did only meant that respondent’s no. 1 to 6 insured that because of the mistake committed in their office some of the tenderers would not suffer. There is no case of malafide or oblique motive in the matter of giving such an opportunity. In that situation, we are of the view that there is no justification or adequate ground made out for interference by the court acting under article 326 of the Constitution of India. As observed in a number of decisions, including the decision of the Supreme Court in the case of AIR India Ltd v. Cochin international Airport limited, [2000] 2 SCC 617: AIR 2000 SC801], what the court is to ensure is that the method adopted by the concerned department is fair and once that is shown no interference with the award should be made. It cannot be said that there is any justification in interfering with the award of work by respondent’s,1 to 6 in this case.'

We are inclined to read M/s. Mahto Automobiles (supra) in light of the discussion with regard to fair play in action to all tenderers as discussed in (2006) 11 SCC 548 (B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.) in which considering the aspect of fairness in decision making process it was observed :-

'66. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarised as under:

(i) if there are essential conditions, the same must be adhered to;

(ii) if there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully;

(iii) if, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing;……'

There is yet another reason why we do not find any substance in the contentions of the Power Company on this aspect.

If the Power Company opined it to be an irregularity there had to be an explanation what worked in its mind to follow this procedure. On the contrary, events suggest the appellants were fully satisfied with regard to the fairness in procedure followed by them in the circumstances. The Central Purchase Committee after due consideration and application of mind placed the matter with reasons for acceptance before the Board of Directors on 14.1.2013. The Central Purchase Committee comprised of the Chairman-cum-Managing Director, Member Administration, Director (F& R), Director (Generation), Director (Transmission), Deputy Director (Technical) Department of Industries, Government of Bihar, Chief Engineer (S&P), Special Invitees : Financial Controller (Budget),Chief Engineer (Rural Electrification), (Electrical Superintending Engineer (Purchase). The Board of Directors comprised of the members of the Central Purchase Committee, the only additional participant being the Secretary, Department of Energy, Government of Bihar. If the same persons opined differently earlier and now still in majority opined otherwise within a period of three weeks only because of the presence of the Secretary, government nominee, there has to be some semblance of explanation or reasoning.

In (2011) 4 SCC 756 (T.H.D.C. India Limited vs. Voith Hydro GMBH Company), opining that the process was transparent and the issues were not raised in the first round, the procedure adopted by inviting fresh bids disclosing reasons to both sides was absolutely transparent it was held as follows:-

'30. In our opinion, since the whole process was absolutely transparent and since these issues, which were raised by way of a writ petition, were not even argued before the Court in the first round, there is no scope to stall the whole process by finding fault with the tendering process and insisting that THBC could not invite the fresh pricing bids. In our opinion, in inviting the fresh pricing bids, particularly after conveying the deficiencies or nonconformities to both the respondents and making it clear to them that they would have to comply with the same as at the first stage, we do not think that any change is being made in the bidding conditions.'

It is curious how the Power Company in such an important matter has changed its decision from one to another in quick succession almost as if it was without due application of mind. After the judgment in CWJC 6293of 2013 the Board of Directors took a conscious decision to challenge it with regard to those Districts where the bids had been opened on more than one date deciding to accept the judgment with regard to Banka, Gaya, Patna and Rohtas where all bids had been opened on one date. Contrary to the same, the counter affidavit filed by the appellants before the Learned Single Judge, contended that opening of financial bids on two dates was done in very fair and transparent manner because of which it was not pressed before the Learned Single Judge to support the cancellation order and finds no discussion in the order. The Learned Single Judge therefore rightly opined that he was required to examine only two aspects of 'complexity' and non-availability of funds for the State part of the project. Before us, in Appeal, the aspect of irregularity in opening of financial bids was again sought to be resurrected. The contention that the counter affidavit was on the half of the Central Purchase Committee and not the Board of Directors is but an argument of desperation which does not merit any consideration. The counter affidavit by a Senior officer of the rank of Chief Engineer [Rural Electrification], states that he was authorized to swear the affidavit's on behalf of the respondent Board. The entire bidding process including opening of financial bids on two dates was done in all fairness and transparency. The appellants cannot be permitted in appeal to make this ground of defence before the Learned Single Judge, a weapon of offense in the appeal.

The salutary principle of jurisprudence is that it is impermissible for a party in the same case to raise inconsistent and mutually destructive stand in pleadings. In (2005) 7 SCC 653 (Devasahayam v. P. Savithramma) it was observed:-

'29…..The respondents, as noticed hereinbefore, in their written statement categorically stated that the plaintiff had been in possession of the land as a tenant and his possession is that of tenant even to this day and, thus, acco

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rding to the defendant the appellant continued to be a tenant. As in the counterclaim such a plea had been taken, the respondents on their own showing raised inconsistent pleas which are said to be mutually destructive.' Similar view was expressed in (2009) 5 SCC 713 (Vimal Chand Ghevarchand Jain v. Ramakant Eknath Jadoo) observing:- '25. Pleadings of the parties, it is trite, are required to be read as a whole. The defendants, although are entitled to raise alternative and inconsistent plea but should not be permitted to raise pleas which are mutually destructive of each other. It is also a cardinal principle of appreciation of evidence that the court in considering as to whether the deposition of a witness and/or a party is truthful or not may consider his conduct. Equally well settled is the principle of law that an admission made by a party in his pleadings is admissible against him proprio vigore….' That brings us to the question of the subsequent development with regard to availability of funds for the State component of the works in Part-B. Learned Principal Additional Advocate General argued that the subsequent availability of funds was a strong motivating factor for the appellants in deciding to go ahead with the earlier tendering process in so far as Banka, Gaya, Patna and Rohtas are concerned as all bids had been opened on one date. If that reasoning is to be accepted, it must be carried to its logical conclusion and there can be no truncated or selective application. We have already held that there was no justification for cancellation of the entire tender in view of the R E C letter dated 19.2.2013. The Power Company in its Counter Affidavit before the Learned Single Judge had rightly contended the following of a fair procedure in twice opening of the financial bids and which meets our approval. The subsequent availability of State funds additionally also makes that ground mentioned to the contrary in the order irrelevant. We are not persuaded to now truncate the impugned order for cancellation of the tender notice, uphold it in a manner to create more commercial complexity and escalation of costs, delay in project, all of which are relevant considerations, when we are otherwise satisfied that the appellants can well proceed with the overall L1 tenderer under the earlier tender published by them. We find no reason to interfere with the order of the Learned Single Judge for reasons discussed by him and that considered by us also. Subsequent events, relevant to the controversy, can always be taken into consideration if they aid in resolution of the disputes and non consideration of which may only lead to multiplicity of litigation stands well settled. The appellant in L P A 829 of 2013 (arising out of CWJC 9326 of 2013) was the overall L 1 bidder for Nalanda. In the changed circumstances due to availability of funds for the State component of the works it becomes irrelevant that he was the 2nd lowest tender for the State component. The order dismissing CWJC No. 9326 of 2013 is not sustainable.. The Appellant in L P A 855 of 2013 (arising out of CWJC 9617 of 2013, his intervention application having been allowed), was a subsequent bidder for Siwan under the fresh tender notice dated 30.3.2013 for Part-A component of the works only. The bidder only had a right to be considered. If the substratum of the right vanished by reason of a Court order nothing survives. The challenge that the writ petitioner/respondent no.6 had suppressed withdrawal of Earnest Money deposit under the former tender, and had offered fresh bid under the new advertisement by deposit of Earnest Money and Bank Guarantee were aspects relevant to the Power Company. The relationship between the parties being contractual, the right of waiver being with the Power Company, it having chosen not to challenge it in Appeal, the right of the Appellant being secondary, consequential and inchoate, we do not think the Appellant has a cause of action. In conclusion, for reasons discussed, we hold that the cancellation of the NIT by order dated 8.3.2013 was unjustified and not sustainable on grounds of 'complexity' in R E C letter or opening of financial bids on more than one date for certain Districts. The fairness in the financial bids opening process and the subsequent availability of funds for the State component in Part-B, persuades us to modify the order of the Learned Single Judge by holding that the Power Company is now required to proceed in accordance with the overall L1 status of the bidders for both Part-A and Part-B of the works. The Appeals filed by the Power Company are dismissed with the aforesaid modification. LPA No. 829 of 2013 is allowed. L P A No. 855 of 2013 is dismissed. Before we part with the order, learned Counsel for the REC, during the hearing informed us that in execution of the RGGVY Scheme for Rural Electrification in all the States of the Country there has been no other litigation regarding award of contracts except one case before the Gauhati High Court by M/s Deka and Deka.