Reasons are the life blood of every administrative decision and every administrative decision has to be informed by good reason: High Court of Delhi

 14 IN THE HIGH COURT OF DELHI AT NEW DELHI W.P.(C) 6752 2021 and C.M. No. 21272 2021 Judgment reserved on: 29.11.2021 Judgment delivered on: 07.01.2022 INSITUFORM PIPELINE REHABILITATION PRIVATE Through: Mr. Sandeep Grover & Mr. Tarang Petitioner Agarwal Advs. NEW DELHI MUNICIPAL COUNCIL Through: Mr. Anil Grover Standing Counsel Respondent with Mr. Yoginder Handoo ASC and Mr. Ashwin Kataria Adv. HON BLE MR. JUSTICE VIPIN SANGHI HON BLE MR. JUSTICE JASMEET SINGH JUDGMENT OF THE COURT The present petition has been filed by the petitioner seeking substantially the following reliefs: “a. issue a writ of mandamus and or certiorari and or any other appropriate writ order direction in the nature thereof quashing the decision of Respondent taken on 04.06.2021 to cancel the tender pertaining to the Project and all acts actions taken by the Respondent in furtherance thereto and also restrain the Respondent from re tendering inviting fresh bids and or take any further steps actions in relation to the Project in question against the Petitioner: b. issue a writ of mandamus and or any other appropriate the nature Respondent to award the work contract in relation to the Project to the Petitioner in pursuance to the evaluation of Petitioner s bid on 10.09.2020.....” thereof directing W.P.(C) 6752 2021 The petitioner is aggrieved by cancellation of tender pertaining to Rehabilitation of Existing 1100 1200 MM DIA Sewer Line along Ashoka Road from Nirwachan Sadan to C Hexagon which according to the petitioner has been arbitrarily whimsically and mala fidely cancelled. Briefly stating the facts giving rise to the filing of the present petition are as under: The petitioner is a provider of trenchless technology Cured in Placed Pipeline 6752 2021 08.09.2020 post technical evaluation only 2 bidders namely the petitioner and Gypsum Structural India Pvt. Ltd. were found eligible and qualified for the next level i.e. financial bid comparison. The bid of the third bidder namely Onsite India Pvt. Ltd. was disqualified by the respondent as on scrutiny of the EMD documents uploaded by Onsite it was found that the entire EMD was deposited by Onsite in the shape of Bank Guarantee which was in breach non compliance of technical qualifications. On the recommendation of the Technical Evaluation Sub Committee of the respondent financial bids were opened on 10.09.2020 and the petitioner emerged as the lowest bidder of the respondent issued a fresh notice inviting tenders calling for fresh bids in relation to the same project with identical scope of work and terms and conditions. In these circumstances the petitioner being materially aggrieved by the conduct of the respondent filed WP(C) 509 2021 on 13.01.2021 seeking the following reliefs: a. issuance of writ of mandamus and or certiorari and or any other appropriate writ order direction in the nature thereof quashing the impugned notice dated 04.01.2021 issued by the Respondent in relation to the Project and all acts actions taken by the Respondent in furtherance thereto b. issuance of writ of mandamus and or any other appropriate writ order direction in the nature thereof directing the Respondent to award the work contract in relation to the W.P.(C) 6752 2021 Project to the Petitioner in pursuance to the evaluation of Petitioner’s bid on 10.09.2020 c. call for complete records pertaining to the impugned notice dated 04.01.2021 and erstwhile NIT dated 20.08.2020 in relation to the Project including all correspondences communications file notings internal communications etc in relation thereto and......” 9. When the matter came up before this Court on 13.01.2021 this Court restrained the respondent from proceeding with NIT dated 04.01.2021 till the next date of hearing. This Court also directed the respondent to produce original records to show as to what were the reasons for cancelling the NIT dated 22.08.2020 in which the petitioner was an L 1 bidder. 10. From the original records produced by the respondent before this Court it transpired that the respondent Council had held a meeting on 26.12.2020 for considering the award of the tender in favour of the petitioner and the decision taken by the respondent was under: “After due deliberations it was decided by the Council to re tender the case. It is further resolved by the Council that the Department may the anticipation of confirmation of the Minutes.” further necessary action 11. On 22.01.2021 a detailed order was passed by this Court directing the respondent to file a comprehensive affidavit in the matter bringing on record the express reasons for cancellations of the tendering process initiated on 22.08.2020. 12. On 15.02.2021 this Court after detailed hearing found the decision of the Council to re tender the work to be arbitrary. Hence this Court quashed the rejection of petitioner’s bid by the respondent and the W.P.(C) 6752 2021 fresh NIT dated 04.01.2021 and directed the respondent to take a further decision in the matter in accordance with law. 13. The relevant extract of the order dated 15.02.2021 is reproduced as hereunder: 13. It is one thing to say that the employer respondent may not give reasons for rejection of the lowest highest bid as the case may be it is however another thing to say that the respondent was not even obliged to have any reason for coming to such a decision. Every decision of the State has to be implied with reasons. The same cannot be arbitrary whimsical or capricious. It is well settled in law that the validity of any administrative decision must be judged on the basis of reasons existing on record and the authority cannot provide new additional reasons when the Court calls for them as they must necessarily exist on the record when the decision is made. In this regard reference may be made to the decision of the Supreme Court in Mohinder Singh Gill v. Chief Election Commissioner 1 SCC 405). 14. In the present case admittedly the resolution passed by the Council is completely unreasoned. If the recommendation on the file itself had been to reject the petitioner s bid the absence of reasons in the resolution passed by the Council may not have been necessary since the reasons recorded on the file itself could be attributed to the Council and that could explain the non recording of further reasons in the Council s resolutions however in a case where the recommendation on the file was for acceptance of the petitioner s bid and contrary to the said recommendation the Council decides not to accept the bid and re tender the work instead the Council was certainly expected to record its reasons for its said 15. In the light of the aforesaid the decision of the Council to retender the work in its meeting held on 26.12.2020 appears to be arbitrary and cannot be sustained. The same is accordingly set aside. W.P.(C) 6752 2021 16. The rejection of the petitioner s bid on that premise and the retendering of the work vide fresh tender notice dated 04.01.2021 is consequently liable to be quashed and the same are hereby quashed. We however leave it open to the accordance with law. take further decision the matter 17. The petition stands disposed of in the above terms. 14. Since as per the respondent’s own showing the work contained in the tender was an emergency work and of grave importance the petitioner post the decision of 15.02.2021 in WP(C) 509 2021 issued several letters to the respondent requesting the respondent to communicate their decision in line with the directions passed by the 15. On 04.06.2021 almost after 10 months since the bids were invited the respondent cancelled the tender for the project citing the Court. following reasons: “1. The rates of L 1 agency were about 2.34% above the justified rate which is not acceptable by the Council. 2. Rehabilitation of water sewer lines are not specialized but a routine work and hence only 2 bids were found and non competitive in 1st call.” It is in this background the decision of the respondent to re tender the work has been challenged in the present writ petition. 17. When the matter came up on 20.07.2021 while issuing notice we restrained the respondent from awarding the contract for the work in question to any party till the next date. The interim order was continued on 08.09.2021 as well as on 05.10.2021. 18. The respondent has filed a detailed affidavit wherein the respondent W.P.(C) 6752 2021 has reiterated the reasons why the respondent Council had decided in its meeting held on 21.05.2021 to cancel the tender in question. The agenda items and the Council’s decision as seen from the record is reproduced below: 07T M of sewer line in NDMC area. existing 1100 1200 mm dia sewer at Ashoka Road from Nirvachan Sadan to C Hexagon During the last council meeting held on 26.12.2020 rejection could not be recorded. It was deliberated in the Council and again confirmed in the meeting today that the earlier tender has to be rejected and recalled due following reasons: 1. The rates of L 1 agency were about justified rates is not acceptable by 2.34% above 2. Rehabilitation of water sewer lines are not specialised but routine work and hence only 2 bids were found and none competitive in the first the Council resolved that this tender be rejected and recalled immediately. It is further resolved by the Council that NDMC may initiate further necessary action on the decisions taken as above in anticipation of the confirmation of the minutes. The above minutes of the council meeting dated 21.05.2021 will be placed before the next meeting of the Council for confirmation If approved we may return the file to Chif. Engrplease. DEBASHISH SEN GUPTA HEAD ASSISTANT) 02.06.2021 5:33 PM” It has further been argued by the respondent that the Council duly applied its collective mind deliberated the issue and thereafter a W.P.(C) 6752 2021 conscious decision was taken to reject the bids received under the tender in question and recall the tender. It is further argued that the decision to accept or reject the bids by the tender inviting authority is within the exclusive domain of that authority and ought not to be interfered by the Court until the same is arbitrary whimsical or mala fide. Reliance has been placed on Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. & Anr. 2016) 16 SCC 818. 21. Clauses 13 and 15 of the tender notice dated 20.08.2021 have also been relied upon which read as under: “13. The competent authority on behalf of the NDMC does not bind itself to accept the lowest or any other bid and reserves to itself the authority to reject any or all the bids received without the assignment of any reason. All bids in which any of the prescribed condition is not fulfilled or any condition including that of conditional rebate is put forth by the bidders shall be summarily rejected. 15. The competent authority on behalf of NDMC reserves to himself the right of accepting the whole or any part of the bid and the bidders shall be bound to perform the same at the rate quoted.” 22. The Respondent Council thus argues that it is not bound to accept the lowest bid and grant the contract. 23. The petitioner has filed a rejoinder and has argued that both the reasons recorded in the minutes of the meeting of 21.05.2021 prompting the Council to cancel the tender are mala fide arbitrary and whimsical. It is argued that the tender document clearly required specialised agencies to bid and it was a specialised work. The Finance Department as well as the NDMC deliberated the bid of the W.P.(C) 6752 2021 petitioner and found that the Petitioner’s financial bid was just above 2.35% of the estimated cost of Rs.16 61 35 617 with quoted value of 17 00 43 000 and 2.34 % above justified cost of Rs. 16 61 52 231 making it eligible for the award of the contract especially since the Respondent has been awarding contracts to entities institutions for similar works where the variation is within the permissible limit of 5% of justified rates. It has further been argued by the petitioner that Mr. Virender Singh Kadian who is a member of the Council had written a letter dated 07.12.2020 pleading the case of the disqualified bidder Onsite and calling upon the Respondent to withdraw the technical objections qua Onsite and open the price bid of Onsite or re invite the tender in question. Shri Virender Kadian also participated in the Council meeting held on 21.05.2021 which has tainted the decision of the Council and hence the entire decision making process stands vitiated as one of its members openly had a bias in favour of the disqualified bidder and against the qualified bidders. It is submitted that Shri Kadian had his way as he succeeded in ensuring cancellation of the tender on completely frivolous grounds. In response learned Counsel for the respondent has submitted that the Council has 13 members all of whom have collectively taken the decision to cancel the tender and to re tender the works. Mr. Kadian was only one of the 13 persons and hence had a miniscule role in the decision making if at all. 26. We have heard Mr. Sandeep Grover for the petitioner and Mr. Anil W.P.(C) 6752 2021 Grover for the respondent. The judgment of Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. & Anr.16 SCC 818 is clear unequivocal and unambiguous. The decision of tender floating authority is not to be lightly interfered with by the Courts unless the same is arbitrary whimsical or malafide. The relevant extract of the Afcons judgment is reproduced as under: “11. Recently in Central Coalfields Ltd. v. SLL SML [Central Coalfields Ltd. v. SLL SML Joint Venture Consortium) 8 SCC 622 :4 SCC Civ) 106 :8 Scale 99] it was held by this Court relying on a host of decisions that the decision making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with. Interference is permissible only if the decision making process is mala fide or is intended to favour someone. Similarly the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that the decision is one which no responsible authority acting reasonably and in accordance with law could have reached. In other words the decision making process or the decision should be perverse and not merely faulty or incorrect or erroneous. No such extreme case was made out by GYT TPL JV in the High Court or before us.” 27. With this background we proceed to examine whether the reasons recorded by the Council on 21.05.2021 which were communicated to the petitioner on 04.06.2021 for cancellation and re tender suffer from arbitrariness mala fides and need interference. The Reason No.1 is reproduced as under: “Reason 1: The Rates of L 1 agency were about 2.34% above the justified rate which is not acceptable by the Council”. 28. We directed production of the original file which was produced before W.P.(C) 6752 2021 AE(P) to us and we have gone through the same. The notings dated 15.09.2020 16.09.2020 25.09.2020 read as under: “ 19 Justification submitted by EE(SM) has been checked and is submitted for further scrutiny in detail by main planning Division. Submitted please. L1 offer of M s Insituform Pipeline Rehabilitation Private Limited may please be accepted which is about 2.32% above the justified cost. Rate of Item No.1 in Delhi Jal Board Justification 0.01 % above the estimated cost has been checked and submitted& EE to accept the work to the lowest agency the lowest agency i.e. M s Insituform Pipeline rehabilitation Pvt. Ltd. who have quoted their rates @ 2.35% above of the EC of W.P.(C) 6752 2021 Rs. 16 61 35 617 with quoted value of Rs 17 00 43 000 . The percentage of tendered of cost over the justified cost of tender i.e. 2.34% above. Accordingly the case is recommended for consideration and acceptance to the lowest agency i.e. M s Insituform Pipcline rehabilitation Pvt. Ltd. who have quoted their rates 2.35% above of the EC of Rs. 16 61 35 617. 30. The Executive Engineer of the NDMC also recommended the bid of the petitioner for acceptance and the operative portion of his file noting reads as under: the above is again recommended “In view of consideration and acceptance of tender of L 1 agency i.e. M s Insituform Pipeline Rehabilitation Pvt. Ltd. who have quoted their rates @ 2.35% above of the estimated cost of Rs. 16 61 35 617 . It is certified that the rates offered by L 1 bidder are reasonable and justified and recommended to acceptance award.” 31. The entire drift of the concerned departments namely the Finance Department and the Executive Engineer of the Respondent NDMC was towards accepting the bid of the Petitioner since the quoted rates though above the estimated cost were well within the 5% variation limit. Neither the minutes of the meeting nor the record produced before us indicates the reasons on which the Council sought to reject the recommendations of the concerned departments. 32. We are not suggesting that the Council is bound in all cases to accept the recommendation on the file made by the concerned authorities. However if the Council was so minded and if it was of the view that W.P.(C) 6752 2021 the rates quoted by the Petitioner were not acceptable for any reason it was necessary for the Council to record its reasons as to why the recommendation of the Finance Department and the Executive Engineer concerned was being differed from. The Council could not have simply stated that the rates quoted by the Petitioner which were 2.34% above the estimated rates were not acceptable when rate variation upto 5% is otherwise acceptable. The reason which seems apparent to us is the influence of Mr. Virender Singh Kadian the member of the Council. On 07.12.2020 Mr. Virender Singh Kadian member of the Council wrote a letter addressed to the Chairman NDMC as well as to Chief Vigilance Officer NDMC which reads as “Ref No. VSK 644 12 20 NDMC Dated 07 Dec 2020 Shri Dharmendra New Delhi Municipal Council 3rd Floor Palika Kendra New Delhi 110001 Subject: Regarding the tender of Rehabilitation of Existing 1100 1200mm dia Sewer line along Ashoka Road from Nirwachan Sadan to C Hexagon 1. I have received representation from Onsite India Private Limited regarding his grievance that the Company has applied for tender of Rehabilitation of Existing 1100 1200 mm dia Sewer line along Ashoka Road from Nirwachan Sadan to C Hexagon which was rejected wrongfully on hyper technical grounds that EMD not submitted in the desired form and therefore price bid was not opened by the Department although the Company has submitted the complete EMD in the shape of Bank guarantee and the same was submitted to the Department in original before submitting W.P.(C) 6752 2021 the online tender. No objection by Department was raised at the time of submission of EMD as per rule generally the Company has to be intimated to remove the technical discrepancy if any. Once the EMD accepted the Department would have opened the price bid for healthy competition in the interest of NDMC. 2. The NDMC has been deprived of better and fair competition by not intimating the technical defect at the time of receipt of EMD due to which most competitive Company has been left out. The matter may be enquired and the dealing Executive Engineer Sewer) of the NDMC may be held responsible for loss to the Department which can only be acknowledged after opening of price bid. The Onsite India Private Limited is most experienced sewer rehabilitation company using CIPP Technology and has completed most difficult projects in the country. The request of the Company to permit removal of technical objection and to open the price bid or to re invite the tender for better and fair competition may be done in the interest of NDMC. Copy to Chief Vigilence Officer New Delhi Municipal Council 3rd Floor Palika Kendra New Delhi 110001 VIRENDER SINGH KADIAN MLA Govt of NCT of Delhi( Delhi Cantt) Member of New Delhi Municipal Council” as follows : In December 2020 the representation of Mr. Kadian was considered on the file and rejected. The relevant extract from the file noting reads “6. The TEC scrutinized the entire bid without prejudice to any agency in a fair & transparent manner strictly as per the NIT stipulation. On the recommendation of TEC bid of technically eligible bidders were opened and M s Insituform Pipelines Rehabilitation Pvt. Ltd. emerged the L 1. Thereafter the case was cleared from Main Planning Division and Finance Department. The case for acceptance of lowest offer will be placed before the Council in its next meeting. W.P.(C) 6752 2021 7. As the bids for the above said work were scrutinized by the Technical Evaluation Sub Committee as per the NIT condition the request of M s Onsite India Pvt. Ltd. to removal of technical objection and to open the price bid or to re invite the tender cannot be opened.” 34. The Superintending Engineer of the Respondent NDMC Shri Ajay Gupta at Note 45 on the file noted as under: “Note # 45 The note of Sh. Anil Grover ASC may please be seenThe High Court Orders are also attached at CP 2 to 18 ) The final Judgement of Hon’ble High Court at CP 18 may please be seen. The same may please be forwarded to Dir Law) for suggesting next course l action please. Here it is not out of place to mention that Council had rejected the tender earlier and in my opinion we should stick to the Council Decision and if need be a special Council Meeting may be called for giving detailed deliberations for Rejecting the same and to Recall the Tender. Considering the VERY POOR CONDITION of the existing sewer line at Ashoka Road it is again requested that the decision may please be taken at the earliest possible to avoid any possible collapse of line. 22 02 2021 2:16 PM AJAY GUPTA SUPERINTENDING ENGINEER)” underlining supplied) 35. A bare perusal of the said note clearly shows that Council meeting was called not for re consideration of the issue whether the contract should be awarded to the Petitioner being the L 1 bidder but for giving reasons for the already taken decision of rejecting the bid of the Petitioner. The Respondent NDMC thus did not act in W.P.(C) 6752 2021 accordance with direction of this Court contained in its order dated 15.02.2021 passed in WPNo.5021. It is also evident that Mr. Virender Kadian one of the members of the Council had a pre conceived mindset of rejecting the Petitioner’s bid on account of his declared interest in the disqualified bidder Onsite. He had openly written a letter supporting Onsite and if Onsite could not be declared technically qualified to seek recall of the tender. In this background in all fairness he should have refrained from participating in the Council meeting held on 26.12.2020. In the counter affidavit the Respondent has in response to paras 10 & k) of the writ petition totally denied the same which again smacks of mala fides and bias. Parasandof the counter affidavit read as under: “That the contents of Para 1 0&are wrong and denied as false and baseless. It is denied that on request of the disqualified bidder i.e. M s Onsite India Private Limited a Member of the Legislative Assembly of Delhi called upon the Respondent to re invite the tender inter alia on the ground that the bid submitted by M s Onsite India Private Limited was not considered. The said allegation on the respondent is mala fide and contrary to the record. It is a matter of record that disqualified bidder M s Onsite India Private Limited was held to be not eligible and it was observed that is entire EMD of Rs.33 22 712 have been submitted in the shape of Bank Guarantee in contravention of the Clause 9 of Form 6 of NIT. Thus the allegation levelled by the petitioner against the respondent are misconceived and irrelevant for the purposes of adjudication of the present writ petition.” In fact the deponent of the affidavit appears to have perjured by stating a patent falsehood. This itself is demonstrative of the W.P.(C) 6752 2021 malafidies and bias entertained by the Respondent Council against the Petitioner. It is clear from the above that the decision to cancel the tender and to re tender was taken at the behest of a Council member viz. Shri Virender Singh Kadian despite the Finance Department and the Executive Engineer being in favour of awarding the tender to the Petitioner. The decision of the Respondent Council dated 21.05.2021 was motivated by concerns which were non transparent and have not been explained by sound reason. The reasons for rejection of the Petitioner’s bid and cancellation of the tender process are mala fide arbitrary extraneous illegal whimsical and violate Wednesbury principle of Reasonableness and cannot be sustained. Validity of any administrative decision is to be judged on the basis of reasons existing on record. The Public authority cannot be permitted to supplant reasons at a later stage especially if those reasons never existed 38. We are supported in our view by Royal Power Turnkey Implements P) Ltd. v. Maharashtra Industrial Development Corpn. 2014 SCC OnLine Bom 2884 wherein the court set aside the arbitrary and irrational decision of the Respondent Corporation to re tender the before. “12. In the light of this factual position much substance is found in contention of the petitioner that the decision to cancel the tender process is motivated by political as well as extraneous considerations. The petitioner has placed on record a letter dated 9 12 2013which is issued on the letter head of a political party Shiv Sena whereby the office bearer of the said political party has asked respondent MIDC to cancel the tender processes initiated vide Tender W.P.(C) 6752 2021 Notice No. 17 201314. The copy of this letter is also seen to the Honourable Minister for have been endorsed Industries as well as the local member of the Parliament. 13. True it is that the right to refuse the lowest or other tender is always available with respondents but the principles laid down by Article 14 of the Constitution are required to be kept in mind while accepting or refusing any tender. Right to choose cannot be considered to be an arbitrary power and if same is exercised for any collateral purposes then such exercise of power will have to be struck down. In the case at hand respondents have decided to cancel the earlier tender process which has travelled upto its destination due to opening of the financial bid in a most arbitrary manner. The reason for arriving at this decision is stated to be creation of huge mess by the unsuccessful bidders as well as for maintaining transparency. What was non transparent in the earlier tender process is an aspect which the respondent MIDC is unable to explain. Creation of mess by unsuccessful bidders and intervention of political party appears to be the factors which weighed the decision making process of the respondent MIDC. Such decision in our opinion is influenced by political and extraneous considerations only for the purpose of denying the petitioner company of its legitimate claim in respect of the tendered work. 15. In its rejoinder affidavit which went uncontroverted the petitioner has averred that undue pressure was brought on the respondent Corporation by a political party for taking decision of retendering the work for favouring contractors who were earlier found to be unqualified… 17. True it is the petitioner has no right to enter into contract but the principles of equality embodied in Article 14 of the Constitution mandates that the respondent Corporation cannot arbitrarily cancel the tender process for choosing any person it likes for entering into relationship with it and for excluding the petitioner by adopting irrelevant considerations. Therefore irrational decision of arbitrary and Corporation in retendering the work needs to be set aside as the same is unable to meet the test of reasonableness and non W.P.(C) 6752 2021 It is also clear from the above that the Respondent for the first time at a belated stage and after a significant period had passed from when the bids were received offered completely new reasons that are not found anywhere in the Respondent s records. It is clear that the new reasons offered are an afterthought given only to deny the Petitioner the contract and allow the disqualified bidder to participate in the bid again. In Mohinder Singh Gill v. Chief Election Commr. 1 SCC 405 the Supreme Court held: “8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise an order bad in the beginning may by the time it comes to court on account of a challenge get validated by additional grounds later brought out. We may here draw attention to the observations of Bose J. in Gordhandas Bhanji: “Public orders publicly made in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant or of what was in his mind or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order 40. Although Clauses 13 & 15 of the NIT empower to the Respondent Council to reject the tender without assigning any reasons in our opinion the reliance on the said clauses is misplaced and erroneous. W.P.(C) 6752 2021 The right not to assign reasons may be exercised only till so long as the action is not put to a legal challenge. The said right cannot be exercised to deny reasons to a competent Court. Moreover the right not to assign reasons does not carry with it the right not to have reasons. Reasons are the life blood of every administrative decision and every administrative decision has to be informed by good reason. It cannot be whimsical or capricious. Otherwise the administrative decision would fall foul of Article 14 of the Constitution of India. The right to refuse the lowest bid or any other tender is available to the Respondents. However the same has to be tested on the touchstone of reasonableness. The Respondent is not vested with the right to cancel the tender arbitrarily in order to choose a person it In Tata Cellular v. Union of India 6 SCC 651 the Hon’ble Supreme Court of India as follows: “70. It cannot be denied that the principles of judicial review would apply the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course if the said power is exercised for any collateral purpose the exercise of that power will be struck down”. W.P.(C) 6752 2021 In Corporate Infotech Private Limited v. South Delhi Municipal Corporation 2021 SCC OnLine Del 3519 the Court held that there may be no vested right available to the bidder for claim of contract but it has the right to find out the reasons for cancellation and assail those reasons if they are arbitrary whimsical or malafide. The Court “14. It is well settled in law that a Request for Proposal is only an invitation to offer. In response to the Request for Proposal the bidder submits its proposal bid which constitutes an offer under the Indian Contract Act 1872. That offer may or may not be accepted and unless accepted a binding contract does not come into being. The entity inviting offers is not bound to accept any offer including the highest or the lowest offer as the case may be. This position is not only well established in law but invariably is also expressly so stated in the Request for Proposal NIT. Even in the present case as noticed herein above the said position was clearly set out in more than one ways in the RFP by the respondents. 15. Having said this we cannot lose sight of the fact that the RFP was invited not by any private entity but by the SDMC which is a public authority and its actions are therefore liable to tested on the touchstone of Article 14 of the Constitution of India. The respondents can therefore be called upon to show that they have acted bona fide and for good reason in the matter of withdrawal of the RFP after having invited bids and after opening them. Whenever a challenge is laid to such an action the Courts do call for an explanation and the reasons which prompted the taking of such a decision. After all RFP s are not issued and bids are not invited in a casual manner and even though there may be no vested right in any bidder to claim that the RFP should culminate in the award of a contract much less to itself the bidders do have the legitimate right to at least find out as to what are the reasons for the cancellation and assail those W.P.(C) 6752 2021 reasons if they are arbitrary whimsical or mala fide. The scope of interference in such situations is therefore confined to call for the reasons which prompted the action taken by the public authority in cancelling the RFP NIT and to examine whether those reasons are germane and provide sufficient justification for the decision taken. It is only when the reasons are nonexistent or arbitrary whimsical or mala fide that the Court may interfere and not otherwise.” emphasis supplied) 43. We may now look at the second reasons provided by the Council for rejection of the Petitioner’s bid and cancellation of the tender. Even the second reason given for cancellation of tender and re tendering the works does not inspire our confidence. The second reason for cancelation is reproduced as under: “Rehabilitation of water sewer lines are not specialised but routine work and hence only 2 bids were found and none competitive in the first call.” 44. The Tender Notice dated 20.08.2020 reads as under: “Executive Engineer invites online Item rate bids on behalf of NDMC from Specialized Agencies in the field of Rehabilitation of old Sewer lines by any structural lining method and registered under GST for the work of T M of Sewer Line in NDMC area during 2020 21. Sub Head: Rehabilitation of existing 1100 1200 mm Dia Sewer Line along Ashoka Road from Nirwachan Sadan to C Hexagon Estimated Cost of Rs.16 61 35 617 with a time of completion of 06 Months at the cost of bidsof Rs. Nil. A sum of Rs.33 22 712 as earnest money shall be deposited in the office of any Ex. Engineer NDMC before the opening of bid in the form of pay order demand draft banker cheque Deposit at Call Receipt FDR of a scheduled bank in favour of Secretary NDMC payable at local branch of W.P.(C) 6752 2021 Delhi New Delhi. It should be ensured that the FDR is pledged in favour of the Secretary NDMC.” 45. The heading of Clause 1.2.2 reads as under: “Criteria of eligibility for Specialized Agencies Technical Eligibility Criteria: Three similar works each of value not less than 6.64 Crore or two similar work each of value not less than 9.96 Crore or one similar work of value not less than 13.29 Crore in last 7 years ending previous day of last date of submission of tenders shall also be considered. The value of executed works shall be brought to current costing level by enhancing the actual value of work at simple rate of 7% per annum calculated from the date of completion to the last date of submission of bid.” 46. A bare perusal of the aforesaid two clauses leads to only one conclusion that the Tender Notice was targeting specialised agencies to bid for the tender and the specialised agencies had to be specialists in the field of “rehabilitation of old sewer lines by structural lining method and registered under GST for executing the work in relation to the Project.” The very fact that in the tender only 3 agencies were considered qualified further lends credence to the fact that it was a work of specialised nature. The experience criteria laid down was in respect of “Three similar works” and not just any civil work. This also shows that the work under the tender was considered as a specialised work. The rules of interpretation clearly state that where the document is clear unequivocal and speaks for itself no external aids are required to interpret it. In the present case the Tender Document at two places uses the word specialised agencies and W.P.(C) 6752 2021 clearly leads to only one conclusion that the work was of a specialised nature. For now claiming that the work was not of specialised nature the Respondents have not given any reasons. The doctrine of Contra Proferentum binds the Respondent Council. 47. We may refer to our judgment in W.P.(C) 5603 2021 Maan Pharmaceuticals Ltd vs Employees State Insurance Corporation delivered on 17.08.2021 wherein we had observed: “28. We do not think that there is any ambiguity in the tender condition which is to be left to the interpretation of the tender floating authority. Nevertheless even there was any ambiguity the principles of contra proferentum are clear and have been explained in the following Supreme Court cases: Then in United India Insurance Co. Ltd. v. Orient TreasuresLtd.3 it was observed … 39. It is a settled rule of interpretation that when the words of a statute are clear plain or unambiguous i.e. they are reasonably susceptible to only one meaning the courts are bound to give effect to that meaning irrespective of consequences. In other words when a language is plain and unambiguous and admits of only one meaning no question of construction of a statute arises for the Act speaks for itself. Equally well settled rule of interpretation is that whenever the NOTE is appended to the main section it is explanatory in nature to the main section and explains the true meaning of the main section and has to be read in the context of main section 6752 2021 applicable and secondly even if there exists any ambiguity then it shall be construed against the drafter of the said contract or tender in the case before u 30. Therefore it leads to only one conclusion that the respondents cannot read ambiguity into the tender condition. In absence of any ambiguity the plain and express meaning of the condition has to be complied with.” 48. For the reasons stated above we are of the view that the reasons for cancellation of subject tender and for re tendering given by the respondent NDMC are illegal arbitrary biased malafide whimsical founded upon extraneous considerations and violative of Wednesbury Principle of Reasonableness and do not pass judicial scrutiny. In this view of the above we quash the decision of the Respondent taken on 04.06.2021 to cancel the tender. 50. We direct the respondent Council to take a fresh decision in the matter keeping in view our aforesaid findings and observations. The respondent Council should take into consideration all relevant and germane aspects including the following : i) Whether the price quoted by the petitioner L 1 bidder which is 2.34% above the estimated cost of work falls within the 5% acceptable limit and if so whether there is any genuine justification for still not accepting the petitioner’s financial bid. If the Council finds that there are any genuine reasons for not accepting the petitioner’s lowest bid those reasons should be clearly recorded and should be borne out from the W.P.(C) 6752 2021 ii) Whether the re tendering of the work at this stagewould itself be financially detrimental to the interest of the Council on account of inflation in rates and costs over the last about 18 months and if so the responsibility of the concerned individuals for inflation and costs should be fixed. 51. The decision that the Council may take should be communicated to the petitioner within a week of the same being taken. Looking to the past conduct of the Council we direct that in case the decision taken is against the petitioner the respondent shall not take any precipitative action at least for a period of ten days from the date of actual communication of the decision to the petitioner. The writ petition stands disposed of in the aforesaid terms. VIPIN SANGHI J JANUARY 07 2022 dm JASMEET SINGH J W.P.(C) 6752 2021 

Summary: The reasons for administrative decisions cannot be mala fide, arbitrary, extraneous, illegal, and whimsical as it would violate the Wednesbury principle of Reasonableness and fall foul of Article 14 of the Constitution of India. The question as to importance of providing good reasons for administrative decisions was examined by High Court of Delhi, consisting Justice Vipin Sanghi in the matter of Inituform Pipeline Rehabilitation Private Limited vs. New Delhi Municipal Council [W.P.(C) 6752/2021] on 07.01.2022. The facts of the case are that the petitioner was a provider of trenchless technology-Cured in Placed Pipeline, (“CIPP”). The petitioner was working with organisations like Delhi Jal Board, Delhi Metro Rail Corporation, Uttar Pradesh Jal Nigam and Hyderabad Metropolitan Water Supply and Sewerage Board. On 20.08.2020, the Sewage Maintenance Division, Civil Engineering department of the respondent NDMC issued the NIT inviting bids from “Specialised Agencies” in the field of rehabilitation of old sewer lines by structural lining method. Three bidders, including the petitioner, participated in the tender process, and as per the minutes of Technical Evaluation Sub-Committee held on 08.09.2020, post-technical evaluation, only 2 bidders, namely, the petitioner and Gypsum Structural India Pvt. Ltd. were found eligible and qualified for the next level, i.e. financial bid comparison. The bid of the third bidder, namely, Onsite India Pvt. Ltd. (Onsite), was disqualified by the respondent as, on scrutiny of the EMD documents uploaded by Onsite, it was found that the entire EMD was deposited by Onsite in the shape of Bank Guarantee, which was in breach/noncompliance of technical qualifications. On the recommendation of the Technical Evaluation Sub-Committee of the respondent, financial bids were opened on 10.09.2020 and the petitioner emerged as the lowest bidder. The petitioner, after being declared as the successful bidder, was waiting for the issuance of the work order to commence rehabilitation work. However, on 04.01.2021 the Sewage Maintenance Division (Civil Engineering Department) of the respondent issued a fresh notice inviting tenders, calling for fresh bids in relation to the same project with identical scope of work, and terms and conditions. The Counsel for petitioner contended that the reasons recorded in the minutes of the meeting of 21.05.2021– prompting the Council to cancel the tender, are mala fide, arbitrary and whimsical. It is argued that the tender document clearly required specialised agencies to bid, and it was a specialised work. The Finance Department, as well as the NDMC deliberated the bid of the petitioner and found that the Petitioner’s financial bid to be eligible for the award of the contract, especially since the Respondent has been awarding contracts to entities/ institutions for similar works where the variation is within the permissible limit of 5% of justified rates. It has further been argued by the petitioner that the entire decision making process stands vitiated as one of its members i.e. Mr. Kadian openly had a bias in favour of the disqualified bidder, and against the qualified bidders. It is submitted that Shri Kadian had his way as he succeeded in ensuring cancellation of the tender on completely frivolous grounds. The Counsel for respondent contended that the Council duly applied its collective mind, deliberated the issue and, thereafter, a conscious decision was taken to reject the bids received under the tender in question, and recall the tender. It was contended that the decision to accept or reject the bids, by the tender inviting authority is within the exclusive domain of that authority, and ought not to be interfered by the Court until the same is arbitrary, whimsical or mala fide also the respondent is not bound to accept the lowest bid. It was submitted by respondent that the Council consisted of 13 members, all of whom have collectively taken the decision to cancel the tender and to re-tender the works. Mr. Kadian was only one of the 13 persons and hence, had a miniscule role in the decision making, if at all.