Case: THE BHARAT COKING COAL LTD. &amp; ORS Vs. AMR DEV PRABHA &amp; ORS

bidders. Such, notification of closure of the auction, even though generated during the period of interruption in connectivity of the bidders with the server, should have been declared as null and void before restarting the auction process. Even, BCCL did not demand any report from C1 India Pvt. Limited for the interruption period so as to take a call before proceeding further for restart of the reverse auction process. Further, considering that during this period BCCL was aware of the connectivity problem being faced by the bidders, it should have exercised intense real time monitoring which have not been done. Failure to do so is a reflection of the fact the adequate incident management system was not put in place by the service provider M/s. C1 India Pvt. Ltd. to handle such eventuality effectively. While there was lack of control and supervision on part of BCCL, however, the Committee has not come across any evidence suggesting mala-fide on their part. As regards to C1 India Pvt. Ltd., their conduct has been found to be far from satisfactory. 46. We do not deem it necessary to venture into the existence of technical problems of limited bandwidth, for the same is a question of fact. However, given the concurrent finding of the second IEM, CERT- In, TCL, as well as the CVC, we feel that the Division Bench erred in holding that there were no technical difficulties. Furthermore, such a conclusion is at odds with subsequent occurrences. A finding that there were no internet problems implies that no other bidder deemed it appropriate to counter the bid of Rs 2345 crores offered by Respondent No. 1 at 12:33PM and that it was the competitively determined lowest price. However, it is obvious that minutes into the resumption of the auction process bids started coming in and more than a dozen bids were received subsequently, with the last bid of Rs 2043 crores having been made mere seconds before closure of the auction at 7:27PM. 47. With regard to other allegations concerning condonation of Respondent No. 6s delay in producing guarantees, we would only reiterate that there is no prohibition in law against public authorities granting relaxations for bona fide reasons. In Shobikaa Impex (P) Ltd. v. Central Medical Services Society (2016) 16 SCC 233 , it has been noted that: … the State can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It has been further held that 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 powers 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. 48. Even if there had been a minor deviation from explicit terms of the NIT, it would not be sufficient by itself in the absence of mala fide for courts to set aside the tender at the behest of an unsuccessful bidder. (Central Coalfields Ltd v. SLL-SML (Joint Venture Consortium), (2016) 8 SCC 622 ) This is because notice must be kept of the impact of overturning an executive decision and its impact on the larger public interest in the form of cost overruns or delays. 49. There is also no need to venture into questions concerning quantum of extension of time. It is clear that the same message was communicated by CI–India to all, stating that the auction process would be extended by a period equivalent to the time between closure of auction at 1:03PM and resumption at 2:30PM. Not only did such uniform communication put all bidders on an equal footing, but there was no possibility of any confusion given the clear wordings of the email. When it is not the case of Respondent No. 1 that they thought that auction would close at 7:35PM and hence they were taken by surprise at the early closure, nor did they in fact highlight or object to such interpretation over the course of the resumed auction process, the question is moot and a finding ought not to be given on it. 50. Additionally, we also do not see merit in the justification for delay in filing writ proffered by the first respondent. It is claimed that the cause of action arose when Respondent No. 6 failed to submit guarantees within a period of 28 days. However, we do not see how that would allow AMR-Dev Prabha to challenge the entire process of auction, or overcome the settled legal principle of privity of contract between Respondent No. 6 and the appellant. (III) Deference to authoritys interpretation 51. Lastly, we deem it necessary to deal with another fundamental problem. It is obvious that Respondent No. 1 seeks to only enforce terms of the NIT. Inherent in such exercise is interpretation of contractual terms. However, it must be noted that judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes. 52. In the present facts, it is clear that BCCL and C1-India have laid recourse to Clauses of the NIT, whether it be to justify condonation of delay of Respondent No. 6 in submitting performance bank guarantees or their decision to resume auction on grounds of technical failure. BCCL having authored these documents, is better placed to appreciate their requirements and interpret them. (Afcons Infrastructure Ltd v. Nagpur Metro Rail Corporation Ltd, (2016) 16 SCC 818 at ¶ 15.). 53. The High Court ought to have deferred to this understanding, unless it was patently perverse or mala fide. Given how BCCLs interpretation of these clauses was plausible and not absurd, solely differences in opinion of contractual interpretation ought not to have been grounds for the High Court to come to a finding that the appellant committed illegality. CONCLUSION

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

Explanation:
1[ds]36. In the present case, although it is clear that the Division Bench of the High Court was cognizant of these principles surrounding scope of judicial review, however, it failed to effectively evaluate whether larger public interest was being affected. On the contrary, we feel that the interest of Respondent No. 1 was purely private and monetary in nature37. First, AMR-Dev Prabhas initial prayer sought to nullify the award of contract, which if granted, would have increased the sums payable by the State instrumentality from Rs 2043 crores to Rs 2345 crores. Second, the conduct of Respondent No. 1 over the course of the present proceedings, as highlighted by the appellants, further bolsters the lack of public interest. Whereas initially the first respondent was seeking quashing of the LOA issued to Respondent No. 6 owing to arbitrariness on part of BCCL and on the ground that sanctity of the auction process had been violated; later, before the Division Bench, Respondent No. 1 sought to make a new offer of Rs 1950 Crores. This shows how AMR-Dev Prabhas priority was only to secure the contract and not to uphold the law or protect larger public interest38. Even otherwise, granting such a prayer means that Respondent No. 1 would have gotten a special opportunity of negotiation, to the detriment of all other participants, which would probably be a more egregious violation of equality envisaged under Article 14 than the procedural adherence which they were initially seeking to protect39. Additionally, we are not impressed with the first respondents argument that there is a certain public interest at stake whenever the public exchequer is involved. There are various factors in play, in addition to mere bidding price, like technical ability and timely completion which must be kept in mind. And adopting such interpretation would permanently blur the line between contractual disputes involving the State and those affecting public law40. Further, the first respondent has failed to demonstrate which public law right it was claiming. The main thrust of AMR-Dev Prabhas case has been on the fact that at 1:03PM on 05.05.2015 it was declared the lowest bidder (or L-1). However, being declared the L-1 bidder does not bestow upon any entity a public law entitlement to award of the contract,However, being declared the L-1 bidder does not bestow upon any entity a public law entitlement to award of the contract,as noted in Maa Binda Express Carrier v. North-East Frontier Railway (2014) 3 SCC 760  :8. The scope of judicial review in matters relating to award of contracts by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognise that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor-made to benefit any particular tenderer or class of tenderers. So also, the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the tender process41. Instead, precedent laid down by this Court in Master Marine Services (P) Ltd v. Metcalfe & Hodg Kinson (P) Ltd, (2005) 6 SCC 138 illustrates that if a prayer for re-bidding is on account of a desire to get a better price, then involvement of Article 14 of the Constitution would not be made out42. Further, regular recourse was made over the course of proceedings by learned senior counsel for the first respondent on terms of the NIT. Findings in the impugned order too were based upon disputed interpretation of such contractual terms. Thus, it is clear that there was neither any public law right of the first respondent which was affected, nor was there any public interest sought to be furthered(II) Infirmities in the auction process43. On merits also, we do not feel that the impugned order is correct in its conclusion that there were substantial procedural lapses on part of BCCL and C1-India which amount to arbitrariness, and ought to be remedied by way of judicial review44. Instead, having the benefit of a detailed inquiry report of the Central Vigilance Commission ( CVC), we are of the firm opinion thatboth the appellant and Respondent No. 4 acted in a bona fide manner and as per their abilities. Even if it is true that BCCL could have assumed more responsibility and C1-India could have exercised a more proactive role in checking for internet issues, yet the possibility of improvement cant be a ground for striking down an authoritys action. Additionally, no allegation of the decisions being accentuated by illegal gratification, or otherwise being fraudulent or contrary to a statute have either been clearly made or established46. We do not deem it necessary to venture into the existence of technical problems of limited bandwidth, for the same is a question of fact. However, given the concurrent finding of the second IEM, CERT- In, TCL, as well as the CVC, we feel that the Division Bench erred in holding that there were no technical difficulties. Furthermore, such a conclusion is at odds with subsequent occurrences. A finding that there were no internet problems implies that no other bidder deemed it appropriate to counter the bid of Rs 2345 crores offered by Respondent No. 1 at 12:33PM and that it was the competitively determined lowest price. However, it is obvious that minutes into the resumption of the auction process bids started coming in and more than a dozen bids were received subsequently, with the last bid of Rs 2043 crores having been made mere seconds before closure of the auction at 7:27PM47. With regard to other allegations concerning condonation of Respondent No. 6s delay in producing guarantees, we would only reiterate that there is no prohibition in law against public authorities granting relaxations for bona fide reasons48. Even if there had been a minor deviation from explicit terms of the NIT, it would not be sufficient by itself in the absence of mala fide for courts to set aside the tender at the behest of an unsuccessful bidder. (Central Coalfields Ltd v. SLL-SML (Joint Venture Consortium), (2016) 8 SCC 622  ) This is because notice must be kept of the impact of overturning an executive decision and its impact on the larger public interest in the form of cost overruns or delays49. There is also no need to venture into questions concerning quantum of extension of time. It is clear that the same message was communicated by CI–India to all, stating that the auction process would be extended by a period equivalent to the time between closure of auction at 1:03PM and resumption at 2:30PM. Not only did such uniform communication put all bidders on an equal footing, but there was no possibility of any confusion given the clear wordings of the email. When it is not the case of Respondent No. 1 that they thought that auction would close at 7:35PM and hence they were taken by surprise at the early closure, nor did they in fact highlight or object to such interpretation over the course of the resumed auction process, the question is moot and a finding ought not to be given on it50. Additionally, we also do not see merit in the justification for delay in filing writ proffered by the first respondent. It is claimed that the cause of action arose when Respondent No. 6 failed to submit guarantees within a period of 28 days. However, we do not see how that would allow AMR-Dev Prabha to challenge the entire process of auction, or overcome the settled legal principle of privity of contract between Respondent No. 6 and the appellant(III) Deference to authoritys interpretation51. Lastly, we deem it necessary to deal with another fundamental problem. It is obvious that Respondent No. 1 seeks to only enforce terms of the NIT. Inherent in such exercise is interpretation of contractual terms. However, it must be noted that judicial interpretation of contracts in the sphere of commerce stands on a distinct footing than while interpreting statutes52. In the present facts, it is clear that BCCL and C1-India have laid recourse to Clauses of the NIT, whether it be to justify condonation of delay of Respondent No. 6 in submitting performance bank guarantees or their decision to resume auction on grounds of technical failure. BCCL having authored these documents, is better placed to appreciate their requirements and interpret them. (Afcons Infrastructure Ltd v. Nagpur Metro Rail Corporation Ltd, (2016) 16 SCC 818     at ¶ 15.)53. The High Court ought to have deferred to this understanding, unless it was patently perverse or mala fide. Given how BCCLs interpretation of these clauses was plausible and not absurd, solely differences in opinion of contractual interpretation ought not to have been grounds for the High Court to come to a finding that the appellant committed illegality32. In cases where a constitutional right is infringed, writs would ordinarily be the appropriate remedy. In tender matters, such can be either when a party seeks to hold the State to its duty of treating all persons equally or prohibit it from acting arbitrarily; or when executive actions or legislative instruments are challenged for being in contravention to the freedom of carrying on trade and commerce. However, writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty. Hence, the persons seeking writ relief must also actively satisfy the Court that the right it is seeking is one in public law, and not merely contractual. In doing so, a balance is maintained between the need for commercial freedom and the very real possibility of collusion, illegality and squandering of public resources.