Case: Tata Cellular Vs. Union of India

The Department of Telecommunications, Government of India, invited tenders from Indian Companies with a view to license the operation of "Cellular Mobile Telephone Service" in four metroplitan cities of India, namely, Delhi, Bombay, Calcutta and Madras. Cellular mobile telephone means a telecommunication system which allowstelecommunication between a mobile or stationary telephone to anther mobile or stationary unit at a location. It may within or outside the city includinging calls. The last date for submission of tender wasThe tender process was in two stages. First stage involved technical evaluation and the second involved financial evaluation. Those who wereat the first stage were invited for the second stage4. Thirty bidders participated initially at the first stage. The first Tender Evaluation Committee was constituted consisting of senior officers of the Department of Telecommunications5. A Telecom Commission was constituted oncomprising a Chairman and fourMembers1. Member (Production)2. Member (Services)3. Member (Technology)4. Member (finance)It16 companies, 12 of which were eligible without any defect. However, in the case of 4 the Committee recommended condonation of certain defects. Those four were1. BPL Systems and Proiects Limited2. Mobile Teleeommunication Limited3. Mobile Telecom Services4. Indian Telecom LimitedBetweenthe recommendations were submitted to the Telecom Commission. The matter came up for discussion among the members of the commission. Onthe Telecom Commission accepted the recommendations of the Technical Evaluation Committee. The chairman recommended that theof bidders, the recommendations of the Tender Evaluation committee and the proposal for financial bids be placed before the Selection committee at the earliest6. It requires to be noted, at this stage, that a Selection Committee also described asCommittee comprising the principal Secretary to the Prime Minister and three other Secretaries to the Government of India had been set up by the Minister for final evaluation of the bid7. Mr. B. R. Nair, a Member (Budget) of Telecom Commission came to be appointed as Member (Services) onIt appears the Selection Committee met a number of times and discussed the matter with the Minister. He submitted an interim report onDuring this time the Committee not only de novo exercised but also modified theprepared by the Technical Evaluation Committee and approved 14 companies. The Selection Committee, also met the representatives of equipment manufacturers for the selection of the licensees. Onthe revised financial bid and theapproved by the Telecom Commission were put up before the Minister for approval. Onfurther meetings of the Selection Committee were held and the financial bid document was revised. Onthe Selection Committee submitted its final report. Two bidders, namely, M/s. Ashok Leyland Ltd. and M/s. Vam Organics Ltd. were dropped from theof 16 bidders. OnMr. Nair was appointed as Director General ofHe was authorised to exercise all powers of Telecom Authority under Section 3 of the Telegraph Act. The Minister approved the issue of financial bids with modification to thecompanies as recommended by the Selection Committee onThe approval took place on2, the financial tenders were issued. It contained seven criteria which had been approved by the Selection Committee. However no marks were earmarked for any of the criteria.off date for financial bid document. On this date the bids received from 14 companies were opened and read out to the bidders, who were present. As per the conditions, the quoted rental ceilings and the cities for which the bids were made, were read out9. Another Departmental Tender Evaluation Committee consisting of senior officers examined the financial bids of the 14companies. It adopted some parameter and devised the marking system which was not done by the Selection Committee. Onthe second Tender Evaluation Committee submitted its recommendations. However, the matter was referred back to it for a fresh gradation on the basis of 21.75 per cent interest rate in respect of 13 per cent rate which it had earlier adopted. Onthe recommendations wereThe Adviser (Operations) recommended only 4 operators based on the evaluation and financial bids, Bharati Cellular was recommended as a first choice for all the four cities, BPL as the second choice for both Delhi and Bombay, Tata Cellular and Skycell as second choice for Calcutta and Madras : This was done since in his view no other bidder qualified for licence. Onthe Chairman of the Tender Evaluation Committee directed that all the documents and recommendations be sent to the Selection Committee for its consideration and for making final recommendations to the Government. When the file was put up to the Minister onhe made three important notings1. In view of the time taken by theCommittee the selection probess be completed by DoT internally;2. Only one party may be granted licence for one city; and3. The actual selection of the licensee should be made primarily on the consideration of rentals and the marks obtained in respect of foreign exehange inflow and outflow criterion and expertence of the licensee10. Onin accordance with this note, a list of 8companies was prepared. The reasons for rejection of the 6 companies were recorded. The Chairman, in his final recommendation, made onnoted that Bharati Cellular, Modi Telecom and Mobile Telecom did not fulfil the conditions provided in clause 2.4.7 of Chapter II of the financial bid which requires that foreign exchange requirement be met by foreign collaborator. With regard to rejection of 6 bidders, Sterling Cellular was rejected because some investigation against them was pending before the CBI. However, the Minister reversed that decision as to the exclusion of Sterling Cellular and Indian Telecom Limited from the list of finally approved bidders and directed that the same be considered11. Onthe list was recast. Sterling Cellular was provisionally selected for the city of Madras. Onthe selected bidders were notified of their provisional selection subject to the acceptance of rentals and other terms as might be advised12. It is under these circumstances, four writ petitions were preferred bearing CWP Nos. 4030, 4031, 4032 and 163 of 1992. The petitioners were1. India Telecomp (Petitioner in CWP No. 4030 of 1992)2. Adino Telecom Limited (Petitioner in CWP No. 4031 of 1992)3. Kanazia Digital System (Petitioner in CWP No. 4032 of 1992)4. Hutchison Max Telecom Private Limited (Petitioner in CWP No. 163 of 1992)13. It was urged before the High Court of Delhi that the decision of the Government in selecting 8 parties, two for each of the cities, was bad on the following groundsbias(ii) invoking certain hidden criteria(iii) irrelevant considerations(iv) bypassing the Selection Committee(v) selecting otherwise underqualified parties(vi) marketing system which was evaluated by the second Technical Evaluation Committee for grading various bidders14. So manipulated thereby a criterion was evolved which wasto knock out the petitioners before the High Court or resulting in knocking out of the petitioner in the case of India Telecomp Limited and Adino Telecom Limited. Hutchison Max Telecom Private Limited urged that it was the highest in the gradation. Its bid was not considered for a technical and flimsy reason; in that, the compliance statement required to be furnished with the bids was not complete. Kanazia Digital System contended that its technical bid was left out on certain wrong premise15. Lengthy arguments were advanced before the High Court. On a consideration of those arguments the writ petitions of Adino Telecom and Kanazia Digital System were dismissed. CWP No. 4030 of 1992 filed by India Telecomp was allowed. A mandamus was issued to consider afresh the grant of licence to the petitioner therein, after evaluating marks for the rental on the basis the figures of deposits from subscribers given for Delhi and Bombay were accumulated. Similarly, CWP No. 163 of 1992 in which the petitioner was M/s. Hutchison Max Telecom Private Limited, was allowed. A direction was issued to reconsider the case of the petitioner, on the basis the compliance filed by it, as it was in order. To that extent the order granting licence to 8 parties(2 for each of the cities) was set aside. This judgment was pronounced on

Court's reasoning:
19. The second ground of attack is bias. In that, Mr. B. R. Nair, Member of production in the Telecom Commission, who was appointed as Member (Service onparticipated. From the Adviser the file was to Member (Service). The note of Mr. Nair is datedHe agreed with the recommendation of TEC that four firms which had some deficiencies should be included in theThey were BPL Systems and Projects, Mobile Telecom Mobile Communications and Indian Cellular. Therefore, BPL was approved by Mr. Nair. Admittedly, Mr. Nairs son is employed in BPL Systems andIn law, there is no degree of bias. Even otherwise in the implementation of the judgment of the High Court of Delhi, if this appellant is to be eliminated, it ought to have been afforded an opportunity. Had that been done it would have pointed out several factors, namely, the omission to consider relevant material, namely, parameter seven, the prejudice caused by the award of marks after the bids were opened. The DoT was obliged to disclose the maximum marks for each criterion at the threshold of the financial bid in the interest of transparency and to ensure a. Insofar as Sterling Cellular is preferred for Delhi that again is arbitrary. There is a CBI inquiry pending against it. Secondly, the foreign exchange is sought to be procured by international roaming and it is awarded 10 marks out ofThe allegation against this respondent that the foreign exchange requirement has not been met is incorrect. The documents filed by the respondent clearly show that there is a surplus of approximately three crore rupees, available from the foreign collaborator, in the first year. The allegation of India Telecomp that the bidder was responding on the basis of one party per city and the proposal for licence for a period of 20 to 25 years is factually incorrect. Equally, to state that this respondent quoted a lower customs duty and thereby got higher marks is incorrect. The financial bid of the respondent shows that this had taken customs duty at 95 per cent for the first year when the backlog of the equipment is to be imported. For the subsequent years, the projection was made on a reduced customs duty in view of the announced policy of the Government to reduce customs duty and to bring them in line with international levels41.The argument that there is a common collaborator of Bharati Cellular and Mobile Telecom Services proceeds on the footing that Bharati Cellular is collaborating with Talkland. That Talkland has a service privately in agreement with Vodaphone Group. Thus, Vodaphone is the common foreign oollaborator of Bharati Cellular and Mobile Telecom. This is notbeing so, this Court will not interfere by exercising its powers under Article 136 of the Constitution of India. The argument about hidden criteria would not affect or benefit this respondent directly or indirectly. Even otherwise, the hidden criteria cannot be impugned. There is no mention of any particular criterion on the basis of which the selection was to be made. At the second stage what was required to be kept in mind were the parameters mentioned in paragraph 2.4. The criteria for selection to each of the four cities had to be provided inter alia because the tenderers did not tender for one city alone but for more than one. The allegatiion of bias on the part of Mr. Nair is withoutthis case Mr. Subhash Nair is only one of the officers in BPL, which has over 5500 employees and 89 officers of his rank in 27 offices all over India, Mr. Nair was not theat all. He was one of the recommending authorities. His involvement in the approval and selection of the tender was indispensable.No doubt, this respondent dropped McCaw as a foreign collaborator. That does not amount to change where one out of two or three collaborators is dropped. This foreign collaborator was required as Condition No. 7 only in financial bid documents not in tender documents. This respondent submitted financial bid onshowing only two of the collaborators. McCaw was not shown as that was already dropped out. Therefore, the High Court rightly held that McCaw was not taken into consideratiion in awarding marks for foreign partners experience. The object of the first stage was not to allot the franchise but to3. The principal objection of the Union of India is that the High Court was not justified in scrutinising the tendering process in such detail. The minute examination is unwarranted because the High Court cannot constitute itself the selecting authority. However, no appeal is preferred, as otherwise, it would have further delayed the introduction of very valuable communication facility in this country. Beyond that, it has no particular interest as to who is selected. However, it becomes necessary to answer the allegations made about the actual selection and whether there was any bias on the part of the selection committee. The selection process was dictated by the exigencies of the situation. It is a question, as to what one could settle for, in the given circumstances. The Government was embarking upon a totally new technology project, for the first time. At that stage, it was impossible to predict what kind of response will there be. Therefore it is impsible to predicate thelimits which could be set or which conditions have to be relaxed or softrned. The allegation of bias, it is held, must be a case of reasonable possibility or likelihood of bias. In this case, there is no such reasonable likelihood. Mr. B. R. Nair was not influenced directly, or, in any other manner, subtle or otherwise. He did not, in fact, participate in any of the significant or crucial stages in the selection process. Even otherwise, the relationship is not such as to give reasonable apprehension ofregards the parameter in relation to project financing it was kept in view by taking into account the estimated number of subscribers, installation charges, monthly rental, any other charges etc. they were included in the competition. The other parameters of the bidders were treated on the same footing as regards this parameter is concerned. Concerning rental, it was specifically averred in the counter before the High Court that the other charges has also been included while calculating quoted rental54. It is not correct to contend that Talklands experience is not relevant. In the United Kingdom the operation of Mobile Cellular System is handled by the network cooperator and a proper service provider, acting together. The licensee is required to perform the combined functions of a network operator as well as service provider. The duties and functions of a licensee are not limited to making available the services as defined. In fact, the principal obligation of the licensee is expressed generally in paragraph 2.1.1. A reading of the other clauses makes it clear that it is incumbent upon the licensee to provide services. Therefore, the experiences of a network operator and the service provider are both important andInternational roaming is a relevant consideration. From the tender document it will be clear that it provides for facility of roaming to visitors, Roaming facility for a tourist is available in the GSM system. Even if this condition has been relaxed in favour of certain bidders, there is nothing wrong. Reliance is placed on G. J. Fernandez v. State ofThe principles deducible from the above are(1) The modern trend points to judicial restraint in administrative action(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made(3) 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(4) The terms of the invitation to tender cannot be open 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 than not, such decisions are made qualitatively by experts(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere orsphere. However, 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(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditureBased on these principles we will examine the facts of this case since they commend to us as the correctThen again, one of the prescribed criterion is 2.4.6 which carries 12 marks, namely, the financial strength of the partner company. The annual turnover from Tata Cellular, from Indian parameters was 12, 000 crores and annual turnover of their foreign parameters was 51, 000 crores yet what has been awarded is only 9 marks. As against this Hutchison Max has only an annual turnover of 75 crores and Rupees 6600 crores of foreign parameters yet it has been awarded 12 marks. Equally, Sterling Cellular whose turnover according to its bid document was 77 crores; the foreign parameter is unknown it has also been awarded 9Thus, we find the argument that paragraph 2.4.7, namely, the financial projection of the proposed Cellular Mobile Cellular and the 7th criterion having been left out of consideration cannot beIn the instant case, the first aspect of the matter does not arise.We hold Mr. B. R. Nairs involvement did not vitiate the selection on the ground of bias, Since we have reached this conclusion we are not going to the other questions argued by Mr. F. S. Nariman whether India Telecomp or Tata Cellular could urge this point relating toAfter finding that only three companies qualified for selection onthe following note was made by Mr. G. T. Narayanan, Adviser (Operations)The financial bid which was approved by the apex committee was given to thebidders and these were received and opened onThese were evaluated by the Tender Evaluation Committee (TEC). The evaluation report is placed below. The financial evaluation was done based upon the weightages of the various parameters namely, rental, financing, foreign exchange inflow/outflow, financial strength, experience and purchasefar as the rental and other allied parameters are concerned, there are wide variations of rent, deposit, registration/connection fee. In some cases rent is zero. It was considered by the TEC that these are to be equated to one parameter as equated rental and the method adopted was loading the basic rental and other charges like deposit, interest rate @ 13% perthough Tata Cellular fulfils all the conditions but in bid document they have based their calculations on single operator concept. However, we may, if approved by Telecom Commission andCommittee, make ato operate on abasisAfter the operators are selected, tariff fixation and other licensing terms can be negotiated by the Telecomfinancial bids from thebidders have now been received and examined in the Department. The recommendations of the Evaluation Committee are being forwarded to the members of theCommittee appointed by MOS (C) for examination and making recommendations to the Government regarding final selection of the franchiseesI spoke to Principal Secretary to the Honble Prime Minister with the request to expedite the process. He indicated that the Committee earlier appointed by MOS (C) stands dissolved and a fresh Committee will have to be nominated for considering the financial bids etc. He also indicated that he proposes to put up the case to the Honble Prime Minister for his clearance. It is, therefore, proposed to issue a letter to the members of theCommittee as per draft placed below. The same may please be seen by MOS (C) for approval beforeAs a resultrecommendations, Bharati Cellular got all the four cities. BPL Systems and Project got two out of four cities. Only Skycell got Madras. No fourth party got any city. Having realised that this decision will patently be unacceptable a relaxation was made onone day before the final decision whether those with less than one lakh lines experience could be considered for Calcutta and Madras. Eve, onBharati Cellular was evaluatedSRF France and EMTEL Mauritius. There was no mention of Talkland. OnBharati Cellular was again evaluatedits collaborators SFR France and EMTELis true that during evaluation it was noted that any bidder with less than 10 marks out of 15 for experience would stand disqualified. The cut of one lakh lines was in the context of minimum experience of 10 marks. Bharati Cellular had a collaborator other than Talkland, namely, SFR France. It was mentioned in Bharati Cellulars bid in its tenderthat the number of SFR France was over 80, 000. Byit was estimated to be 1, 10, 000 In August 1992 when the bids were submitted SFR France line experience could reasonably be expected to be above one lakh lines. In addition, SFR had a GSM licence.We are not in a position to accept the contentions of Mr. Harish Salve that these criteria were evolved asto suit some other bidders and knock off others. In a technical matter like this where the Government of India is embarking upon new communication scheme with advance technology all the criteria cannot be postulated in the beginning itself. Where the Committee of Experts thought certain criteria have to be evolved in order to subserve the interest of the scheme it is necessary to have all them set out in the beginning itself. However, the important question remains after the evolution of the criteria whether they have been uniformly and properly applied, as urged by Mr. Ashoke Sen126. A careful perusal of the files shows that the Adviser (Operations) selected Bharati Cellular for franchise, with its foreign collaborators SFR France, EMTEL Mauritius. The same was approved by the Chairman in his final proposal which was ultimately approved onThus, it is clear that at no point of time Talkland ever figured as Bharati Cellulars collaborator. SFR France, the foreign collaborator of Bharati Cellular had GSM Paris area (sic)91, it had 81, 085 subscribers with no GSM experience. The number of subscribers was estimated to go up to 1, 10, 000 byOn the date of submission of the bid it was expected to cross the one lakh mark. The other collaborator EMTEL Mauritius had only an experience of 1982 lines. In order to make Bharati Cellular qualify Talkland is also included as a foreign collaborator. This factually wrong, as noted above, because at no point of time Talkland was thought of as foreign collaborator for Bharati Cellular. Even the, as seen form the file, Talkland is providing marketing, sales, customer care, billing services to both Vodaphone and Cellnet under contracts with both of them. This is evident from the material produced before us. ItWe are unable to support this finding as it clearly ignores that Talkland never figured as acollaborator for Bharati Cellular. Further, ignoring the disjunctive clause, two qualifications were sought to be subsumed to give an undue advantage to Bharatia matter of fact BPL Systems and Projects did submit its application for foreign collaboration onto the Reserve Bank of India. When that application was returned onit came to be sent to SIA onWe do not think BPL Systems and Projects could be faulted on this score. Equally, the argument that the memorandum and articles do not mean cellular business does not merit acceptance at our hand. In fact, the High Court has correctly the main object, namely, to design, develop, fabricate, manufacture, assemble, exporting from and importing into India by self or otherwise dealing and act as consultants and render services in connection with all kinds of telecommunication equipments as including cellular(The alternate submission is the question of even clerical error does not arise here because one month before acceptance Hutchison Max had sent the compliance form. Where the matter is purely technical the court should not exercise the power of judicial review. We find great force in this submission. We are clearly of the opinion that the mistake is in relation to amatter that is in relation to peripheral or collateral matter. There has been every intention to comply with the terms of the bid. For an accidental omission it cannot be punished. We concur with the High Court.On the date of consideration by the Technical Evaluation Committee its position was even better If, therefore, this aspect had been borne in mind it is nor for us to reweigh the claims and come to one conclusion or another. So much forthis letter we are not able to fathom the reason for omission. As seen above, Tata Cellular was originally selected for Delhi. By implementation of the judgment of the High Court it has been left out. Before doing so, as rightly urged by Mr. Soli J. Sorabjee, this appellant ought to have been heard. Therefore, there is a clear violation of the principle of natural justice. On an overall view we find it has two distinctive qualifications. In that1. It has not borrowed from any commercialIn the case of Ashok Leyland, the nothing, as seen above, is as under"In both cases of (i) M/s. Ashok Leyland and (ii) M/s. Vam Organic Chemicals Ltd.a joint venture company has not been formed as stipulated in the tender, and there is no indication of the equity structure or the extent of participation of the foreign collaborators"cannot interfere with the discretion of the Committee151. In the above two cases, we are obliged to interfere on the ground of arbitrariness and violation of the principle of natural justice confining ourselves to the doctrine of judicial restraint, however, by the application of permissible parameters to set right theprocess152. We make it clear that we are not disturbing the other selections since the power of judicial review is not an appeal from the decision. We can not substitute our decision since we do not have the necessary expertise to review153. Lastly, quashing may involve heavy administrative burden and lead to delay, increased and unbudgeted expenditure; more so, in a vital field like telecommunication154. In view of the foregoing, we thus reach the conclusion the Bharati Cellular could not claim the experience of Talkland. This conclusion has come to be arrived at on the basis of the parameters we have set out in relation to the scope of judicial review. We may reiterate that it is not our intention to substitute our opinion to that of the expert. Apart from the fact that the Court is hardly equipped to do so, it would not be desirable either. Where the selection or rejection is arbitrary, certainly this Court would interfere