Case: Coastal Marine Construction &amp; Engineering Limited &amp; Another Vs. The Shipping Corporation of India &amp; Others

of tenders because it is the realm of contract and as such the decision more often are made collectively by experts. It is also been held by catena of judgments that the Government must have freedom of contract. A fair play is necessary for an administrative body functioning in administrative spare. The Courts have also to consider that the quashing of decision may impose heavy administrative burden on the administration. Even if some defect is found in the decision making process, the Court must exercise its discretionary powers under Article 226 of the Constitution of India in furtherance of public interest and not merely on the making out of a legal point. [See Jagdish Mandal vs. State of Orissa, (2007) 14 Supreme Court Cases, 517 , (relied upon by the third Respondent), Air India Ltd. vs. Cochin International Airport Ltd. (2000) 2 SCC 617 , Tata Cellular vs. Union of India, (1994) 6 SCC 651 , B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd., (2006) 11 SCC 548 , Raunaq International Ltd. vs. I.V.R. Construction Ltd. (1999) 1 SCC 492 ]. 15. Having heard the learned counsel for the parties, we find that the only question which is required to be decided in this Petition as to whether the clause Nos. 6.1 and 6.5 permit the TPC/ first Respondent to take into consideration the experience of another company namely Fugro Survey (Middle East) Ltd. along with the experience of the third Respondent bidder company for the purposes of fulfilling the experience criteria.16. It is pertinent to mention here that from the minutes of the meeting of TPC, it reveals that the TPC had observed that the company Furgro (Middle East) Ltd. is unrelated company from the bidder third Respondent company. There is no material to accept the contention of the third Respondent that Furgro (Middle East) Ltd. is its Parent Company or the third Respondent is its Subsidiary.17. On a plain reading of clause Nos. 6.1 and 6.5 we find ourselves unable to agree with the claim of the Respondents that the experience of the Group Company can also be taken into consideration while considering the experience of bidder when the clauses are so clear requiring therein that the bidder independently should have experience. In this view of the matter, even though clause 5.1 provides that in the event of any dispute as regards interpretation of the clauses, the decision of the first Respondent shall be final and binding, the interpretation as has been done by the first Respondent leads to absurdity and provides for arbitrary exercise of powers.18. In our considered view the condition NO. 6.1 and 6.5 regarding eligibility criteria being fundamental condition of tender for being qualified for the purposes of experience if allowed to be interpreted as has been done then the said condition would become redundant. By putting the aforesaid clauses, the Respondent No. 1 having restricted the entry of the bidders to those who independently should have experience could not have allowed the other bidders to claim experience of technical collaborator/totally unrelated Group Companies. By doing so the first Respondent has violated the fundamental experience qualification condition and thereby acted in arbitrary manner vitiating the entire decision making process. As noted above, we also have not come across any document to show that the third Respondent bidder is Subsidiary of Fugro Survey (Middle East) Ltd. or that the said Company is Parent Company or Sister Company of the third Respondent bidder.19. In what way the Group Company or Subsidiary can be termed as parent or sister company of the third Respondent for claiming the experience said company i.e. Furgo Middle East Private Limited has also not been explained by first or the third Respondent in their reply affidavit. On the other hand, the reply affidavit filed by these Respondents is not touching to the main issue raised by the Petitioners. In reply, it has been stated by the first Respondent that the term independently does not bar any form of any association between a parent company or subsidiary. However it is not the case of the third Respondent that Fugro Middle East Pvt. Ltd company is its parent, sister or subsidiary company. It is also the case of the first Respondent that Appendix VII of the tender provides for guarantee to be given by the parent company. However, admittedly the guarantee in terms of Appendix VII has not been given by third Respondent as during the course of arguments, it has been stated by counsel for both the Respondents that the guarantee in the form of Appendix VII was not required to be furnished in the present case as the said clause is not applicable. We may also note that the third Respondent to support its association with Fugro (Middle East) Ltd. has submitted a document titled Memorandum of Understanding wherein the third Respondent has referred itself as the bidder and has referred Fugro (Middle East) Ltd as a Technical Collaborator and not that it is Parent Company.20. Keeping in view the aforesaid facts and the settled legal position as stated above, we are of the view that while accepting the third Respondents bid, the first Respondent has acted arbitrary and has violated the fundamental condition of the tender in respect of eligibility criteria. The first Respondent firstly restricted the number of bidders from participating in the tender process by putting the said eligibility criteria and thereafter arbitrarily accepted the bid of the third Respondent by relaxing the condition by interpreting it contrary to its spirit by taking into consideration the experience of altogether unrelated company, in the garb of the technical collaborator/ group company or the Subsidiary company. The use of the expression Subsidiary company or Group Company or Technical Collaborator of the third Respondent company for taking into consideration the experience of Fugro Survey Middle East Ltd. is merely an eye wash and the same is of no use in view of the condition regarding experience criteria as extracted above.

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

Explanation:
1[ds]14. True it is, normally the Courts will not interfere in the decision of the tender evaluation committee consisting of experts unless it is malafide or wholly perverse. It is also a settled position of law that in the matters relating to tenders if the decision relating to award of contract is bonafide and is in public interest, the Courts will not in exercise of powers of judicial review interfere even if 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 the contractual disputes. The evaluation of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters, the Court is concerned primarily as to whether there has been any infirmity in the decision making process. The Courts certainly examine whether the decision making process was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution. The Court will not sit as a Court of Appeal but merely reviews the manner in which the decision was made as it has no expertise to correct the administrative action. It is also well settled that the Court is not empowered to scrutinize the terms of the invitation of tenders because it is the realm of contract and as such the decision more often are made collectively by experts. It is also been held by catena of judgments that the Government must have freedom of contract. A fair play is necessary for an administrative body functioning in administrative spare. The Courts have also to consider that the quashing of decision may impose heavy administrative burden on the administration. Even if some defect is found in the decision making process, the Court must exercise its discretionary powers under Article 226 of the Constitution of India in furtherance of public interest and not merely on the making out of a legal point. [See Jagdish Mandal vs. State of Orissa, (2007) 14 Supreme Court Cases, 517 , (relied upon by the third Respondent), Air India Ltd. vs. Cochin International Airport Ltd. (2000) 2 SCC 617  , Tata Cellular vs. Union of India, (1994) 6 SCC 651  , B.S.N. JoshiSons Ltd. vs. Nair Coal Services Ltd., (2006) 11 SCC 548  , Raunaq International Ltd. vs. I.V.R. Construction Ltd. (1999) 1 SCC 492  ].16. It is pertinent to mention here that from the minutes of the meeting of TPC, it reveals that the TPC had observed that the company Furgro (Middle East) Ltd. is unrelated company from the bidder third Respondent company. There is no material to accept the contention of the third Respondent that Furgro (Middle East) Ltd. is its Parent Company or the third Respondent is its Subsidiary.17. On a plain reading of clause Nos. 6.1 and 6.5 we find ourselves unable to agree with the claim of the Respondents that the experience of the Group Company can also be taken into consideration while considering the experience of bidder when the clauses are so clear requiring therein that the bidder independently should have experience. In this view of the matter, even though clause 5.1 provides that in the event of any dispute as regards interpretation of the clauses, the decision of the first Respondent shall be final and binding, the interpretation as has been done by the first Respondent leads to absurdity and provides for arbitrary exercise of powers.18. In our considered view the condition NO. 6.1 and 6.5 regarding eligibility criteria being fundamental condition of tender for being qualified for the purposes of experience if allowed to be interpreted as has been done then the said condition would become redundant. By putting the aforesaid clauses, the Respondent No. 1 having restricted the entry of the bidders to those who independently should have experience could not have allowed the other bidders to claim experience of technical collaborator/totally unrelated Group Companies. By doing so the first Respondent has violated the fundamental experience qualification condition and thereby acted in arbitrary manner vitiating the entire decision making process. As noted above, we also have not come across any document to show that the third Respondent bidder is Subsidiary of Fugro Survey (Middle East) Ltd. or that the said Company is Parent Company or Sister Company of the third Respondent bidder.19. In what way the Group Company or Subsidiary can be termed as parent or sister company of the third Respondent for claiming the experience said company i.e. Furgo Middle East Private Limited has also not been explained by first or the third Respondent in their reply affidavit. On the other hand, the reply affidavit filed by these Respondents is not touching to the main issue raised by the Petitioners. In reply, it has been stated by the first Respondent that the term independently does not bar any form of any association between a parent company or subsidiary. However it is not the case of the third Respondent that Fugro Middle East Pvt. Ltd company is its parent, sister or subsidiary company. It is also the case of the first Respondent that Appendix VII of the tender provides for guarantee to be given by the parent company. However, admittedly the guarantee in terms of Appendix VII has not been given by third Respondent as during the course of arguments, it has been stated by counsel for both the Respondents that the guarantee in the form of Appendix VII was not required to be furnished in the present case as the said clause is not applicable. We may also note that the third Respondent to support its association with Fugro (Middle East) Ltd. has submitted a document titled Memorandum of Understanding wherein the third Respondent has referred itself as the bidder and has referred Fugro (Middle East) Ltd as a Technical Collaborator and not that it is Parent Company.20. Keeping in view the aforesaid facts and the settled legal position as stated above, we are of the view that while accepting the third Respondents bid, the first Respondent has acted arbitrary and has violated the fundamental condition of the tender in respect of eligibility criteria. The first Respondent firstly restricted the number of bidders from participating in the tender process by putting the said eligibility criteria and thereafter arbitrarily accepted the bid of the third Respondent by relaxing the condition by interpreting it contrary to its spirit by taking into consideration the experience of altogether unrelated company, in the garb of the technical collaborator/ group company or the Subsidiary company. The use of the expression Subsidiary company or Group Company or Technical Collaborator of the third Respondent company for taking into consideration the experience of Fugro Survey Middle East Ltd. is merely an eye wash and the same is of no use in view of the condition regarding experience criteria as extracted above.