Civil Appeal Nos. 1353-1354 of 2017 (Arising out of S.L.P. (Civil) Nos. 35104-35105 of 2016) and Civil Appeal No. 1355 of 2017 (Arising out of S.L.P. (Civil) No. 36308 of 2016). Case: Consortium of Titagarh Firema Adler, S.P.A., Titagarh Wagons Ltd. through Authorized Signatory, West Bengal Vs Nagpur Metro Rail Corporation Ltd., through its General Manager (Procurement) and Ors.. Supreme Court

Case Number:Civil Appeal Nos. 1353-1354 of 2017 (Arising out of S.L.P. (Civil) Nos. 35104-35105 of 2016) and Civil Appeal No. 1355 of 2017 (Arising out of S.L.P. (Civil) No. 36308 of 2016)
Party Name:Consortium of Titagarh Firema Adler, S.P.A., Titagarh Wagons Ltd. through Authorized Signatory, West Bengal Vs Nagpur Metro Rail Corporation Ltd., through its General Manager (Procurement) and Ors.
Judges:Dipak Misra and Amitava Roy, JJ.
Issue:Constitution of India - Article 14
Judgement Date:May 09, 2017
Court:Supreme Court
 
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Judgment:

Dipak Misra, J.

  1. Nagpur Metro Rail Corporation Ltd., the 1st Respondent herein, issued a Notice Inviting Tender (NIT) on 25.01.2016 for the work of design, manufacture, supply, testing, commissioning of 69 passenger rolling stock (Electrical Multiple Units) and training of personnel at Nagpur Metro Rail Project. The said project is being funded by KfW Development Bank, Germany. As per the Clause ITS 35.8 at all stages of bid evaluation and contract, award would have to be subject to no-objection from KfW Development Bank.

  2. In response to the said NIT, three bidders submitted their bids. One was found technically disqualified and thus, only the Appellant and the Respondent No. 2 remained in contest. Upon opening of financial bid on 29.09.2016, it was found that the Appellant had given a bid of Rs. 852 crores whereas the bid of the Respondent No. 2 was Rs. 851 crores. The Director Level Tender Committee of the 1st Respondent agreed with the report of the tender evaluation committee and recommended to accept the lowest offer of Respondent No. 2 and the work order was to be issued after compliance of certain technical requirements. Before issue of work order, the Appellant filed Writ Petition No. 5818 of 2016 before the High Court contending that Respondent No. 2 was not technically qualified and, therefore, its financial bid could not have been opened.

  3. It was contended by the Appellant herein before the High Court that Clause 26 of the tender document prevented a person from getting any information about the technical qualification of the competitor, till the contract is awarded, which is arbitrary, unreasonable and violative of Article 14 of the Constitution; that the Respondent No. 2 is not having the requisite experience as required under the NIT, for it does not meet the eligibility criteria on its own, but was relying on the experience of its subsidiary.

  4. The Division Bench rejected the contention to go into the legality or otherwise of Clause 26 observing that the Appellant had participated in the tender bid knowing very well that such a Clause existed and it was not open to it to contend that the said Clause is onerous and lacks transparency and, therefore, violative of Article 14 of the Constitution; and it had challenged the same only after it is found that its financial bid was higher than that of Respondent No. 2. It further observed that the matter would have been different had the Appellant, immediately after the tender notice was published, challenged the said condition after NIT was issued. The High Court placing reliance upon the decisions in New Horizons Ltd. v. Union of India (1995) 1 SCC 478, Tata Cellular v. Union of India (1994) 6 SCC 651, Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) 2016 (8) SCALE 99: (2016) 8 SCC 622 and Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. 2016 (8) SCALE 765 dismissed the writ petition. Be it noted, though the High Court felt that it could have non-suited the writ Petitioner only on the ground that it had participated in the tender process knowing fully well that stipulation in nature of the Clause 26.1 existed, yet proceeded to address the controversy and directed the owner to produce the record solely for the further purpose of being satisfied as to whether the decision making process by the employer/owner is legally valid or not and further to examine as to whether the decision arrived at by the owner that the Respondent No. 2, the lowest bidder, possessed requisite experience. After perusing the entire documents on record, the High Court came to hold that:

  5. It is to be noted that the tender evaluation committee consists of Chief Project Manager/RS, General Manager/Procurement, Chief Project Manager/Signaling and the General Manager/Finance. The said Committee has evaluated the documents with regard to the technical qualification of the Petitioner as well as Respondent No. 2. The Committee has noted that Respondent No. 2 was formed in June 2015 by merger of CRC Corporation and CNR Corporation limited. The documents relating to the merger has been submitted along with the bid. The Evaluation Committee has also noted that after the incorporation of the Respondent No. 2, upon the merger of CSR Corporation and CNR Corporation, Respondent No. 2 was awarded contract for supply of 76 cars for Noida Metro Project by Delhi Metro Rail Corporation Ltd. The Committee found that insofar as Clause No. 12 is concerned, though the minimum requirement was that the bidder must have an experience of total 60 metro cars and out of which 30 cars should be either stainless steel or aluminium, Respondent No. 2 was having an experience of total 594 metro cars and all the cars were of stainless steel. Insofar as Clause 12.1 is concerned, which requires that out of the number of cars manufactured, there has to be completed satisfactory revenue operation at least in one country outside country of origin/manufacturer or in India or at least one in G8 country of 30 metro cars, Respondent No. 2 was having an experience of 432 outside country of origin. It could thus be seen that the perusal of the document placed on record would reveal that the decision making process of the technical evaluation committee has been guided by the relevant factors and it cannot be said that they have not taken into consideration any of the relevant factors. We are, therefore, of the considered view that the decision of the technical evaluation committee would fall within the ambit of 'rationality'.

  6. It is further to be noted that the minutes of the tender evaluation committee was further placed for approval before the Director Level Tender Committee consisting of Director (Rolling Stock and Systems), Director (Projects) and Director (Finance). It could thus be seen that the matter has not been examined at only one level of expert committee, but has gone through examination at two levels of experts.

  7. Thereafter, the High Court referred to the authorities mentioned hereinbefore and appreciated the principles stated therein and eventually dismissed the Writ Petition.

  8. It is pertinent to mention that in the course of hearing of the matter before the High Court, learned Counsel for the writ Petitioner sought permission to withdraw the Writ Petition with further liberty to approach the High Court after award of the contract. The Court, though expressed its willingness to grant permission to withdraw the Writ Petition, it was not inclined to grant liberty as sought by the learned Counsel for the Petitioner. Simpliciter withdrawing was not accepted and grant of liberty was insisted upon. Dealing with the said fact, the Division Bench referred to a passage from Central Coalfields Ltd. (supra) and expressed thus:

  9. We find that if we accept the prayer as made by the Petitioner, it will be giving leverage to the Petitioner to again approach this Court and delay the project further. Taking into consideration the public interest, we have ourselves scrutinised the entire minutes of the Tender Evaluation Committee and Director Level Committee to find out as to whether the decision making process, answers the test as laid down by Their Lordships of the Apex Court. We have found that the decision making process cannot be termed to be vitiated on the ground of arbitrariness, irrationality or mala fides. Accepting the request of the learned senior counsel for the Petitioner would further permit the project to be delayed. Needless to state that the project is an important project for the city of Nagpur. In that view of the matter, though the prayer which on first impression appears to be innocuous, is liable to be rejected.

  10. After dismissal of the Writ Petition, an application for review (M.C.A. [Review] No. 1087 of 2016) was filed. The High Court, while dealing with the application for review, noted the two grounds on which the review was sought. It is worth reproducing:

    i. While exercising the principle of Wednesbury reasonableness, the order in review failed to take into account relevant omission in the process of scrutiny, like (a) how rate discount cannot be granted and (b) improper calculation of service tax which renders the applicant bid lowest.

    ii. that there was suppression of relevant facts by Respondent No. 2 before the authorities.

  11. Dealing with the said aspect, the Division Bench held:

  12. Shri S.G. Aney, learned senior counsel appearing on behalf of the Petitioner, submitted that when an action would fall in the ambit of malice in law, it may not be necessary to implead the persons against whom malafides are attributed as a party Respondent. We find that by no stretch of imagination the present case would fall in the ambit of malice in law. If it is a case of applicant that the tender processing authorities in order to favour the Respondent No. 2 have deliberately made some omissions or have committed some malafide act in order to help the Respondent No. 2 to get the contract, then in that event such of the officers of the Respondent No. 1 who are attributed with such an act or omission, were necessary parties. So also it was necessary for the Petitioner to make specific averments against those individuals. As already discussed hereinabove, though a specific query was made in that regard, the learned Senior Counsel appearing on behalf of the Petitioners, as that stage, fairly stated that no such malafides are attributed in the memo of petition. In the light of this factual position, seeking review on the ground that there was a wrong deliberate evaluation of price bids by Respondent No. 1 and the same act was malafide in order to favour the Respondent No. 2 and to illegally oust the Petitioner, in our view, is an imagination of a fertile brain of the draftsman.

  13. We further find that the Review Application depicts total non-application of mind. In paragraph No. 6.8 of the application, the draftsman of the Review Application, has averred that the Respondent No. 2 has not formed any JV/Consortium...

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