Case: Lanco Infratech Limited Vs. Mormugao Port Trust

in domain of contractual matters is subject to judicial review on the touchstone of Article 14 of the Constitution where equality is denied or reasons stated are patently unsustainable. He also relied upon the judgment of the Supreme Court in the case of Air India Vs CIAL, (2000) 2 SCC 167), as well as Sterling Computers Ltd. Vs M/s. M&N Publication Ltd., (1993) 1 SCC 445 ), to further argue that an Authority or State is bound to adhere to the norms, standard and procedure laid down by them and cannot depart from such procedure arbitrarily. The Supreme Court in the case of Reliance Energy Limited Vs MSRDC Ltd., (2007) 8 SCC 1 , while holding that Article 14 of the Constitution embodies the principle of non-discrimination, clearly held that Level playing field is an important concept while construing Article 19(1)(g) of the Constitution. This doctrine provides space within which equally placed competitors are allowed to bid so as to subserve the larger public interest. The Supreme Court further held that where tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This legal certainty is an important aspect of the rule of law. In the case of Sterling Computers Limited (supra), the Supreme Court also stated that scope of judicial review in such cases the Court cannot act as an appellate authority to examine details of terms of contract. 21. The Respondent has also relied upon the judgment of the Supreme Court in the case of Raunaq International Ltd. Vs I.V. R. Construction Ltd and Others, (1999 AIR SCW 53), where the Supreme Court enunciated the principle in relation to scope of power of judicial review in relation to the matters of tenders where grant of contract challenged by unsuccessful tenderer, the Court should not interfere unless substantial public interest is involved or grant is mala fide, held as under: 11. When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the Court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the Court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by Court intervention, the proposed project may be considerably delayed thus escalating the cost for more than any saving which the Court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the Court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the Court should not intervene under Art. 226 in disputes between two rival tenderers. 22. In the case of Kanchi Fleet Movers Vs The Collector of Solapur & Ors., 1998(3)ALL MR 474, this Court also laid down the guidelines after considering Tata Cellulars case (supra) in such matters, as under:- 21. .......................... i) The modern trend points to judicial restraint in administrative action;ii) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made; iii) 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.iv) The terms of the invitation to tender cannot be hope 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 that not, such decisions are made qualitatively by experts. v) The government must have freedom of contract. I 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 but must be free from arbitrariness not affected by bias or actuated by mala fides; vi) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. 23. In the present case, examined in light of the above guidelines, we are unable to hold that the decision of the Respondents is illegal, irrational or arbitrary to invite application of Wednesbury principle of unreasonableness. There is no procedural impropriety in the decision making process. Clauses 2.2.1, 2.2.2, 2.2.9, 3.2.1, 3.2.3 and 3.2.4 have been understood by the Authority concerned in a particular manner keeping in view the interest of the project. This interpretation applied by the Authorities is based upon the advise of the Expert Body which was called as Technical Advisors. There is hardly any material before the Court to accept any other interpretation. Merely because it is possible to collectively read these clauses and give a meaning different than the one given by the Authorities per se would not be a ground justifying judicial intervention by this Court in exercise of its power under Article 226 of the Constitution of India. The challenge of the Petitioner falls in a narrow compass and the arguments raised do not have merit. Within the limited scope of judicial review of such administrative decision, we are unable to find that the approach of the Respondent manifestly suffers from arbitrariness or there is any attempt on the part of the said authority to exclude the Petitioner from participating in the tender process. The bid has been rejected being non eligible to the eligibility criteria clause being Clauses 2.2.2(A) in case of projects in Category 1 and/or 3.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]This approach of the Respondent, in our view, can hardly be faulted with. Firstly, a group of Companies forming consortium can be an option and that is not disputed. The eligibility ofand shortlisting process contemplated eligibility in regard to technical capacity and five years experience preceding the application due date in relation to receiving payment for construction, development and collection and appropriation of revenue and from eligible project underThe application of this condition is hardly in dispute. In terms of Clause 3.2.1 eligible experience from Categories 1 and 3 both had to relate to `Port sector. Unless such experience of project and construction was in relation to eligible project in Port sector, the Applicant would not be able to claim benefit of such experience for satisfying eligibility criteria. Clause 3.2.3 which titles as `For a project to qualify as an Eligible Project under Categories 1 and 2, under Clause (b), the entity claiming experience should have held in the company owning the Eligible Project a minimum of 26% equity during the period for which Eligible experience is being claimed. On plain reading of this clause, the experience has to be directly in the company owning the Eligible Project and not through an indirect ownership. A minimum of 26% equity has to be claimed by the Applicant in the Company owning Eligible Project. This simply means that an indirect route of ownership would not satisfy the language of this clause. The purpose and nexus of the clauses with the eligibility therefore is that a Company claiming such benefit should directly own the eligible project and if not should at least directly have 26% shareholding in the Company owning eligible project of which experience is claimed. This condition is not satisfied in the present case. Admittedly, PRSB the Petitioner (Member of Consortium) claims experience on the basis that it has 42.9% equity shares in M/s. Westport Holding Sdn Bhd which owns 100% capital of the project company Westport Malaysia Sdn Bhd. Nothing was submitted along with the application by the Petitioner which could show that it is one and the same company or even that its management vested in the sameapproach of the Respondent that the intended members of the Consortium application to have a direct experience in eligible project relating to Port Sector cannot be termed as an absurd interpretation or a meaning which will be opposed to public policy or public interest. It is a settled rule of law that in commercial transactions, the Court would not substitute its view in preference to the meaning given to a clause inviting tenders unless it was absolutely essential to do so and the ends of justice would demand such substitution. It is at the very threshold that the Respondent has sought clarification expressing doubt in regard to the experience claimed by the Petitioner under Clauses 2.2.2, 2.2.9 read with Clauses 3.2.1 and 3.2.3 and the explanation was not found to be satisfactory and hence not accepted. We are unable to say that in the facts of the case, the Respondent has acted arbitrarily. Shortlisting was contemplated in terms of Clause 2.2.1 for participation in the bidthis regard, the Respondent relied upon the report of the Expert Committee which found that the stand taken by the Petitioner was not justifiable and it did not satisfy requirement of different clauses of the RFQthe action of the Respondent is reasonable and does not suffer from the element of arbitrariness, the Courts would be reluctant to interfere in tender process. It is also a settled principle of law that the Court at best could examine infirmities or legalities of the decision making process and not the decision itself.In the present case, examined in light of the above guidelines, we are unable to hold that the decision of the Respondents is illegal, irrational or arbitrary to invite application of Wednesbury principle of unreasonableness. There is no procedural impropriety in the decision making process. Clauses 2.2.1, 2.2.2, 2.2.9, 3.2.1, 3.2.3 and 3.2.4 have been understood by the Authority concerned in a particular manner keeping in view the interest of the project. This interpretation applied by the Authorities is based upon the advise of the Expert Body which was called as Technical Advisors. There is hardly any material before the Court to accept any other interpretation. Merely because it is possible to collectively read these clauses and give a meaning different than the one given by the Authorities per se would not be a ground justifying judicial intervention by this Court in exercise of its power under Article 226 of the Constitution of India. The challenge of the Petitioner falls in a narrow compass and the arguments raised do not have merit. Within the limited scope of judicial review of such administrative decision, we are unable to find that the approach of the Respondent manifestly suffers from arbitrariness or there is any attempt on the part of the said authority to exclude the Petitioner from participating in the tender process. The bid has been rejected being non eligible to the eligibility criteria clause being Clauses 2.2.2(A) in case of projects in Category 1 and/or 3.