Case: Directorate Of Education  Vs. Educomp Datamatics Ltd.

Directorate of Education, Government of National Capital Territory of Delhi, appellants herein, took a decision to establish computer labs in the National Capital Territory area in all Government schools by the year 2003 in collaboration with private sector. Under the scheme evolved (computer education project), the Education Department is to provide functional literacy to the students from class VIth to Xth and teaching of computer science and informatics practices subjects to plus two stage, as per CBSE syllabus.3. In the first phase for the year 2000-2001, 115 schools were taken up for imparting computer education. Tenders were called from the firms having a turnover of Rs. 2 crores. As per terms of tender notice the firm was to provide hardware to establish the lab in the concerned schools. The total contract was for a sum of Rs. 14.62 crores. Since the lowest tenderer was not in a position to carry out the project in 115 schools, the contract was divided amongst four parties. In the year 2001-2002 the turn over clause was amended, instead Rs. 2 crores the turn over of Rs. 5 crores was prescribed. Because of the several representations filed the tender was cancelled and fresh tenders were invited from the firms having a turnover of Rs. 2 crores or above. The tender was for 275 schools, the total cost of the project being approximately Rs. 30 crores. The lowest tenderer was again not in a position to take up the entire project. The other seven tenderers agreed to lower their prices to bring it at par with the rate of the lowest tenderer. Thus the contract had to be distributed amongst eight parties, i.e., 35 schools each to seven parties and 28 to one party. For the final phase of 2002-2003 the tenders were called for all the 748 schools. The cost of project was approximately Rs. 100 crores. Because of the difficulty faced in the earlier years that the lowest tenderers were not able to implement the entire project, the Government took a policy decision to deal with one company having financial capacity to take up such a project instead of dealing with a number of small companies which were unable to take up the entire project individually. Accordingly, Government took a decision to invite tenders from firms having a turnover of Rs. 20 crores or more for the last three financial years ending with 31.3.2002. The decision was taken to provide quality education which was the top priority of the department as it was felt that it would be easier for the department to deal with one company which is well managed and not seven or eight who individually are not in a position to take up the whole project compelling the Government to distribute the contract amongst bidders at the lowest rate having no scope to negotiate the rates any further.4. Aggrieved by the term of clause inviting tenders from firms having a turnover of Rs. 20 crores or more, the respondents filed writ petitions in the High Court of Judicature at Delhi.5. Writ petitions were heard by a Division Bench. The Bench came to the conclusion that neither the increase in number of schools nor the quality of education to be provided appeared to have nexus with the financial turnover of the bidder inasmuch as the financial turnover had nothing whatsoever to do with the computer education. It was held that the term was arbitrary and it had nothing to do with the objective sought to be achieved, namely, the quality of education to be imparted. That the impugned condition appeared to have been incorporated solely with an intent to deprive a large number of companies imparting computer education from bidding and to monopolise the same for big companies. Accordingly, the writ petitions were allowed and the offending clause was struck down being arbitrary and irrational.6. Aggrieved against the aforesaid judgment of the High Court, the present appeals by way of special leave petitions were filed. On 24th March, 2003 leave was granted and as an interim measure, the appellants were permitted to go ahead with the processing of the tender application but no contract was to be awarded without taking further orders from this Court. This order was modified on 14th April, 2003. It was directed that the tender bids of all the respondents be considered without reference to the financial qualification of the turnover of Rs. 20 crores. However, the acceptance of the bid was kept in abeyance till the passing of the final order in the appeals.7. In compliance with the aforesaid directions letters were sent to all the 13 bidders/parties for opening of the commercial bids on 30th July, 2003 at 3.30 p.m. Technical bids of four companies, i.e., Tata Infotech Ltd., Educomp Datamatics Ltd., UPTEC Computer Consultancy Ltd., Sterlite Foundations were rejected after scrutiny by the tender opening committee as these firms did not fulfil the criteria laid in the tender notice. The financial bids of other 9 companies were opened and the bid given by M/s. SSI Limited was found to be the lowest. Interlocutory Application Nos. 1 to 5 of 2003 were filed for placing these facts on record. Facts which emerged from the opening of the bids were that the four companies having a turnover of Rs. 20 crores or above participated in the tender and M/s. SSI Limited with a turnover of more than Rs. 20 crores was the lowest amongst them.

Reasoning:
Directorate of Education, Government of NCT of Delhi had invited open tender with prescribed eligibility criteria in general terms and conditions under tender document for leasing of supply, installation and commissioning of computer systems, peripherals and provision of computer education services in various Government/Government aided senior secondary, secondary and middle schools under the Directorate of Education, Delhi. In the year 2002-2003, 748 schools were to be covered. Since the expenditure involved per annum was to the tune of Rs. 100 crores the Competent Authority took a decision after consulting the technical advisory committee for finalisation of the terms and conditions of the tender documents providing therein that tenders be invited from firms having a turnover of more than Rs. 20 crores over the last three years. The hardware cost itself was to be Rs. 40-45 crores. The Government introduced the criteria of turnover of Rs. 20 crores to enable the companies with real competence having financial stability and capacity to participate in the tender particularly in view of the past experience. We do not agree with the view taken by the High Court that the term providing a turnover of at least Rs. 20 crores did not have a nexus with either the increase in the number of schools or the quality of education to be provided. Because of the increase in the number of schools the hardware cost itself went upto Rs. 40-50 crores. The total cost of the project was more than 100 crores. A company having a turnover of Rs. 2 crores may not have the financial viability to implement such a project. As a matter of policy Government took a conscious decision to deal with one firm having financial capacity to take up such a big project instead of dealing with multiple small companies which is a relevant consideration while awarding such a big project. Moreover, it was for the authority to set the terms of the tender. The Courts would not interfere with the terms of the tender notice unless it was shown to be either arbitrary or discriminatory or actuated by malice. While exercising the power of judicial review of the terms of the tender notice the Court cannot say that the terms of the earlier tender notice would serve the purpose sought to be achieved better than the terms of tender notice under consideration and order change in them, unless it is of the opinion that the terms were either arbitrary or discriminatory or actuated by malice. The provision of the terms inviting tenders from firms having a turnover of more than Rs. 20 crores has not been shown to be either arbitrary or discriminatory or actuated by malice.14. This apart SSI having a turnover of more than Rs. 20 crores was the lowest bidder. Faced with the situation that the bids given by the respondent were not competitive with the bid given by SSI Limited, learned Counsel for the respondents contended that because of the fall in price in the computer hardware and lowering of duty on the imports of the computers or its components the Government should invite fresh bids. It is not for us to comment as to what course is to be adopted by the appellants, in the changed circumstances attributable to lapse of time. It is for them to decide whether to continue with the tenders already floated, if necessary by making negotiations so as to bring down the rates quoted or to invite fresh tenders.