MONTECARLO LTD. versus NTPC LTD.
[2016] 8 S.C.R. 224, Supreme Court of India, 2016
Outcome: Dismissed (Dismissed)
Segment: Ratio
A 
B 
c 
[2016] 8 S.C.R. 224 
MONTECARLO LTD. 
v. 
NTPC LTD. 
(Civil Appeal No. 10143 of2016) 
OCTOBER 18, 2016 
[DIPAK MISRA AND UDAY UMESH LALIT, JJ.] 
Tenders - Judicial review - Invitation for bids for development 
and operation of coal mines - Respondent-NTPC found the bid by 
appellant technically non-responsive as appellant did not have 
necessary experience of drilling for blasting purposes - Appellant 
invoked jurisdiction of High Court challenging the determination 
made by respondent - Plea of appellant that the tender documents 
required experience of a bidder only in drilling, not drilling for 
. blasting purposes - High Court held that the assessment of the 
D . respondent-NTPC was correct as it did not affect public interest but 
subserved the public purpose - On appeal, held: Owner or the 
employer of a project, having authored the tender documents, is 
the best person to understand and appreciate its requirements and 
interpret its documents - Constitutional Courts must defer to this 
E 
F 
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understanding and appreciation of tender documents unless there 
is malafide or perversity in understanding - Technical evaluation 
or comparison by the court thus is impermissible - Principle to 
understand ordinary instrument relatable to contract has to be 
treated differently than tender documents relating to technical works 
and projects - In the instant case, tenders and offers are invited for 
highly technical subjects - It is to check and ascertain that
technical 
ability and the financial feasibility have sanguinity and are 
workable and realistic - It requires technical expertise - Therefore, 
respondent should be allowed to carry out technical evaluation 
freely - No infirmity in the judgment and order passed by the High 
Court. 
Dismissing the appeal, the Court 
HELD: 1. The Respondent-NTPC invited bids for 
development and operation of coal mines and had issued 
"Instructions to Bidders" (ITB) which contained clauses as to 
224
MONTECARLO LTD. v. NTPC LTD. 
225 
bow the proposal shall be conducted. Clauses of Mine operations A 
are technical but they are fundamental to understand the 
Qualifying Requirements (QR). They clearly demonstrate that 
drilling is imperative. High Court has considered the documents 
filed by appellant and opined that the documents filed in support 
of the QR are substantially inadequate. Adverting to the facet of 8 
drilling, the writ court bas opined that there is specific use of the 
words "drilling for the purposes of blasting". [Para l 7][243-D-F] 
2. In the present scenario, tenders are floated and offers 
are invited for highly complex technical subjects. It requires 
understanding and appreciation of the. nature of work and the C 
purpose it is going to serve. It is common knowledge in the 
competitive commercial field that technical bids pursuant to the 
notice inviting tenders are scrutinized by the technical experts 
and sometimes third party assistance from those unconnected 
with the owner's organization is taken. This ensures objectivity. 
Bidder's expertise and technical capability and capacity must be 
D 
assessed by the experts. In the matters of financial assessment, 
consultants are appointed. It is because to check and ascertain 
that technical ability and the financial feasibility have sanguinity 
and are workable and realistic. There is a multi-prong complex 
approach; highly technical in nature. The tenders where public 
largesse is put to auction
stand on a different compartment. 
Tender in present case, is not comparable to any scheme for 
allotment. This arena referred requires technical expertise. 
Parameters applied are different. Its aim is to achieve high degree 
E 
of perfection in execution and adherence to the time schedule. 
But, that does not mean, these tenders will escape scrutiny of F 
judicial review. Exercise of power of judicial review would be 
called for if the approach is arbitrary or nw/aji<le or procedure 
adopted is meant to favour one. The decision making process 
should clearly show that the said maladies are kept at bay. But 
where a decision is taken that is manifestly in consonance with 
the language of the tender document or subserves the purpose G 
for which the tender is floated, the court should follow the principle 
of restraint. Technical evaluation or comparison by the court 
would be impermissible. The principle that is applied to scan 
and understand an ordinary instrument relatable to contract in 
-
H
226 
SUPREME COURT REPORTS 
[2016) 8 S.C.R. 
A 
other spheres has to be treated differently than interpreting and 
appreciating tender documents relating to technical works and 
projects requiring special skills. The owner should be allowed to 
carry out the purpose and there has to be allowance of free play 
in the joints. There is no infirmity in the judgment and order 
B 
c 
D 
E 
F 
passed by the High Court. [Paras 24, 25][245-H; 246-A-F] 
Tata Cellular v. Union of India (1994) 6 SCC 651: 1994 
(2) Suppl. SCR 122; Michigan Rubber (India) Ltd. v. 
State of Karnataka and Ors. (2012) 8 SCC 216: 2012 
(8) SCR 128; Sterling Computers Limited v. Mis M & 
N Publications Limited & Ors. (1993) 1 SCC 445: 1993 
(1) SCR 81; Jagdish Manda! v. S1a1e of Orissa and 
Ors (2007) 14 SCC 517: 2006 (10) Suppl. SCR 606; 
Master Marine Services (P) Ltd. v. Metca(fe & 
Hodgkinson (P) Ltd and Am: (2005) 6 SCC 138: 2005 
(3) SCR 666; B.S.N. Joshi & Sons Ltd. v. Nair Coal 
Services Ltd. and Ors. (2006) 11 SCC 548: 2006 (8) 
Suppl. SCR 11; Afcons Infrastructure Ltd. v. Nagpur 
Metro Rail Corporation Ltd. 2016 (8) SCALE 765 -
relied 011. 
Case Law Reference 
1994 (2) Suppl. SCR 122 
relied on 
Para 12 
2012 (8) SCR 128 
relied on 
Para 12 
1993 (1) SCR 81 
relied 011 
Para 17 
2006 (10) Suppl. SCR 606 
relied on 
Para 19 
2005 (3) SCR 666 
relied on 
Para 20 
2006 (8) Suppl. SCR 11 
relied 011 
Para 21 
2016 (8) SCALE 765 
relied on 
Para 22 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10143 
G
of2016. 
H 
From the Judgment and Order dated 30.09.2016 of the High Cou11 
of Delhi at New Delhi in Writ Petition (Civil) No. 7726 of2016. 
P. Chidambram, Harish P. Raval, Vikas Singh, Sr. Adv., Sandeep 
Singh, Mahesh Agarwal, Shamik Bhat, Shashank Mani sh, E. C. Agrawala,
MONTECARLO LTD. v. NTPC LTD. 
227 
Ankit Jain, Ms. !ti Agarwal, Ravi Prakash, Chandra Prakash, Advs. for 
A 
appearing pa1iies. 
The Judgment of the Court was delivered by 
DIPAK MISRA, J. 1. The respondent, NTPC Limited, had 
issued separate invitation for bids for development and operation of three 
coal mines, viz., Dulanga Coal Block, Chatti Bariatu and Talaipalli in the 
State ofOdisha. Online bids were invited on Single Stage Two Envelope 
Bidding basis (Envelope-I: Techno-Commercial Bid and Envelope-II: 
Price Bid). There was stipulation for Reverse Auction from the eligible 
bidders. It was also stated in the Invitation For Bids (IFB) issued on 
22.01.2016 that the bids shall be received on 17.03.2016 and Envelope-
!, that is, Techno-Commercial Bid will be opened on 17.03.2016. The 
date of opening of Envelope-II, that is, Price Proposal shall be intimated 
separately. Clause 5 of the IFB stipulated Qualifying Requirements (QR). 
Clauses 5.1 and 5.1.2 dealt with technical criteria. 
2. The respondent had also issued "Instructions To Bidders" (!TB) 
which contain clauses as to how the proposal shall be conducted. Clause 
6.3. l of!TB deals with Preliminary Examination ofTechno-Commercial 
Proposals. We think it appropriate to reproduce the same:-
"6.3. l Preliminary Examination of Techno-Commercial 
Proposals: 
(a) OWNER will examine the Project Proposals to 
determine whether they are complete, whether required 
securities have been furnished, whether the documents
have 
been properly signed and whether the bids are generally in 
order. 
(b) Prior to the detailed evaluation, OWNER will initially 
determine whether each Techno Commercial Proposal is 
of acceptable quality, is generally complete and is 
substantially responsive to the bidding documents. For 
purposes of this determination, a substantially responsive 
Proposal is one that conforms to all the terms, conditions 
and specifications of the bidding documents without material 
deviations, objections, conditionalities or reservations. A 
material deviation, objection, conditionality or reservation is 
one (i) that affects in any substantial way the scope, quality 
B 
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228 
A 
B 
c 
SUPREME COURT REPORTS 
[20 I 6] 8 S.C.R. 
or performance of the contract; (ii) that limits in any 
substantial way, inconsistent with the bidding documents, 
the Owner's rights or the successful Bidder's obligations 
under the contract; or (iii) whose rectification would unfairly 
affect the competitive position of other Bidders who are 
presenting substantially responsive Proposals. 
(c) OWNER's determination of a Techno Commercial 
Proposal's responsiveness is to be based on the contents of 
the Techno Commercial Proposal itself without recourse to 
extrinsic evidence. If a Techno Commercial Proposal is 
not substantially responsive, it will be rejected by OWNER, 
and may not subsequently be made responsive by the Bidder 
by correction of the nonconformity." 
3. Clauses 6.3.2 6.3.2.1, 6.3.2.2 and 6.3.4 provide for Evaluation 
of Responsive Techno-Commercial Proposal, Evaluation of Qualification 
Proposals, Evaluation of Technical Proposals and Clarification Meeting. 
D Clause 6.3.5 deals with the steps where the responsive Techno-
Commercial Proposal which meets the QR specified in Chapter 7 and 
Technical Requirements specified in Chapter 8 of REF Documents and 
stipulates that they shall be considered cor Price Proposal Phase of the 
Bidding Process. It has also been provided therein that the bidders who 
E meet QR specified in Chapter 7 and Technical Requirements specified 
in Chapter 8 of REP documents shall be terms as "shortlisted bidders". 
Chapter 7
ofITB deals with technical criteria. Clauses 7.1.1 and 7.1.2, 
being significant, are extracted below:-
F· 
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"7.1.1 The Bidder should have, in the preceding 7 (seven) 
years reckoned from the date of opening of the Techno-
commercial Bids developed & operated single coal/lignite 
mine having coal/lignite reserves of at least 150 million 
tonnes & annual capacity of at least 6 MTPA and produced 
at least 2 million tonnes of coal/lignite from such mine. 
OR 
7.1.2 The Bidder should have, in the.preceding 7 (seven) 
years reckoned from the date of opening of the Techno-
commercial Bids, operated and produced: 
a) At least 23 Million SCM of aggregated volume of
MONTECARLO LTD. v. NTPC LTD. 
229 
[DIPAK MISRA, J.] 
overburden and/or coal/lignite from a maximum of seven 
A 
open cast mines of Coal/Lignite, in any year. 
b) At least 11.5 Million SCM of composite volume of 
overburden and coal/lignite from single open cast mine in 
any year, out of which at least 3 million tonnes shall be 
coal/lignite. 
B 
The qualifying works at clause 7 .1.2(a) can be from same 
mine or different mines including the mine considered to 
meet qualifying requirement at clause 7. l .2(b )." 
4. At this stage, it is necessary to refer to Notes appended to 
Clause 7.3.3 that deals with route-3. Notes are as under:-
"i. The word "operated" means that the Bidder should have 
performed the necessary activities of drilling, excavation, 
hauling etc. on its own or through sub-contracting. 
ii. The word "developed" means that the Bidder should have 
performed the necessary activities of Land Acquisition/ 
assisted in Land Acquisition, Statutory clearances/assisted 
in Statutory clearances and carried out 'Infrastructure 
development' on its own or through sub-contracting." 
5. Chapter 9 of the ITB deals with Evaluation Methodology for 
Techno- Commercial Proposal (Qualification Proposal and Technical 
Proposal). Clause 9. I deals with Evaluation of Qualification Proposal 
and Clause 9.2 deals with Evaluation of Technical Proposal. They read 
as under:-
"9. Evaluation Methodology for Techno Commercial 
Proposal (Qualification Proposal and Technical Proposal)
9.1 Evaluation of Qualification Proposal: 
The Techno-Commercial Proposal shall be scrutinized to 
establish "responsiveness" as per Clause 6.3.1. 
The Responsive Techno-Commercial Proposal shall be 
evaluated in detail to determine their fulfillment ofQualifring 
requirements specified in Chapter 7 of this RFP document. 
During the bid evaluation, NTPC may, at its discretion, ask 
the Bidder for a clarification of its Qualification Proposal 
c 
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230 
A 
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SUPREME COURT REPORTS 
[2016] 8 S.C.R. 
including documentary evidence pertaining to only the;: 
reference mines declared in the Qualification Proposal for 
the purpose of meeting Qualifying Requirement specified 
in Chapter 7 of this RFP document. The request for 
clarification and the response shall be in writing and no 
change in the substance of the TECHNO-COMMERC!AL 
Proposal including substitution of reference mines in the 
Qualification Proposal by new/additional mines for 
conforming to Qualifying Requirement shall be sought, 
offered or permitted. 
The Qualification Proposals which meets the g_t!alification 
criteria shal I be considered for Technical Proposal 
Evaluation Phase of the Bidding Process. The Bidders who 
meet tl~ualification criteria shall be termed as Qualified 
Bidders. 
9.2 Evaluation ofTechnical Proposal: 
The Technical Proposals shall be evaluated to determine 
their compliance with the Technical Proposal Requirements. 
For this purpose, NTPC shall use the suppo1ting documents 
and/or information available with or obtained by NTPC. 
E 
9.2.1 During evaluation NTPC may seek clarification from 
the Bidders, may conduct discussions with the Bidders, and 
may ask the bidder to make Technical presentation. 
Technical proposal shall include details as has been sought 
vide Chapter 8. 
F 
9.2.2 The Technical Proposals without sufficient information 
as per the terms of Chapter 8 of this document shall be 
deemed "Non Responsive Technical
Proposal". 
9.2.3 The Responsive Technical Proposals meeting the 
requirements to the satisfaction of Owner shall be 
G 
considered for further detailed Technical Evaluation." 
H 
[emphasis added] 
6. Clause 9.3 provides how detailed evaluation of technical 
proposals submitted by the bidder shall take place. Clauses 9.3. I and 
9 .3 .2 which are relevant for the present purpose are reproduced below:-
MONTECARLO LTD. v. NTPC LTD. 
[DIPAK MISRA, J.] 
' 
"9.3.1 The purpose of technical evaluation is to check 
J:§P-Onsive and assess the compliance with the requirements 
of NTPC. 
9.3.2 To ensure effective evaluation ofTechnical Proposals 
the Bidders shall provide the necessary details as specified 
in Clause 8.4. The Technical evaluation will be for evaluating 
whether the Technical Proposal of the Bidder meets the 
following criteria. 
(a) Time Schedule to Achieve First Year Coal Production 
Target - NTPC shall evaluate the PERT chart submitted 
by the Bidder, to determine its completeness; 
reasonableness; and achievability. 
(b) Adequacy of the Equipment Plan -The Bidder shall 
submit an equipment plan giving details of the equipment 
that shall be used by the Mine Operator to provide Mining 
Services which sh:fll be not less than the Minimum 
Equipment to be deployed as specified by NTPC at 
Schedule 6 of Project Agreement. NTPC shall evaluate 
the adequacy of equipment to meet the criteria imposed by 
NTPC in terms of quantity of production, quality of coal 
produced etc." 
[emphasis supplied] 
7. The controversy in the instant case basically pertains to whether 
the appellant meets the qualification criteria as provided under the heading 
Technical Criteria that occurs in Clauses 7. I and 7.2 of QR. To appreciate 
the same, it is essential to have a look at the bid submitted by the appellant. 
The appellant had uploaded the proposal on 26.4.2016 by referring to 
three
mines in support of its stand to meet the QR. The three mines that 
have been referred to in the proposal are (i) Mata No Madh, Lignite 
Mine, Kutch, GMDC (Mine I); (ii) June Kundada OCP of Western 
Coalfield Limited (Mine 2) and (iii) Khadia OCP, Northern Coalfield 
Limited (Mine 3). As regards the Mine No. I, the appellant declaring the 
scope of work in the aforesaid Mine had furnished the following details:-
231 
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B 
c 
D 
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232 
SUPREME COURT REPORTS 
[2016] 8 S.C.R. 
A 
"SI. 
Particulars 
Mine 1 (Lignite Project, Mata No 
No. 
Ma.db, Kutch) 
10. 
Bncf descnption of scope ot Turnkey mining Contract involving 
work 
overburden,-intcr 
burden 
removal, 
B 
cxcavaticm and'or loading oflignite from 
mines face and ancillary activities 
11. 
Drilling 
~o 
Carried out Drilling on our Qilf eWflisu8eee:lfae!ieg 
own or through subcootrac1ing 
c 
Excavation 
Yes/Ne 
Canied out Excavation on our Our ownjsueee&aetleg 
own or through subcootractng 
D 
Hauling 
Yes/Ne. 
Carried out Excavation on our Our own:sueeea1iaeti!l( 
own or through subcootrac1ing 
E 
8. As the proposal would reflect, the appellant had not provided 
the information that it had carried out the drilling in the aforesaid Mine, 
namely, Mata No Madh. The respondent-owner sent a communication 
F on 17.5.2016 seeking certain clarification pertaining to the QR and other 
aspects. The High Court has referred to the said communication and we 
think it necessary to reproduce the same:-
G 
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"Ref:O I/CS-70 l 4-602(Rl )-9-PAA Dated: 17 .OS .2016 
To, 
Mis. Montecarlo Limited, 
706, Ship Building, Near Municipal Market, 
C.G. Road, Navrangpura,Ahmedabad-380 009, 
Gujarat, India
MONTECARLO LTD. v. NTPC LTD. 
[DIPAK MISRA, J.) 
Kind Attn. Sh. Shekhar Shanna, Sr. General Manager 
Sub: Development and Operation of Dulanga Coal Block 
as per IFB No. 40051319; Bid Doc. No.CS-7014-802(Rl)-
9 
Dear Sir, 
1.0 This has reference to your Project Proposal (Techno-
Commercial Bid) against IFB No.40051319 for the subject 
package. You are requested to furnish the following 
information with respect to the details/documents furnished 
in the bid for qualification requirement data: 
(i) Against QR requirement of Clause 7.1.2 of ITB: It 
is observed in the Contract Agreement dtd. 11.02.2014 
submitted by the bidder in support of meeting qualifying 
requirement for Lignite project Mata No Madh, Kutch, 
Gujrat that the necessary activity of drilling as per stipulations 
of QR (sr.no. i ofNotes) is not mentioned. The same may 
please be clarified with supporting documents. 
(ii) Against QR requirement of Clause 7.2 of ITB: 
Details of Other non cash expenses in Million for calculating 
Annual Cash Accrual for three year viz. 2013-14, 2014-15 
&2015-16 
2.0 It is requested that the requisite information along with 
necessary documents be furnished to us at the earliest, 
preferably by 24.05.2016. 
3.0 It may please be noted that seeking the above 
clarifications should not be construed that the bid submitted 
by you is considered techno commercially responsive and/ 
or meeting the Qualification requirements (QR)." 
9. The response that was given by the appellant on
21.5.2016 is to 
fbe following effect:-
" A) Para 1.0 (i) of your above letter against QR of Clause 
7.1.2 ofITB: We are attaching the followings: 
a)A certificate from GMDC (client of our Lignite Project 
at Mata No Math) Vide No.GMDC/MMLG/298/2016-17 
233 
A 
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c 
D 
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234 
A 
B 
SUPREME COURT REPORTS 
(2016] 8 S.C.R. 
dated 18.05.2016 mentioning our scope on this Turnkey 
Project which includes activities of Mine Planning, Quality 
Control, Drilling, Ripping, Dust suppression, Nala Diversion, 
preparation of Garland drain, dewatering of Monsoon and 
seepage water, preparation and monitoring of haul road for 
better hauling as required to complete the mining process. 
b) Certificates from Northern Coalfields Ltd. (NCL) and 
Western Coalfields Ltd. (WCL) are also attached herewith 
mentioning drilling as pa11 of the Mining Process of these 
projects as ready reference: 
C 
i) NCL Ce11ificate No.GM/KSL/2016/460 dated 31.03.2016 
D 
E 
F 
G 
H 
ii) NCL Ce11ificate No.GM/KSL/25 dated 24.04.2016 
iii)NCL Certificate No.GM/KHD/OS/2016/43 dated 
23.04.2015 
iv)WCL Certificate No. WCL/MA/MGR/JKOC/2015/400 
dated 04.12.2015 
v) WCL Certificate No. WCL/MA/MGR/JKOC/2015/27 
dated 14.04.2016 
Ft111her, as you are kindly aware that Indian Lignite deposits 
occur in the Te11iary sediments in southern and western 
parts of peninsular shield pai1icularly in Tamilnadu, Rajasthan 
and Gujarat. The Overburden and interburden comprises 
of Clay, Claystone, mudstone and as well as lignite 
[Geologically younger sediments (Formations) then 
occurrences of Coal] which can be excavated by hydraulic 
Shovel dumper combination. As such, in lignite deposits of 
Tamilnadu, Gujarat and Rajasthan, Blast hole drilling is 
normally not required. 
B) Para 1.0 (ii) of your
above letter against QR of 
Clause 7.2 of ITB: 
We are attaching the following: 
a) Financial certificate of last 3 years 
We hope that the above submission clarifies your points on 
QR requirement;
MONTECARLO LTD. v. NTPC LTD. 
235 
[DIPAK MISRA, J.] 
If your require further clarification/information in this regard, 
A 
kindly inform us. We shall be pleased to provide the same 
at your convenience." 
I 0. To the said letter, a document issued by the Gujarat Mineral 
Development Corporation Ltd (GMDC) dated 18.5.2016 was enclosed. 
The said certificate reads as follows:-
B 
"GMDC/MMLG/298/2016-17 
Dated: 18.05.2016 
To Whom It May Concern 
This is to certify that the Turnkey Mining Contract involving 
Overburden/Inter burden removal, Excavation and/or 
C 
Loading of Lignite from mining face and ancillary activities 
at Lignite project, Mata No Madh Vide Tender Notice No. 
(Rl)/LP/Ol/13-14 dated 30.08.2013, has been awarded to 
M/s. Montecarlo Limited, having registered office at 7'11 
Floor, Shilp Building, Nr. Municipal Market, C.G. Road, 
Navrangpura, Ahmedabad- 380009, Gujarat, India. 
D 
Name of Work: Turnkey Mining Contract involving 
Overburden/Inter burden removal, Excavation and/or loading 
of Lignite from mines face and ancillary activities at Lignite 
project, Mata No Madh. 
Name of Contractor 
LOI No. 
Estimated Cost/ 
Contract Value 
Awarded Quantity 
Contract Period 
: M/s. Montecarlo Limited 
: GMDC/LP/13306/13-14 
Dated: 15/01/2014 
: 663.04 Cr. 
: Over Burden (I I 09.00) 
Lac CUM 
Lignite (148.00) Lac MT 
: 28.01.2014 to 27.01.2019 
The scope of Project is to carry out mining operation on 
Turnkey basis comprising ofremoval ofover burden, inter 
burden
and lignite and/or loading from mines faces using 
hydraulic showel and dumper combination and other 
activities like Mine Planning, Quality control, Drilling, 
E 
F 
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SUPREME COURT REPORTS 
[2016] 8 S.C.R. 
A 
Ripping, Dust suppression, Nala Diversion, preparation of 
Garland drain, dewatering of Monsoon and seepage water, 
preparation and monitoring of haul road for better hauling 
etc. as required to complete the mining process. 
Quantities Executed (year-wise) by Mis. Montecarlo 
B 
Limited are shown below: 
Sr. 
Period 
Over 
Burden Lignite 
Total Work Done 
No 
Removal (cum) Dispatched 
Amount (Rs.) 
(MT) 
c 
1 
28.01.2014 
18,24,674.03 
7,64,791.18 
33,59,23,240.00 
To 
31.03.2014 
2 
01.04.2014 
1,37,54,520.76 32,10,961.46 
135,57,06,364.00 
To 
31.03.2015 
D 
3 
01.04.2015 
1,45,66,445.22 
13,68,861.67 55,38,02.,253.00 
To 
31.03.2016 
Mis. Montecarlo Limited successfully carried out Dewatering of 
E 
Mine. Yearwise details are shown for dewatering by deploying high 
capacities of Diesel and Electrical operated pump: 
Sr. No. 
Period 
Dewatering in Lac m' 
1. 
01.04.2015 
65.0 
F 
To 
31.03.2016 
G 
This certificate is issued as per their request vide letter no. ML(P)I 
H 
mnl4J901clt/2016-171020 date: 18.05.16 for applying tender." 
11. On the basis of the said communications, the respondent formed 
an opinion that the bid of the appellant was technically non-responsive. 
The reason for arriving at the said conclusion by the respondent was
MONTECARLO LTD. v. NTPC LTD. 
[DIPAK MISRA, J.] 
that the appellant did not have necessary experience of drilling for blasting 
purposes. As the appellant was regarded as technically non-responsive, 
it invoked the jurisdiction of the High Court challenging the said 
determination made by the respondent. It was contended before the 
High Court that the tender documents that contained QR was of the 
experience of a bidder in only drilling, excavation and hauling, etc. and 
not blasting or drilling for blasting purposes. It was further urged that 
the scope of work for Dulanga Mines projects which was taken into 
consideration by the respondent in evaluating the technical proposal of 
the petitioner as being non-responsive had,been wrongly understood. 
The stand of NTPC before the High Court was that the assessment by 
the Technical Committee was absolutely justified and the writ petitioner 
therein did not meet the QR and, therefore, was treated as non-
responsive. 
12. The High Court referred to how tender documents that 
reflected the nature of mine operations, how blasting is an inherent part 
and drilling is differently understood in the sense that the appellant had 
understood. Thereafter, placing reliance on Tata Cellular v. Union of 
lndia1 and Michigan Rubber (India) Ltd. v. State of Karnataka and 
Ors.1, it came to hold that the decision taken by the owner was correct 
and did not adversely affect public interest but subserved the public 
purpose. Being of this view,
the High Court dismissed the writ petition. 
Hence, the present appeal by special leave. 
13. We have heard Mr. P. Chidambram and Mr. Harin P. Raval, 
learned senior counsel with Mr. Sandeep Singh, learned counsel for the 
appellant and Mr. Vikas Singh, learned senior counsel with Mr. Ankit 
Jain, learned counsel for the respondent. 
14. The dispute and the dissention between the parties rest on 
how the Chapter 7 (QR) ofITB that contains Clause 7 .2 that deals with 
technical criteria is to be understood. We are not really concerned with 
Clause 7.1. The centrality of controversy hinges on the interpretation to 
be placed on Clause 7 .1.2. It is submitted by Mr. Chidambram, learned 
senior counsel appearing for the appellant that the appellant satisfied the 
condition as postulated in the QR under Clause 7.1.2 (a) and Clause 
7.1.2 (a) stipulates that 23 Million BCM of aggregated volume of 
overburden and/or coal/lignite from a maximum of seven open cast mines 
1 (1994)6 sec 651 
2 (2012) s sec 216 
237 
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SUPREME COURT REPORTS 
[2016] 8 S.C.R. 
of coal/Lignite, in any year and clause 7.1.2. (b) lays down that at least 
11.5 Million BCM ofcomposite volume of overburden and coal/lignite 
from single open cast mine in any year, out of which at least 3 million 
tones shall be coal/lignite. Learned senior counsel would lay emphasis 
on the documents which the appellant had filed to show that it had 
operated and produced from single mine 11.5 Million BCM of composite 
volume of overburden and coal/lignite from single open cast mine in a 
year. Mr. Singh, learned senior counsel resisting the said stance would 
urge that the appellant does not satisfy the condition of drilling as is 
· required under the QR regard being had to the nature of work. In this 
context, we may usefully take note of the definition of"operated". The 
said term, as defined, means activities of drilling and excavation. The 
documents produced by the appellant indicate the scope of work including 
activities ofopcration of coal/lignite mine. It reads as follows:-
"l 0. 
The scope of work includes the following activities of 
operation of the Coal Lif;nitr ~line 
Drilling 
¥es.No 
Yes.N<i 
Yes•Ne 
CatTied 
out Guf (1Wtt:'sfih Our ewa' 
Gm 
Drilling 
on e<int-rae#ttg 
sub 
ewftiSUb 
our own 
or 
contracting 
contracting 
throucrh 
"' 
sub 
contracting 
Exca\·a ti on 
YesiNe 
Yes•Ne 
Yes:Ne 
Carried 
out Our own/~ Our own/sub Our 
OW!l1 
Excavation on eetttraeting 
eontraetiag 
~ 
our
own or 
~ 
0 
through sub 
contracting 
Hauling 
Yes·'NB 
Yes No 
Yes Nu 
Carried 
out Om own sub ' Our O\\'Jl. 
Our own· 
Hauling 
on 
et7!:lffattttl~ 
soo 
suh 
-
our 
0\\'11 or 
~~ eootraeting 
through sub 
contracting
rs.N 
o. 
11 
MONTECARLO LTD. v. NTPC LTD. 
[DIPAK MISRA, J .] 
Particulars 
---·~---~-- -·--
Mine l 
Mine2 
Mine3 
Annual 
Year (From Ol.04.W14 Year(f rom 01.04.2014 Year(From 01.04.2014 
Production 
to 31.03.2015) 
to 3!.0l.2015) 
to 31.03.2015) 
in Million 
Bank Cubic 
Meters. 
Bidder 
ro 
refer Note (?ool,i 
Overburden Coal1 j Overburden 
Gwlibignite j Over 
(vii) of the Lignite 
(in Million bigriite I 
(in Million ~ burden 
OualifYtnu 
(in MT) 
BCM) 
(in 
BCM) 
(in 
~ 
' . 
Requirement 
MT) 
Million 
s of Chapter 
BCM) 
7 
3.210 
13.i54 
\.l21 • 3.386 
. 
I 12. iQJ" 
Million 
Millien 
Tonne 
Tonne 
I 
239 
A 
B 
c 
D 
15. We have already analysed what is covered by the word 
"operated" as per !TB. In this regard, the High Court has referred to 
Schedule II that deals with description of mining services. Clause 5 
E 
deals with the Mine Operations. We think it appropriate to reproduce 
Clauses 5.1, 5.9 and 5.10 of the same:-
"5. I. The Mine Operator shall construct and operate the 
Site in accordance with the followi.ng scope: 
(a) Plan the mine (Site), its development and construction 
(b) Strip OB and store such OB on dumps 
(c) Mi.ne and extract coal in accordance with the 
requirements of Owner 
F 
(d) Make provisions for HEMM, other mining machinery 
G 
and its effective maintenance 
(e) Implement, and comply with EMP and environmental 
clearances; 
(f) Construction, maintenance and operation of mine 
H
240 
SUPREME COURT REPORTS 
[2016] 8 S.C.R. 
A 
dewatering plant, sump, and garland drains with de-silting 
provisions 
B 
(g) Construct and maintain all access ways and haul roads 
(h) Arrangement and use of explosives, as per Indian 
Explosives Act 
(i) Drilling and blasting 
(j) Construction and maintenance ofwokshops, stores etc 
as per the requirement. 
(k) Construction, Operation and maintenance of complete 
C 
power supply system. 
(I) Mine illumination as per prevalent laws 
(m)Arrangement of petrol/diesel, oil and lubricants. 
(n) (if applicable) control any spontaneous combustion on 
D 
Site 
(o) Conduct advance infill drilling. 
(p) OB dump management including rehandling of internal 
dump as per Environmental Clearance. 
E 
(q) Progressive mine closure with effective land reclamation 
plan in accordance with approved mine closure plan. The 
Mine Operator shall submit to the Owner the annual financial 
statement of cost incurred towards progressive mine closure 
activities duly certified by National Environmental 
Engineering Research Institute (NEER!) or Central Mine 
F 
Planning & Design Institute Limited (CMPDIL) or any 
other institute as may be notified by the Government for 
these purpose to an acceptable level by the Coal Controller. 
G 
H 
(r) POL Store shed 
(s) Development of Power Supply Distribution System 
beyond 33KV switchgear breaker terminals of Darlipalli 
STPP for various equipments/facilities included in Mine 
0.perator's scope. 
x 
x 
x
MONTECARLO LTD. v. NTPC LTD. 
[DIPAK MISRA, J.] 
5.9 Blasting: 
Blasting shall be required for coal and selectively for 
overburden with the objective of achieving good 
fragmentation so that the excavators can operate at high 
levels of efficiency. 
5.10 Overburden and Inter burden Removal: 
The terms overburden and interburden are each included 
in the term overburden below unless noted otherwise. The 
Mine Operator shall ensure the following in respect of 
Overburden removal: 
(a) The Mine Operator shall assess the admissibility of 
accommodation of OB volume in the external dump/in-pit-
dump and accordingly if warranted, notify or seek necessary 
clearances/ approvals from appropriate authority, keeping 
in view the stipulation of MoEF, contained in Forest 
241 
A 
B 
c 
Clearance Stage - 1, dated 10.01.2014. 
D 
(b) The Mine Operator's daily and weekly scheduling shall 
be consistent with the AAPP. All levels, benches, haul roads, 
and highwalls shall be consistent with the Monthly Production 
Plans and the statutory requirements. 
(c) Weekly digging plans shall contain recommended 
methods for excavation and removal of overburden including 
blasting plans ifneeded. 
(d) The Owner shall not be responsible for any costs 
associated with the Mine Operator inefficiently scheduling 
daily and weekly activities. 
(e) The Mine Operator considers itself fully aware of 
conditions of the Overburden in the mining area. No claim 
for lack of knowledge of the site conditions shall
be allowed. 
E 
F 
(f) Reasonable efforts shall be made to keep coal clean 
G 
and free from soil, overburden, rock, clay, parting bands, 
steel, stones, timber, rags, equipment parts or any other 
deleterious material. 
(g) The Mine Operator shall ensure the quality of the coal 
H
242 
A 
B 
SUPREME COURT REPORTS 
[2016] 8 S.C.R. 
is not affected by its mining methods which cause coal ash 
to rise above the target levels presented in AAPP. 
(h) Water in the pit shall be kept to a minimum. 
(i) Fires or hot spots in the coal shall be handled expeditiously 
and not transported to the crusher. The Owner shall be 
notified of any significant occurrence. Oxidized coal shall 
be treated as Overburden for compensation purposes. 
(j) Any equipment repairs on the coal bench shall be cleaned 
after use to prevent contamination. 
C 
(k)All equipment shall undergo pre shift inspections including 
loose bucket teeth or other parts. 
D 
E 
F 
G 
H 
(I) The Mine Operator shall be responsible to provide 
equipment to suit the varying thickness of the seams and 
partings which must be mined. 
(m) The Owner may instruct the Mine Operator to maintain 
an overburden or inter burden cover over in-pit coal 
inventory prior to mining. 
(n) If, during the excavation oroverburden, any coal is found, 
the Mine Operator shall inform the Owner and seek 
instructions before proceeding. Overburden shall be hauled 
and placed in areas as shown in the Mining Plan. 
( o) Reject coal placed in overburden or interburden dumps 
shall be buried in 5 meter lifts and compacted to ensure no 
ingress of air which could cause spontaneous combustion. 
The Mine Operator shall be required, at its own expense, 
to dig out, compact and replace any smouldering dump area. 
(p) Placement of
overburden shall be carried out with due 
regard to water run off, final topography, and Jong term 
ground stabilization. 
(q) Any erosion or land slip in areas of placed materials 
shall be rectified by the Mine Operator at its own expense." 
I 6. Clause 5.7.2. deals with drilling and blasting. It is as follows:-
"5.7.2. Drilling & Blasting
MONTECARLO LTD. v. NTPC LTD. 
[DIPAK MISRA, J.] 
Crawler-mounted pneumatically operated down the hold 
drilling rigs are capable to meet the future requirement of 8 
m/hrwill be deployed for OB. R.B.H. drills will be used for 
drilling about 160 mm dia. holes in coal. 
After shot holes are drilled into the horizontal bench cut by 
the shovel, the faces are blasted using explosives and 
detonators. Coal is also extracted after blasting off the coal 
faces. 
Drilling & Blasting would be required both in OB and Coal, 
benches, before excavation by shovel. Except for coal 
benched which will be mined by CSMs Heavy ANFO type/ 
Slurry Emulsion is proposed to be used based on the daily 
requirement. However, flexibility may have to be provided 
for usage of suitable alternative/available explosives as per 
the requirement." 
17. We have referred to these clauses which are technical but 
hey are fundamental to understand the QR. They clearly demonstrate 
that drilling is imperative. Mr. Chidambram, learned senior counsel for 
the appellant would argue with all the conviction at his command that 
the appellant is engaged in drilling in Lignite and the tender requirement 
was coal/lignite. According to the learned senior counsel, drilling in lignite 
would meet the requirement but the owner has travelled beyond the 
postu I ates of the QR to insist on drilling for the purpose of blasting. We 
have already referred to the certificate issued by GMDC in favour of 
the appellant and the
documents filed by the appellant. The High Court 
has considered the documents and opined that the documents filed in 
rnpport of the QR are substantially inadequate. Adverting to the facet of 
:!rilling, the writ court has opined that there is specific use of the words 
'drilling for the purposes of blasting". It is urged by Mr. Chidambram 
md Mr. Raval, learned senior counsel that in the absence of a definitive 
prescription, the court cannot add an attribute or quality component to · 
the qualifying clause. Jn this regard, we may usefully refer to certain 
authorities. In Sterling Computers Limited v. Mis M & N Public"tio11s 
Limited & Ors3, the Court has held that under some special 
circumstances a discretion has to be conceded to the authorities who 
have to enter into contract giving them liberty to assess the overall 
:;ituation for purpose of taking a decision as to whom the contract be 
'(1993) 1sec445 
243 
A 
B 
c 
D 
E 
F 
G 
H
244 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2016] 8 S.C.R. 
awarded and at what terms. It has also been observed that by way of 
judicial review the court cannot examine the details of the terms of the 
contract which have been entered into by the public bodies or the State. 
Courts have inherent limitations on the scope of any such enquiry. 
18. Jn Tata Cellular (supra) a three-Judge Bench after referring 
to earlier decisions culled out certain principles, namely, (a) the modern 
trend points to judicial restraint in administrative action, (b) the court 
does not sit as a court of appeal but merely reviews the manner in which 
the decision was made, ( c) 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, and (d) the Government 
must have freedom of contract and that permits a fair play in the joints 
as a necessary concomitant for an administrative body functioning in an 
administrative sphere or quasi-administrative sphere. Hence, the Court 
has laid down that the decision must not only be tested by the application 
of Wednesbury principle of reasonableness (including its other facts 
pointed out above) but must be free from arbitrariness not affected by 
bias or actuated by mala fides. 
19. In Jagdisli Manda/ v. State of Orissa and Ors' the Court 
has held that a contract is
a commercial transaction. Evaluating tenders 
and awarding contracts are essentially commercial functions. Principles 
of equity and natural justice stay at a distance. If the decision relating to 
award of contract is bona fide and is in public interest, courts will not, in 
exercise of power of judicial review, interfere even if a procedural 
aberration or error in assessment or prejudice to a tenderer, is made out. 
20. In Master Marine Services (P) Ltd. v. Metca(fe & 
Hodgkinson (P) Ltd and Anr5, it has been ruled 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, ifthe 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. 
'· (2007) 14 sec 517 
'(2005) 6 sec 138
MONTECARLO LTD. v. NTPC LTD. 
[DIPAK MISRA, J.] 
21. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. 
mu/ Ors. 6 a two-Judge Bench, after referring to series of judgments 
has culled out certain principles which include the one that where a 
decision has been taken purely on public interest, the court ordinarily 
should apply judicial restraint. 
22. In Michixan Rubber (India) Ltd. (supra) the Court referred 
to the earlier judgments and opined that before a court interferes in 
tender or contractual matters, in exercise of power of judicial review 
should pose to itself the question whether the process adopted or decision 
made by the authority is mala fide or intended to favour someone or 
whether the process adopted or decision made is so arbitrary and 
irrational that the judicial conscience cannot countenance. Emphasis 
was laid on the test, that is, whether award of contract is against public 
interest. 
2~. Recently in ~{cons li!frastructure Ltd. v. Nagpur Metro 
Rail Corporation Ltd. 7 a two-Judge Bench eloquently exposited the 
test which is to the following effect:-
" We may add that the owner or the employer of a project, 
having authored the tender documents, is the best person 
to understand and appreciate its requirements and interpret 
its documents. The constitutional Courts must defer to this 
understanding and appreciation of the tender documents, 
unless there is mala fide or perversity in the understanding 
or appreciation or in the application of
the terms of the 
tender conditions. his possible that the owner or employer 
of a project may give an interpretation to the tender 
documents that is not acceptable to the constitutional Courts 
but that by itself is not a reason for interfering with the 
interpretation given:'' 
24. We respectfully concur with the aforesaid statement of law. 
We have reasons to do so. In the present scenario, tenders are floated 
and offers are invited for highly complex technical subjects. It requires 
understanding and appreciation of the nature of work and the purpose it 
is going to serve. It is common knowledge in the competitive commercial 
field that technical bids pursuant to the notice inviting tenders are 
, r2006J 11 sec 548 
7 2016 (8) SCALE 765 
245 
A 
B 
c 
D 
E 
F 
G 
H
246 
A 
B 
c 
D 
E 
SUPREME COURT REPORTS 
[2016] 8 S.C.R. 
scrutinized by the technical experts and sometimes third party assistance 
from those unconnected with the owner's organization is taken. This 
ensures objectivity. Bidder's expertise and technical capability and 
capacity must be assessed by the experts. In the matters of financial 
assessment, consultants are appointed. It is because to check and 
ascertain that technical ability and the financial feasibility have sanguinity 
and are workable and realistic. There is a multi-prong complex approach; 
highly technical in nature. The tenders where public largesse is put to 
auction stand on a different compartment. Tender with which we are 
concerned, is not comparable to any scheme for allotment. This arena 
which we have referred requires technical expe1tise. Parameters applied 
are different. Its aim is to achieve high degree of perfection in execution 
and adherence to the time schedule. But, that does not mean, these 
tenders will escape scrutiny of judicial review. Exercise of power of 
judicial review would be called for if the approach is arbitrary or malajide 
or procedure adopted is meant to favour one. The decision making 
process should clearly show that the said maladies are kept at bay. But 
where a decision is taken that is manifestly in consonance with the 
language of the tender document or subserves the purpose for which 
the tender is floated, the court should follow the principle of restraint.
Technical evaluation or comparison by the court would be impennissible. 
The principle that is applied to scan and understand an ordinaiy instrument 
relatable to contract in other spheres has to be treated differently than 
interpreting and appreciating tender documents relating to technical works 
and projects requiring special skills. The owner should be allowed to 
carry out the purpose and there has to be allowance of free play in the 
joints. 
F 
25. In view of t11e aforesaid analysis, we do not perceive any 
infirmity in the judgment and order passed by th'< High Court and, 
accordingly, the appeal stands dismissed. In the facts and circumstances 
of the case, there shall be no order as to costs. 
Kalpana K. Tripathy 
Appeal dismissed.