A. Kulasekaran, J.
1. The facts involved in the cases on hand is as follows:
(i) The first respondent herein is Steel Authority of India (SAIL), which is registered as a government company under the provisions of Companies Act in which 85% shares are held by the Government of India and 15% shares are held by public. The second respondent namely Salem Steel Plant (SSP) is an unit of the first respondent, which was set up by the first respondent for production of stainless steel.
(ii) The first respondent issued tender notice E/08 dated 13.03.2007, hereinafter referred to as first tender, inviting sealed tenders for establishment of new Cryogenic Air Separation Plant (ASP) in the premises of Salem Steel Plant on Build-Own-Operate (BOO) basis and supply Oxygen, Nitrogen and Argon gases on long term basis to steel melting shop (SMS) being put up under expansion. The first respondent appointed the fifth respondent as Consultant-cum-Project Manager. The tender floated on 13.03.2007 was opened on 09.05.2007 in which six tenderers have participated, out of which two were found ineligible, one tender was rejected and the remaining three namely the appellant, fourth respondent and one M/s. BOCIL were considered as eligible. After holding techno-commercial discussion with them, the price bid was opened on 04.07.2007 in which the fourth respondent's bid was rejected. The appellant and M/s. BOCIL were evaluated by the fifth respondent. The fifth respondent, in his letter dated 12.07.2007, after evaluating the price bid and the Net Present Value, hereinafter referred to as NPV, as per the terms of the tender conditions, recommended to consider M/s. BOCIL as L1 for establishment of ASP on BOO basis for supply of industrial gas for fifteen years to the second respondent.
(iii) While things are such, the re-tender in respect of EAF, LF and AOD packages of SMS were issued by the second respondent on 13.08.2007 and the process was on. In view of the re-tendering of SMS packages, the second respondent sent a letter dated 04.10.2007 to the fifth respondent requesting to recommend for the course of action with respect to ASP on BOO basis. The fifth respondent, by letter dated 15.10.2007 recommended for re-tendering of ASP. Since the ASP specifications required to be reviewed, the fifth respondent's letter dated 15.10.2007 was placed before the Plant Level Tender Committee (PLTC) of the respondents 1 to 3 which considered it and recommended to re-tender the packages for ASP on BOO basis with revised quantity and delivery period to synchronise with the commissioning of re-tendered EAF, LF and AOD packages. After approval of the said tender committee and the Executive Director of the second respondent, the second re-tender was floated for establishment of the said ASP with revised terms on BOO basis for 15 years and tender notice was published in dailies and web site of the first respondent on 14.11.2007.
(iv) In response to the said second tender notice (1) M/s. Goyal MG Gases (2) the appellant (3) the fourth respondent and (4) M/s. Praxair have participated in which the tender of M/s. Goyal MG Gas was rejected and the remaining three were found eligible. On evaluating the technical bids, it was found that the appellant has agreed to the tender conditions in toto but the fourth respondent and M/s. Prag Air deviated, hence, opportunity was granted to all the three tenderers for discussion and clarification by organising a meeting. The fourth respondent and M/s. Praxair have withdrew all the deviations, however, intended to submit their revised price bids on the ground that the withdrawal of deviation have had a bearing on the price quoted.
(v) On 10.01.2008, the Techno-Evaluation Committee and Commercial Evaluation Committee of the respondents 1 to 3 recommended that all the three are techno-commercially eligible. The commercial evaluation committee considered the request of the fourth respondent and M/s. Praxair for submitting revised price bid and suggested to seek revised price bids from all the three bidders. The said recommendation was also accepted by the tender committee. The second respondent issued a letter dated 11.01.2008 requesting all the three tenderers to submit their revised price bid on or before 14.01.2008. The appellant stated to have initially not agreed for submitting revised price bid, however, submitted it. The respondents 1 to 3 stated that the appellant has not filed revised price bid but submitted only supplementary price bid, which is not permissible as per the tender conditions. The revised price bid tender was opened on 14.01.2008 in the presence of all the three bidders and handed over to the fifth respondent for the purpose of evaluation, to arrive at NPV and consequently calculate the total cost in the contract period of 15 years as contemplated in annexure-I, Section V of tender document.
(vi) The fifth respondent, on going through the bids stated to have informed the appellant that it emerged and qualified as 'L1' and sent its report dated 30.01.2008 to that effect to the second respondent. It is stated by the respondents 1 to 3 that such report dated 30.01.2008 was not received however received letters dated 01.02.2008 and 02.02.2008 of the fifth respondent, however, the appellant sent representations dated 16.01.2008, 18.01.2008, 19.01.2008, 21.01.2008 and 22.01.2008 to the second respondent claiming that they are the lowest bidder and requested to issue letter of acceptance. The fourth respondent also sent representations dated 16.01.2008, 23.01.2008 and 30.01.2008 claiming that they are the lowest bidders on the basis of hourly average flow rate. M/s. Praxair India (P) Limited also claimed that they are the lowest bidders and sent representations dated 14.01.2008, 15.01.2008 and 21.01.2008 stating that there are some lack of clarity for considering the evaluation of price bid and requested to evaluate on the basis of the daily average flow rate i.e., NM3/day for all the gases.
(vii) While things are such, the first respondent cancelled the second tender and issued third tender notification dated 23.02.2008, revising the technical conditions as follows:
a) The oxygen quantity was revised from 84,000 NM3/day (3500 NM3/hour for 24 hours) to 75600 NM3/day (3150 NM3/hour for 24 hours). But at the same time, the respondent DGM, Salem Steel introduced a condition that the plant should be designed to produce 50% to 105% of the contracted capacity (Page Number 58 under clause No. 9.2 under the heading Design Basis)
b) The Argon quantity was reduced from 11500 NM3 (20.54 TPD) to 11200 NM3/day (20 TPD). But in Note 2, Annexure II to the draft agreement, the respondent DGM, Salem Steel introduced a stipulation that the tenderer was to supply 19600 NM3 Argon Gas per day (35 TPD) required occasionally through out the day in future.
(viii) According to the appellant, the third respondent colluded with the fourth respondent to favour it and instigated the respondents 1 to 3 to call for the third tender; that on perusal of the technical conditions in the third tender dated 23.02.2008, it was seen that there is no real change in the tender conditions from that specified in the second tender dated 12.11.2007; that the appellant's bid, which is the lowest in the second tender, could have very well met the marginally changed requirements of the third tender.
(ix) It was averred by the appellant that the third respondent, in order to favour the fourth respondent is repeatedly revising the tender conditions and such action violates equality before Law enshrined under Article 14 of the Constitution of India; that the appellant is qualified as 'L1' by thein the second tender, but the first respondent erred in not issuing letter of acceptance to the appellant immediately after the appellant qualified as 'L1' by the fifth respondent . The respondents 1 to 3 stated that on 01.02.2008, the fifth respondent has sent a letter to the second respondent stating that the tenderers have not really understood the tender requirements/evaluation criteria as stipulated in the second tender documents and have interpreted differently to suit their bids and claimed themselves to be the 'L1'. Since various representations have been received from the tenderers, the fifth respondent informed the second respondent to seek fresh price bids once again from all the three eligible bidders defining once again the evaluation criteria. The said suggestion was also placed before the tender committee on 02.02.2008 itself which felt that after opening of price bids, seeking fresh price bid is contrary to the terms and conditions of the tender. The Executive Director of the first respondent, after discussing the matter with the Executive Director - Project, Executive Director - Vigilance, Chief Vigilance officer of the first respondent, General Manager (Law) and Principal Law Officer of the first respondent at Corporate Office, New Delhi stated to have found that asking for fresh revised bids after opening the price bid is a clear deviation from PCP-06 and such option cannot be exercised, instead, go for fresh re-tender with necessary clarification and correction as suggested by the fifth respondent.
(x) The above said course of action for re-tendering with necessary clarification/correction as suggested by the Executive Director (Operations) on 02.02.2008 was said to have informed by the Executive Director of the second respondent to the third respondent herein and it based on the information received from the Executive Director of the second respondent initiated on 02.02.2008, a proposal for re-tender for ASP. The Executive Director of the second respondent, on 04.02.2008, approved the decision for re-tender. The second respondent, thereafter, placed the said re-tender proposal before the Executive Director (Operation) of the first respondent, who sought opinion from the General Manager and Principal Law Officer and they have also opined that revised tender was the better alternative. Thereafter, the Executive Director (Operations) of the first respondent approved the recommendations of the Plant level tender committee for re-tendering on 22.02.2008. The second respondent, thereafter, took steps for re-tendering after obtaining opinion from the Principal Law Officer of the first respondent and placed the matter before the approving authority on 22.02.2008 itself with necessary modification in respect of technical specifications as suggested by the fifth respondent. The revision of technical requirements were carried out in Annexure-II of the draft agreement in the third tender incorporating the methodology to be adopted for the calculation of NPV and for the purpose of price evaluation as suggested by the fifth respondent herein. The competent authority also approved the said third tender for ASP package on 22.02.2008 itself. The Executive Director of the second respondent also approved the recommendation, which was informed to the third respondent by fax message on 22.02.2008.
(xi) On 23.02.2008, the second respondent sent a letter to all the tenderers, including the appellant, informing the cancellation of the previous tender dated 13.11.2007. It was also informed that return of the earnest money deposit is being arranged and requested them to participate in the proposed third tender. On 23.02.2008, notice inviting fresh tenders for establishment of ASP was issued indicating the last date as 15.03.2008 for submitting and opening of the tenders, which was extended to 22.03.2008 and further extended to 31.03.2008. Till the issuance of re-tender on 23.02.2008, the price bids submitted by all the three tenderers in respect of the second tender was not at all evaluated.
(xii) The said third tender notification dated 23.02.2008 was challenged by the appellant in W.P. No. 6425 of 2008 and W.P. No. 6426 of 2008 was filed praying for a Writ of Mandamus to direct the second respondent herein to issue letter of acceptance to the appellant as he was the successful bidder relating to the second tender notification dated 12.11.2007. Both the writ petitions were dismissed by the learned single Judge by a common order dated 31.07.2008, hence, the present writ appeals.
2. Mr. AL. Somayaji, learned senior counsel appearing for the appellant in W.A. No. 1125 submitted the following:
The orders for cancellation of the second tender and seeking re-tender was made to accommodate the fourth respondent, which is ex-facie illegal, arbitrary, discriminatory and perverse. The second respondent, along with the fifth respondent fixed the criteria that Oxygen and Nitrogen would be evaluated on a hourly basis and Argon on daily basis, based on it, the plant capacity was fixed to match the actual requirement of gases, which was not considered by the respondents 1 to 3. The tender process was actuated by malice, which is evident that the respondents 1 to 3 suppressed the recommendations dated 30.01.2008 of the fifth respondent that the appellant was 'L1' and chosen to act upon only on their subsequent letter dated 01.02.2008, that suggested for revised price bids only however the respondents 1 to 3 decided to favour the fourth respondent and had gone for the third tender, which factors were not considered by the learned single Judge. The learned single Judge failed to note that the letter dated 01.02.2008 and 02.02.2008 were placed before the plant level tender committee and others and approvals have been obtained from authorities within a short period. No valid reason is assigned by the respondents 1 to 3 for not placing the letter dated 30.01.2008 of the fifth respondent before the plant level tender committee. Once the fifth respondent has evaluated the tenders submitted by the tenderers and given final recommendations stating that the appellant is 'L1' it is obligatory on the part of the respondents 1 to 3 to consider it before taking a different view. There is no materials placed on record to show or valid reasons assigned why fifth respondent changed its original decision took on 30.01.2008 and suggested for fresh price bid in its letter dated 01.02.2008. The fifth respondent ought to have issued the letter dated 01.02.2008 only at the behest of the respondents 1 to 3. The learned single Judge erred in not appreciating the role of the Consultant, 5th respondent and the value of its recommendation and brushed it aside on the ground that it is a mere recommendation. The stand taken by the respondents 1 to 3 that there was confusion in the minds of the tenderers, which resulted in cancelling the second tender is incorrect, indeed, all the tenderers have understood the evaluation criteria and submitted their bids in accordance with those criteria after numerous clarificatory meetings, which were also considered by the fifth respondent before submitting its final recommendations dated 31.01.2008 mentioning that the appellant was 'L1'. The plea of the respondents 1 to 3 that evaluation criteria in the second tender lacks clarity or was incapable of being applied is not supported by any material. The learned judge erred in not noticing the fact that final quantities frozen and clarified in the third tender are the same as claimed by the appellant in the second tender and was evaluated by the fifth respondent in the final recommendation dated 30.01.2008. The second tender was cancelled with malafide intention to give another opportunity to the fourth respondent, that too at the cost of delaying the project. The third respondent is also a party in the plant level tender committee and he colluded with the fourth respondent to favour them, which factors have been elicited by the appellant but not considered by the learned single Judge and prayed for setting aside the common order passed by the learned single Judge in W.P. Nos. 6425 and 6426 of 2008. In support of their contention, the learned Counsel for the appellant relied on the decisions of the Honourable Supreme Court reported in
i) In (Delhi Development Authority v. UEE Electricals Engineering) AIR2004SC2100 the Honourable Supreme Court held in Para No. 16 as follows:
16. Doubtless, he who seeks to invalidate or nullify any act or order must establish the charge of bad faith, an abuse or a misuse by the authority of its powers. While the indirect motive or purpose, or bad faith or personal ill will is not to be held established except on clear proof thereof, it is obviously difficult to establish the state of a man's mind, for that is what the employee has to establish in this case, though this may sometimes be done. The difficulty is not lessened when one has to establish that a person apparently acting in the legitimate exercise of power has, in fact, been acting mala fide in the sense of pursuing an illegitimate aim. It is not the law that mala fides in the sense of improper motive should be established only by direct evidence. But it must be discernible from the order impugned or must be shown from the established surrounding factors which preceded the order. If bad faith would vitiate the order, the same can, in our opinion, be deduced as a reasonable and inescapable inference from proved facts. (See S. Partap Singh v. State of Punjab) It cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demands proof of a high order of credibility. (As noted by this Court in E.P. Royappa v. State of T.N.
ii) In (Reliance Airport Developers (P) Ltd v. Airports Authority of India and Ors.) (2006)10SCC1 the Honourable Supreme Court, in Para No. 62 held thus:
62. Therefore, to arrive at a decision on "reasonableness" the court has to find out if the administrator has left out relevant factors or taken into account irrelevant factors. The decision of the administrator must have been within the four corners of the law, and not one which no sensible person could have reasonably arrived at, having regard to the above principles, and must have been a bona fide one. The decision could be one of many choices open to the authority but it was for that authority to decide upon the choice and not for the court to substitute its view.
iii) In (Noble Resources Ltd., v. State of Orissa and Anr.) AIR2007SC119 , it was held by the Honourable Supreme Court as follows::
15. It is trite that if an action on the part of the State is violative of the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the court's scrutiny would be more intrusive, in the latter the court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Article 14 of the Constitution. While exercising contractual powers also, the government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on their part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie only because it involves a contractual matter.
iv) In (Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors.) AIR2004SC1962 , it was held by the Honourable Supreme Court in Para Nos. 9 and 12 as follows:
9. It is well settled now that the courts can scrutinise the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favouritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular v. Union of India. After examining the entire case-law the following principles have been deduced: (SCC pp. 687-88, para 94)
94. The 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 or quasi - administrative sphere. 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 expenditure.
12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.
v) In (Harminder Singh Arora v. Union of India and Ors.) [1986]3SCR63 , it was held by the Honourable Supreme Court as follows:
29. In the instant case, the instrumentalities of the State invited tenders for the supply of fresh buffalo's and cow's milk and, therefore, this case has to be decided on the basis of bid by the tenderers. There was no question of any policy in this case. It is open to the State to adopt a policy different from the one in question. But if the authority or the State Government chooses to invite tenders then it must abide by the result of the tender and cannot arbitrarily and capriciously accept the bid of Respondent 4 although it was much higher and to the detriment of the State. The High Court, in our opinion, was not justified in dismissing the writ petition in limine by saying that the question relates to the contractual obligation and the policy decision cannot be termed as unfair or arbitrary. There was no question of any policy decision in the instant case. The contract of supply of milk was to be given to the lowest bidder under the terms of the tender notice and the appellant being the lowest bidder he should have been granted the contract to supply, especially, when he has been doing so for the last so many years.
3. Mr. Vijay Narayan, learned senior counsel appearing for the appellant in W.A. No. 1126 of 2008 submitted as follows:
The fifth respondent has sent a final recommendation letter dated 30.01.2008 wherein in Para No. 2.0 it is stated that all bidders furnished their documents/information for establishing their eligibility requirement and based on the preliminary review of documents received from the tenderers, all the bidders appeared to be prima facie eligible. Additional clarifications and documents were sought from all the bidders for meeting the eligibility requirements, on receipt of which certain discrepancies were observed in the offer of GMGGL, while rest of the three bidders namely fourth respondent, the appellant and Praxair were found to be eligible. In Para-6.0, it is stated that the bidders were asked to quote their revised prices based on the clarification/confirmation to draft agreement read with tender document & minutes of meeting mentioned therein. In para-7.0 it is stated that in line with the said clarifications/confirmations all the three techno-commercially acceptable parties were communicated to submit un-priced bids and revised price bid (as per the format in the tender document) in separate sealed envelopes to be opened on 14.01.2008. All the bidders quoted the amount calculated uniformly based on hourly basis for supplying Oxygen and Nitrogen and Argon on daily basis. Further, in Para No. 10 of the said letter, it is stated that subsequent to the receipt of confirmation and declaration on the unpriced bid all the parties were called together and the declarations/ confirmation given by each party were read out and all the parties have noted the above. Similarly, in para-11, it is mentioned that the prices are inclusive of the taxes etc., as quoted by the fourth respondent, appellant and Praxair as tabulated therein. In para-14, it is stated that based on the above results of NPV it is found that appellant was the lowest bidder and the prices quoted by them were considered reasonable and recommended to consider the appellant. It is however suggested that the second respondent may try and negotiate with the appellant for any possible reduction in supply price of Argon as it is their bought-out item. The learned senior counsel further submitted that the said letter dated 30.01.2008 of the fifth respondent was suppressed by the respondents 1 to 3 in order to favour the fourth respondent. The letter dated 01.02.2008 was sent by the fifth respondent at the instance of the third respondent. The appellant also, in their letter dated 22.02.2008 addressed to the first respondent referred to the said letter dated 30.01.2008 of the fifth respondent. There was no confusion in the minds of the bidders in the evaluation criteria as alleged by the respondents 1 to 3. Pointing out the said reasons, the learned senior counsel prayed for setting aside the common order passed by the learned single Judge in WP Nos. 6425 and 6426 of 2008.
4. Mr. Jagdeep Dhankar, learned Senior Counsel appearing for the first respondent submitted that the evaluation criteria for contracted quantity of gases mentioned in annexure I of the second tender do not impart any certainty besides lacking clarity and taking advantage of the same, the appellant, fourth respondent and M/s. Praxair India (P) Limited have claimed themselves as 'L1'. The learned single Judge, in para Nos. 39 and 40 of the order, has rightly rejected the contention of the appellant that there was clarity in the evaluation mechanism. The evaluation criteria stated in tender documents and the requirements of gases stated in Annexure-II of the draft agreement are inconsistent; that if the average hourly flow rate NM3/hour is converted into days requirements, NM3/day hourly flow rate in NM3/hour of gas multiplied by 24 hours, the resultant figures should tally with the days requirements, but it differs from the days requirement, which was also pointed out by the learned single Judge to say that there was no clarity in the second tender; that the fifth respondent has requested the respondents 1 to 3 to re-define once again the evaluation criteria and to call for fresh bids from the bidders, however, the respondents 1 to 3 considered that it is improper to call for fresh bids after opening the price bids as it is contrary to PCP-06; that when the respondents 1 to 3 came to know about the letter dated 30.01.2008, the fifth respondent was called upon to state as to whether any such letter was sent on 30.01.2008 by it. During the meeting, the fifth respondent clarified that it was one of the alternative evaluation calculation worked out by them and further stated that they had worked out other alternative calculations considering daily flow rate of all gases etc., and these alternatives were worked out to check the various representations received. It was further clarified by the fifth respondent that the said letter had not been officially despatched to the respondents 1 and 2 since it was felt that any evaluation method followed would not be able to address the various representations received and the matter needed further review. Clause 14 of Section 1 of second tender empowers the respondents 1 and 2 to withdraw from the tendering process or any part thereof, to accept any or all tenders in full scope or part scope at any stage of process and or to modify price or any part thereof at any time thereafter without assigning any reasons whatsoever and no financial obligation shall accrue to the respondents 1 and 2 in such event; that in annexure I of the second tender, the evaluation criteria for contracted quantity of gases are mentioned, which lacked clarity; that considering all those factors, the tender committee as well as other authorities of the respondents 1 and 2 cancelled the second tender and called for third tender; that Section VI of the third tender contains evaluation criteria for all contracted quantity of gases which obviate the different interpretation by the parties; that the evaluation criteria further clarifies that total variable cost, net of CENVAT & TNVAT of all the three gases (Oxygen, HP-Nitrogen & Argon) and fixed facility charges excluding taxes and duties shall be calculated for fifteen (15) years and brought down to Net Present Value (NPV) of the gases and prayed for dismissal of the writ appeals. In support of his contention, the learned senior counsel for the first respondent relied on the below mentioned decisions:
i) In Ramchandra Murarilal Bhattad and Ors. v. State of Maharashtra and Ors. AIR2007SC401 , the Honourable Supreme Court held in Para Nos. 47, 55, 58 and 69 as follows:
47. Reliance has also been placed on State of U.P. v. Singhara Singh wherein this Court quoted with approval the decision in Taylor v. Taylor (Ch D at p.431) for the proposition that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and that other methods of performance are necessarily forbidden. There is again no quarrel over the aforementioned proposition of law. Here the Authority has not exercised any power forbidden by law. The Authority has also not exercised its power in the manner which is not in accordance with law.
55. The next question which arises for consideration is as to whether any reason was required to be assigned. A power to deal with a contractual matter and a power of a statutory authority to exercise its statutory power in determining the rights and liabilities of the parties are distinct and different. Whereas reasons are required to be assigned in a case where civil or evil consequences may ensue, the same may not be necessary where it is contractual in nature, save and except in some cases e.g. Star Enterprises.
58. We have noticed hereinbefore that power has not been exercised by the Executive Committee in rejecting the tender. The power has been exercised by the Authority in cancelling the tenders so as to enable it to have a re-look of the entire project.
69. The appellant did not participate in the second bid. The tender process is complete. Before us only a higher bid has been given. We do not intend to enter into the intricacies of the question. The appellant could have submitted its bids pursuant to the new tender and new conditions, even without prejudice to its rights and contentions in this appeal. The stipulations made in the 2002 tender could have been repeated by it so as to demonstrate before the experts comprising members of the Executive Committee that its bid was the highest. If, in view of the change in the policy decision, the Authority does not intend to become a partner in the profit-making and opt for having the entire bid amount at one go instead of waiting for 20 years, we do not find any fault therewith.
ii) In (Centre for Public Interest Litigation v. Union of India (2000)8SCC606 , the Honourable Supreme Court, in Para Nos. 13 and 20 held thus:
13. ...At any rate, it would be hazardous for the Courts to venture on a guesswork as compared to the technical assessment that is made, correctness of which not disproved by cogent materials."
20. It is clear from the above observations of this Court that it will be very difficult for the courts to visualise the various factors like commercial/technical aspects of the contract, prevailing market conditions, both national and international and immediate needs of the country etc. which will have to be taken note of while accepting the bid offer. In such a case, unless the court is satisfied that the allegations levelled are unassailable and there could be no doubt as to the unreasonableness, mala fide, collateral considerations alleged, it will not be possible for the courts to come to the conclusion that such a contract can be prima facie or otherwise held to be vitiated so as to call for an independent investigation, as prayed for by the appellants. Therefore, the above contention of the appellants also fails.
iii) (G.D. Zalani and Anr. v. Union of India and Ors.) 1995 Suppl SCC 512 wherein in Para No. 34, the Honourable Supreme Court held thus:
34. We must reiterate that this was not a simple case of granting of lease of a government company, in which case the court would have been justified in insisting upon the authorities following a fair method consistent with Article 14, i.e., by calling for tenders. We agree that while selling public property or granting its lease, the normal method is auction or calling for tenders so that all intending purchasers/lessees should have an equal opportunity of submitting their bids/tenders. Even there, there may be exceptional situations where adopting such a course may not be insisted upon. Be that as it may, the case here is altogether different. HAL was trying to improve not only the quantum of production but also its quality and for that purpose looking for an appropriate partner. They went in for the best. It must be remembered that this technology is not there for the mere asking of it. All the leading drug companies keep their processes and technology a guarded secret. Being businessmen, they like to derive maximum profit for themselves. It is ultimately a matter of bargain. In such cases, all that need be ensured is that the Government or the authority, as the case may be, has acted fairly and has arrived at the best available arrangement in the circumstances.
5. Mr. R. Krishnamoorthy, learned Senior counsel appearing for the respondents 2 and 3 submitted as follows:
The first tender notice dated 13.03.2007 was cancelled on 25.10.2007 on the recommendation of the plant level tender committee to go for re-tender of ASP since the other main equipment packages of Steel Melting Shop (SMS) for which the gases from ASP are required, were re-tendered and consequently the contracted quantity of gases had to be re-ascertained on the out come of the other re-tendered main equipment packages and also to prevent the financial loss of Rs. 5.75 crores to the first respondent as well as to synchronise the supply of the gases to match with the commissioning of main equipment packages of SMS. Since the plant level tender committee recommended to go for re-tender, recommendations of the consultant in favour of 'L1' bidder M/s. BOCIL against the first tender notice was not accepted by the respondents 1 to 3 with the approval of Executive Director of the second respondent as well as the Executive Director (Operation) of the first respondent. As Plant level tender committee decided to go for re-tendering of ASP, which was also approved by the competent authority, second tender was floated on 12.07.2007. Neither the appellant nor the other bidders in the first tender had challenged the said cancellation. The allegation that in the first tender the fourth respondent quoted 23 months as delivery period is incorrect, in fact, it quoted 24 months as delivery period. The extension of delivery period was granted not as an isolated case of ASP alone but also for other associated main equipment packages in the interest of synchronising the commissioning of the entire expansion project of the second respondent with due approval of competent authority. After submission of tender, if any techno-commercial deviation taken by any tenderer is withdrawn during the clarification meeting, the tenderers are within their right to request for submission of revised price bids, however, they can do so before opening the price bids since the withdrawal of techno commercial deviation may have some price implication and such revised price bid alone should be called for as permissible under Clause-15 and 21 (5) of Section III of the instructions to the tenderers under which the respondents 1 to 3 are authorised to seek for revised price bid. Clause 7.17 of PCP-06 empowers the respondents 1 to 3 to provide an equal and fair opportunity to all the tenderers to submit their revised price bid. Accordingly, revised price bids were called for from all the tenderers, which was in accordance with the tender conditions as well as PCP-06. The supplementary price bid is not permissible as per PCP-06. The appellant himself has declared on his own as if he had qualified and emerged as 'L1'. After opening the price bid, there are certain procedures to be followed during and after the process of evaluation and before declaring 'L1' tenderer. After evaluation of the price bid, the fifth respondent has to forward it to the second respondent the detailed evaluation, including the comparative position of all the bidders, who in turn place the same before the plant level tender committee or the third respondent. The plant level tender committee has to consider the basis of evaluation and recommend it to the fifth respondent. Thereafter, the recommendation of the plant level tender committee would be placed for approval before the Executive Directors of the second respondent as well as the first respondent and ultimately, the said recommendations will be placed before the Board of Directors of the first respondent for final acceptance. After the approval by the Board only, 'L1' bidder can be declared as successful bidder. Therefore, the role of the fifth respondent is limited to the extent of submission of evaluation and recommendation to the plant level tender committee, which has the sole prerogative either to accept or to reject the recommendations of the fifth respondent as per the applicable guidelines. The fifth respondent cannot declare anybody as 'L1' bidder because it is beyond the delegated purview and authority. Immediately after the opening of the price bids, all the tenderers started sending representations and each one of them claimed themselves as 'L1' bidder on the basis of their own interpretation about the evaluation criteria. The evaluation criteria stipulated in the second tender lacked clarity in respect of contracted quantity of gases to be considered for price evaluation and the tenderers could not fully understand the evaluation criteria clearly. Therefore, with a view to resolve the ambiguity, the fifth respondent suggested to the second respondent to ask for fresh bid from all the three bidders by defining the evaluation criteria vide his letters dated 01.02.2008 and 02.02.2008. Even in the letter dated 01.02.2008 of the fifth respondent, the letters dated 14.01.2008 and 15.01.2008 of M/s. Pragair; letter dated 16.01.2008 and 18.01.2008 of the appellant and the letter dated 16.01.2008 of the fourth respondent sent to the respondents 1 and 2 were taken into consideration by it. The plant level tender committee, after examining the suggestions made by the fifth respondent, recommended to seek the advice from the Chief Vigilance Officer of the first respondent regarding seeking of fresh price bid. The Executive Director of the second respondent, who was available in New Delhi at that time, held discussions with the Executive Director (Operations), Executive Director (Projects), Principal Law Officer, Executive Director (Vigilance), Chief Vigilance Officer and other senior officials of the first respondent and came to the consensus that asking for fresh bid after opening the original bid would be a clear violation of PCP-06 and therefore they opined that such an option cannot be exercised and instead recommended that the case can be re-tendered with necessary clarification/modification as suggested by the fifth respondent. The suggestion made by the fifth respondent was placed before the plant level tender committee and the committee had also recommended to go for re-tender by way of third tender notice. The fifth respondent did not send any recommendation dated 30.01.2008 to the respondents 1 to 3 as alleged by the appellant. After receiving of the representation from the appellant dated 22.02.2008, referring the said letter dated 30.01.2008 of the fifth respondent, the respondents 1 to 3 have conducted detailed enquiry and called the senior officials of the respondents 2 and 5, enquired the matter on 15.03.2008 and in that meeting, it was replied by the fifth respondent that he has not despatched the said letter dated 30.01.2008. Thereafter, the fifth respondent also sent letter dated 20.03.2008 clarifying that the said letter has not been despatched either to the first respondent or to the second respondent which was the reason that even in the letters dated 01.02.2008 and 02.02.2008, the said letter dated 30.01.2008 was not referred to by the fifth respondent. As per Clause 6.17.2 of the Purchase Contract Procedure 2006 (PCP-06) the plant level tender committee is the competent authority to monitor the progress made by the consultant and examine the recommendation submitted by it, hence, the consultant namely the fifth respondent has a right to make only inputs available to the plant level tender committee for its consideration and such inputs are only in the form of recommendations or suggestions. The consultant cannot issue any binding direction or guideline and it cannot be bestowed with the status of a decision maker and final decision has to be taken by the concerned competent authority and even plant level tender committee does not enjoy competence to take final decision in the matter. The reason for cancellation of the second tender is because of ambiguity, lack of clarity and different interpretation given by the tenderers with regard to evaluation criteria and the price bid, hence, the averment that the fifth respondent/consultant changed its recommendations within 24 hours at the instance of the respondents 1 to 3 is false. The appellant has not chosen to participate in the third tender. The averment that the respondents 1 to 3 called the third tender with the intention to favour the fourth respondent is false. The respondents 1 to 3 gained financially by calling third tender because of lower price and NPV quoted in the third tender by the fourth respondent as well as assured of gases supplied to the extent required. The expansion project of the second respondent is estimated to cost about Rs. 1900 crores. Unless the gas production commenced by commissioning ASP by the scheduled date, production would be affected and consequently market demand of stainless steel cannot be met by the respondents 1 to 3. It is further submitted by the learned senior counsel for the respondents 1 to 3 that considering the above said facts, the learned single Judge rightly dismissed the writ petitions. Judicial review is not permissible in contractual matters. Even if some defect was found in the ultimate decision resulting in cancellation of the tender, the courts should exercise its discretionary power under Article 226 of The Constitution of India with great care and caution and should exercise it only in furtherance of the public interest. On the said grounds, the learned senior counsel prayed for dismissal of the writ appeals. In support of his contention, the learned senior counsel for respondents 2 and 3 relied on the below mentioned decisions:
i) (Haryana State Agricultural Marketing Board and Ors. v. Sadhu Ram and etc., etc.,) AIR2008SC2411 wherein in Para Nos. 12 and 15, it was held thus:
12. ...At the risk of repetition, we may note that one of the conditions in the Public notice was that the final authority to approve or disapprove the best offer in the auction was that of the Chief Administrator of the Board. It is true that the Chief Administrator of the Board rejected the offers without assigning any reason but Section 18 of the Act clearly provides that such rejection could be made without assigning any reason. Let us now consider whether the action on the part of the Chief Administrator of the Board cancelling the auction was unfair, arbitrary and invalid. In our view, considering the facts and circumstances of the case, the action of the Chief Administrator of the Board was fair and the cancellation was not arbitrary. The second auctin as held in respect of the plots in question on 20th December, 2004 and from the said auction, although the reserve price was not mentioned, much higher offers were received by the appellants. Apart from that, we should not keep this fact out of mind that the amounts deposited by the respondents with the appellants were refunded to the respondents by account payee cheques, which were duly encashed by them. Such being the position, we neither find any malafide, unfairness or arbitrariness on the part of the Chief Administrator of the Board in rejecting the offers of the respondents nor do we find it a colourable exercise of power.
15. In view of the admitted fact that the money deposited by the respondents with the appellants was refunded to the respondents by account payee cheques which were duly encashed by them and in view of the admitted fact that subsequently, a second auction was held on 20th of December 2004 in respect of the same plots which were put up for auction on 8th of July 2004 and in the second auction, some other parties have now acquired interest in the said plots, it was not open to the High Court to direct the appellants, in the exercise of its writ jurisdiction, to allot alternative plots to the respondents only on the ground that the auction dated 8th July 2004 could not be cancelled by the Chief Administrator of the Board without assigning any reason and also on the ground that the reserve price was not disclosed in the public notice issued by the appellants."
iii) (Haridwar Singh v. Bagun Sumbrui and Ors.) [1972]3SCR629 it was stated thus:
8. ....What the Minister did was not to confirm the acceptance made by the Divisional Forest Officer, but to accept the offer made by the appellant in his communication dated October 26, 1970, that he would take the coup for the reserved price of Rs. 95,000/-. There was, therefore, no confirmation of the acceptance of the bid to take the coup in settlement for the amount of Rs. 92,001/-. If the offer that was accepted was the offer contained in the communication of the appellant dated October 26, 1970, we do not think that there was any communication of the acceptance of that offer to the appellant. The telegram sent by the Conservator of Forest, Hazaribagh, by the Government on November 28, 1970, cannot be considered as a communication of the acceptance of that offer to the appellant. The acceptance of the offer was not even put in the course of transmission to the appellant; and so even assuming that an acceptance need not come to the knowledge of the offerer, the appellant cannot contend that there was a concluded contract on the basis of his offer contained in his communication dated October 26, 1970 as the acceptance of that offer was not put in the course of transmission. Quite apart from that, the appellant himself revoked the offer made by him on October 26, 1970, by his letter dated November 3, 1970, in which he stated that the coup may be settled upon him at the highest bid made by him in the auction. We are, therefore, of the opinion that there was no concluded contract between the appellant and the Government.
6. Mr. Harishankar, learned Counsel appearing for the fourth respondent submitted that the fourth respondent is one of the leading gas companies in India and is a joint venture company formed between the former Industrial Oxygen Company Ltd., (INOX) and Air Products (AP) USA, which is a global industrial and medical gases and chemicals giant having diversified interests in both fields with a turnover of US Dollar 9 billion; that the fourth respondent has been in the industrial and medical gases business since its inception in 1963 onwards having more than 30 manufacturing facilities all over the country; that the fourth respondent's products and services are used by all segments of industry, health care and research and development work; that the appellant has deliberately chosen to add the fourth respondent as a party to the above proceedings but failed to add M/s. Pragair despite the fact that it also claimed as 'L1' in the second tender; that the respondents 1 and 2 sought clarification regarding the evaluation criteria post price bid opening; that the averments that the fourth respondent influenced the respondents 1 to 3 are false; that the fourth respondent signed letter of acceptance after the dismissal of the writ petitions and all preparations for commencement of work as per the contract have begun and prayed for dismissal of the writ appeals.
7. Mr. Habibullah Basha, learned senior counsel appearing for the fifth respondent submitted that the letter dated 30.01.2008 was not at all addressed by the fifth respondent to the appellant; that the appellant is not a party to the letter dated 30.01.2008, hence, they cannot claim any right based on the said letter, which is purely in the nature of internal communication; that any letter written by the fifth respondent to the second respondent would only be in the nature of a prima facie opinion/ suggesting alternatives, which needs to be placed and discussed by the tender evaluation committee and that is the reason why the letter was marked as 'confidential'; that the appellant has not explained as to how they came into possession of the said letter dated 30.01.2008 of the fifth respondent; that the fifth respondent also sent a letter dated 20.03.2008 when it was called to clarify as to whether any such letter dated 30.01.2008 was sent by it to the appellant and in the said letter dated 20.03.2008, it was stated by the fifth respondent as follows:
During the meeting SAIL has informed that they have received a representation from M/s. MSPL enclosing letter Ref.MD-25046-288A dated 30th January 2008 and enquired about the status of this letter. Dasturco clarified that this was one of the alternative evaluation calculations worked out by them. Daturco further stated that they had worked out other alternative calculations considering daily flow rate of all gases etc., These alternatives were worked out to check the various representations received. Dasturco also clarified that the said letter has not been officially dispatched to SAIL-SSP since it was felt that any evaluation method followed will not be able to address the various representations received and the matter needed further review.
Pointing out the above said letter dated 20.03.2008 of the fifth respondent, the learned senior counsel submitted that it is evident from the above said letter written by the fifth respondent that it is nothing but a prima facie opinion/suggesting alternatives which reply has to be placed and discussions has to take place by the tender evaluation committee and prayed for dismissal of the writ appeals.
8. This Court carefully considered the argument of the counsel for both sides and perused the material records. In order to establish new Cryogenic Air Separation Plant in the premises of the second respondent on Build Own Operate (BOO) basis, for supply of Oxygen, Nitrogen and Argon gases, first tender notice dated 13.12.2007 was issued by the first respondent, which was subsequently cancelled. The second tender notice dated 12.11.2007 was issued by the first respondent, which was also cancelled and third tender notice dated 23.02.2008 was issued by it. The subject matter of these writ petitions are relating to the said second and third tender.
9. The judicial review is permissible against the decision making process not against the decision. (Harpal Singh Chauhan v. State of U.P.) AIR 1975 SC 2436. The principles of judicial review would apply to the exercise of contractual power by government bodies in order to prevent arbitrariness or favouritism, however, there are inherent limitations in exercise of that power of judicial review. The modern trend points to judicial restraint in the administrative action. The Court does not have the expertise to correct the administrative decision. If a review of administrative decision is permitted, it would be substituting its own decision without necessary expertise, which itself may be fallible. The Court does not sit as a Court of appeal but merely reviews the manner in which decision was made. (Tata Cellular v. Union of India) AIR1996SC11 . Three heads, the grounds on which administrative action is subject to control by judicial review; the first ground is illegality, the second irrationality and the third procedural improprietary. The Courts are slow to interfere in matters relating to administrative function unless the decision is tainted by any vulnerability such as lack of fairness in procedure, illegality and irrationality and whether such action falls within any of the categories has to be established. Mere assertion in that regard would not be sufficient. (Delhi Development Authority v. UEE Electricals Engineering) AIR2004SC2100 .
10. If malafide is alleged or it is alleged that the contract has been entered into for collateral purposes and the Court is satisfied that there is sufficient materials which requires further examination, it can interfere.
11. In this case, the appellant, fourth respondent and others participated in the first tender. The appellant herein has referred to the first tender in support of his contention that the respondents 1 to 3, particularly the third respondent, in order to favour the fourth respondent, initially extended the delivery period of the said tender from 18 months to 23 months as required by the fourth respondent or to suit it, however, the said tender was cancelled since the fourth respondent could not be qualified as 'L1'. The respondents 1 to 3 contended that ASP specifications required to be modified in view of the fact that the re-tender was ordered in respect of allied EAF, LF and AOD packages of SMS, which was having a bearing on establishing ASP, hence the first tender was cancelled. The cancellation of the first tender was not challenged by any of the tenderers, including the appellant, hence, it is not necessary to go into the merits or demerits of the same.
12. The case of the appellant is that it participated in the second tender along with the fourth respondent, M/s. Praxair India Pvt Ltd and others and the Techno-Evaluation Committee and Commercial Evaluation Committee have recommended on 10.01.2008 that the appellant, fourth respondent and the said M/s. Praxair are commercially eligible and suggested to seek revised price bids from all the said three bidders. On 11.01.2008, the second respondent issued a letter requesting all the three tenderers to submit their revised price bids on or before 14.01.2008, which was protested by the appellant on the ground that the revised price bid is unwarranted, if at all, submission of supplementary price bid is appropriate. It is the further case of the appellant that all the tenderers, including the appellant, have properly understood the evaluation criteria, prepared their price bids calculated on the hourly basis in respect of supply of Oxygen and Nitrogen and daily basis for Argon and submitted on or before 14.01.2008. It is stated by the appellant herein that the fifth respondent found that the appellant was 'L1' and sent a letter dated 30.01.2008 to that effect to the respondents 1 to 3 recommending to consider its bid, which was suppressed by the respondents 1 to 3 and they obtained letters dated 01.02.2008 and 02.02.2008 from the said respondent wherein it is wrongly stated that the said eligible tenderers have not understood the tender requirements and sent their representations and suggested for obtaining fresh bids, thus, the tender process is actuated by malice. In support of this contention, the appellant relied on the decisions of the Honourable Supreme Court reported in (i) Delhi Development Authority v. UEE Electricals Engineering) AIR2004SC2100 (ii) (Reliance Airport Developers (P) Ltd v. Airports Authority of India and Ors.) (2006)10SCC1 (iii) (Noble Resources Ltd., v. State of Orissa and Anr.) AIR2007SC119 (iv) (Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors.) AIR2004SC1962 (v) (Harminder Singh Arora v. Union of India and Ors.) [1986]3SCR63 and submitted that it is trite that if an action of the State is violative of equality clause contained in Article 14 of the Constitution of India and also in violation of the tender conditions, judicial scrutiny is warranted.
13. The respondents 1 to 3 countered that they have not at all received the letter dated 30.01.2008 from the fifth respondent, however, they received letters dated 01.02.2008 and 02.02.2008 wherein it is stated that it received several representations from the eligible bidders from which "it is clear the parties not clearly understood the tender requirements"; that the respondents 1 and 2 have received representations dated 16.01.2008, 18.01.2008, 19.01.2008, 21.01.2008 and 22.01.2008 from the appellant stating that they are the lowest bidder and requested to issue letter of acceptance; that the fourth respondent also sent similar representations dated 16.01.2008, 22.01.2008 and 30.01.2008 claiming that they are 'L1' and M/s. Praxair India Pvt Ltd claimed itself as 'L1' and sent representations dated 14.01.2008, 15.01.2008 and 21.01.2008 and the said representations are outcome of lack of clarity in the evaluation criteria.
14. The said representations were also extracted by the learned single Judge in Para Nos. 57 to 68 of the order in the writ petitions. The learned single Judge, after perusal of the said representations as well as the the letters dated 01.02.2008 and 02.02.2008 of the fifth respondent found that the same were placed before several authorities of the respondents 1 to 3 and were considered.
15. The letters dated 01.02.2008 of the fifth respondent is extracted below:
From the representations received from all the parties, it is clear that the parties have not clearly understood the tender requirements/stipulations and have interpreted the tender document differently to the extent of all of them claiming to be the successful bidder.
In view of the above and to give one more equal opportunity to the bidders, we are proposing that SSP may consider requesting all the eligible bidders to submit fresh prices once again defining once again the evaluation criteria and other applicable contract terms. It was also understood from SAIL-ASP, Durgapur plant that supply of Argon by the BOO party has become a bottleneck because present contract stipulations. This suggested course can also address this issue by enhancing the contract Argon requirement as desired by SSP.
Dasturco can issue a detailed draft which can be issued to the parties regarding revised prices upon hearing from you.
16. Pursuant to the said letter dated 01.02.2008, another letter dated 02.02.2008 was sent by the fifth respondent to the respondents 1 to 3, which is as follows:
Further to our letter No. MD-25046-292A dated 01.02.2008, we elaborate further on two points which may be communicated to the participating bidders while seeking revised price.
1. Contracted quantities/ requirement of Gases shall be as follows:
a) Oxygen : 99.6 to 99.8% pure, 24 kg/CM2 pressure with a flow rate of 3500 NM3/hr (average hourly flow rate)
b) HP Nitrogen : 2 ppm O2 max pure, 22 kg/cm2 pressure with a flow rate of 1200 NM3/hr (average hourly flow rate)
c) LP Nitrogen : 2 ppm O 2 max pure 7.9 kg/cm2 pressure for occasional purging with a daily requirement of 250 NM 2 (to be supplied free)
d) Argon : 5 ppm max total impurities, 22 KG/CM2 pressure with a flow rate of 825 NM3/hr (average hourly flow rate)
Thus, for evaluation of Price Bids and for calculating the total variable cost of Gases, the contracted quantity/ requirement of Oxygen shall be taken as 84000 NM3/day (1200 TPD, Nitrogen as 28800 NM3/day (36 TPD) and Argon as 19800 NM3/day (35 TPD). These figures are arrived at based on 24 hour operation of 358 days (Allowable shut down of 7 days in a year)
2. We also suggest that the price bid evaluation shall be done on Net off CENVAT and Net off VAT basis instead of "on total cost" basis. This is in view of the fact that tenderers have quoted the tax and duty components of the Gas prices different from each other and also due to the fact that the benefit of VAT payments will accrue back to SSP. Therefore this change in evaluation method if acceptable to SSP may also to be communicated.
3. In case of lower demand, BUYER shall continue to pay monthly Fixed Facility charge and the price for Gases supplied on actual consumption basis subject to minimum off take of 50% during operation of the Feed Air Compressor, 75% during operation of two Fund Air Compressor (excluding Argon in both cases) as given in Article 153 of Draft agreement in the tender document. However, since Argon is not being produced from the plant, Argon will always be paid only on actual consumption basis.
4. All other terms specified under evaluation criteria will remain as per tender document."
17. The learned single Judge pointed out that the said two letters as well as the letters of the appellant, fourth respondent and Anr. mentioned supra made it clear that there was no clarity in the evaluation criteria, which was made use by them and claimed each and every one of them are 'L1'.
18. In this context, when we look into requirement of gases as found in annexure II of the draft agreement of second tender (in page No. 224 of typed set of papers of appellant), it could be seen that requirement of oxygen per day is 51600 NM3 and average flow rate is 3500 NM3/hr; that the requirement of Nitrogen per day is 22500 NM3 and average flow rate is 1200 NM3/hr; that the requirement of Argon per day is 11500 NM3 and average flow rate is 825 NM3/hr.
19. The learned single Judge also compared the evaluation criteria stated in the tender document and the requirements of gases as found in annexure II of the draft agreement of the second tender and rightly found that they are inconsistent as detailed below:
Required quantity of gases as stipulated in Annexure-II of 2nd Tender
Gas | Hourly flow rate converted into day requirement (NM3/hr X 24) | Day requirement as provided in Annexure-II |
Oxygen | 3,500 X 24 = 84,000 NM3/hr i.e., (120 TPD) | 51600 NM3/hr (73.71 TPD) |
HP Nitrogen | 1,200 X 24 = 28,800 NM3/hr i.e., (36 TPD) | 22,500 NM3/hr (28,125 TPD) |
Argon | 825 X 24 = 19800 NM3/hr i.e., (35.35 TPD) | 11,500 NM3/hr (20.5 TPD) |
This Court, after careful perusal of the said comparision concur with the findings of the learned single Judge that they are inconsistent, outcome of lack of clarity in evaluation criteria.
20. It is necessary to mention that the respondents 1 to 3 corrected the mistake in the evaluation criteria of the second tender and formulated proper evaluation criteria with details in the third tender. The Evaluation Criteria for contracted quantity of gases both in second tender and third tender is as follows:.
2nd Tender | 3rd Tender |
1. The total cost of all the three gases including fixed charges for fifteen (15) years shall be brought down to Net Present Value of the gases
2. An escalation @ 5% p.a. shall be applicable for power rates only for contract period
3. A discounting factor of 10% shall be the basis for computing the Net Present Value
4. For the purpose of evaluation, one uniform power cost on base date shall be considered for all the three gases | 1. Price bid evaluation will be done on Net of CENVAT & Net of TNVAT basis
2. For the purpose of evaluation of Price bids and for calculating the total variable cost of gases, the contracted quantity of Oxygen shall be taken as 75600 NM3/day, HP Nitrogen as 28800 NM3/day and Argon as 12000 NM3/day. The number of days in a year shall be taken as 358 (i.e., 365 days less 7 days of annual schedule maintenance)
3. The total variable cost, net of CENVAT & TNVAT of all the three gases (Oxygen, HP-Nitrogen & Argon) and fixed facility charges excluding taxes and duties shall be calculated for fifteen (15) years and brought down to Net Present Value (NPV) of the gases. The taxes and duties, if any applicable on fixed facility charges will not be taken for the purpose of evaluation.
4. An escalation @ 5% p.a. shall be applicable for power rates for all three gases (Oxygen, HP Nitrogen and Argon) during contract period of 15 years only for the purpose of evaluation.
5. A discounting factor of 10% shall be the basis for computing the Net Present Value
6. For evaluation purpose, power cost on base date i.e., Rs. 4.86 per unit shall be considered for Oxygen and Nitrogen gases.
7. For evaluation purpose, the notional power cost on base date i.e., Rs. 4.86 per unit shall be considered also for Argon gas irrespective of the source/state of supply.
|
| 8. Extent of lease land required or lease rent paid by Seller will have no impact on evaluation criteria |
21. On comparison of the evaluation criteria of both the second and third tender, it is evident that there is no definite evaluation mechanism provided in the second tender whereas in the third tender the defects are rectified.
22. In so far as the malafides alleged by the appellant are concerned, it is to be kept in mind that the burden of establishing malafide is very heavy on the person who alleges it. The allegations of malafides are often more easily made than proved, and the very seriousness of such allegations demands proof of a high order of credibility. Of course, it is not necessary that such malafide to be established only by direct evidence. The Court has to find out as to whether the said authority left out relevant factors or taken into account irrelevant factors. Even the decision could be one of many choices open to the authority to decide upon the choice and not for the Court to substitute its view. Followed (Delhi Development Authority v. UEE Electricals Engineering AIR2004SC2100 and Reliance Airport Developers (P) Ltd v. Airports Authority of India and Ors. (2006)10SCC1 .
23. The appellant alleged malafide only against the third respondent and complained that the fifth respondent's letter dated 30.01.2008 was suppressed and obtained letters dated 01.02.2008 and 02.02.2008 from it to favour the fourth respondent, which act resulted in cancelling the second tender and obtaining of approval in a short period for the third tender from the higher authorities of respondents 1 and 2. The learned single Judge after elaborate discussion found that there is every possibility to assume that such a letter would have been sent to the respondents 1 to 3 by the fifth respondent, but relying on the letter dated 20.03.2008 of the fifth respondent came to the conclusion that the fifth respondent did not despatch the said letter officially to the respondents 1 to 3. The learned single Judge also extracted the letter dated 20.03.2008 of the fifth respondent in the order impugned. It is to be noted that the said letter dated 20.03.2008 relates to the period after cancellation of second tender and notification of the third tender, hence much significance cannot be attached to that letter.
24. The respondents 1 to 3 stoutly refuted the receipt of the said letter dated 30.01.2008 of the fifth respondent and also all the allegations made against the third respondent in the counter and stated that the fifth respondent is only a consultant whose suggestion or recommendation, if any made in the letter dated 30.01.2008 would not bind either the tender committee or the other authorities of respondents 1 to 3 and neither the third respondent nor the respondents 1 and 2 have any power or authority to take a decision in their individual capacity; that after evaluation of the price bid, the same has to be placed before the tender committee, which is the competent authority to recommend and declare 'L1' tenderer, which has to be approved by the second respondent and the first respondent Board, then only, the acceptance letter would be issued by the second Respondent to 'L1' bidder and the third respondent can only forward the letter of acceptance to successful bidder.
25. The appellant alleges malafide relying on the contention of the letter dated 30.01.2008 of the fifth respondent and presumed that the same was sent by it to the respondents 1 to 3, but receipt of it was deliberately suppressed by the third respondent and seeks to invalidate or nullify the act of the respondents 1 to 3 in cancelling second tender and issuing third tender. The respondents 1 to 3 denied the receipt of the letter and stated that in individual capacity none of them are vested with the power to take final decision. The evidentiary facts of the letter dated 30.01.2008 is too remote and conjectural and either of the respondents against whom malafide is attributed could exercise the power of taking final decision individually or any of their action be equated with decision tainted by vulnerability such as lack of fairness, illegal and irrational or falls within any one of such category, hence, this Court hardly accept the plea of malafide alleged.
26. The other averments that the respondents 1 to 3 maneuvered fifth respondent and obtained the letter dated 01.02.2008 and 02.02.2008 is hardly believable, that too, in the absence of any allegations against the fifth respondent.
27. The averments that in a short period the second tender was cancelled and approval for third tender was obtained from the higher authority is concerned, the right to choose best person expeditiously by the respondents 1 to 3 cannot be considered to be arbitrary when the project is estimated to the cost of Rs. 1,900 crores and it is being delayed, hence, the said averment of the appellant is rejected.
28. The other averments is that the fifth respondent in its letter dated 01.02.2008 and 02.02.2008 suggested only for obtaining of fresh prices but the respondents 1 to 3 chosen to cancel the second tender itself. As concluded above, any such suggestion of the fifth respondent not binding the tender committee or other authorities of the respondents 1 to 3. The respondents 1 to 3 replied that letters dated 01.02.2008 and 02.02.2008 of the fifth respondent and also the letters dated 14.01.2008, 15.01.2008 of M/s. Praxair, letter dated 16.01.2008 and 18.01.2008 and letter dated 16.01.2008 were sent to respondents 1 and 2 which were considered and came to a consensus conclusion that seeking for fresh bid after opening the price bid is clear violation of PCP-06 and opined that such option cannot be exercised and instead recommended for re-tender with necessary clarification/ modification as suggested by the fifth respondent. Again the suggestion of the fifth respondent was placed before the plant level tender committee and the committee also recommended to go for re-tender, which were also informed by letter dated 23.02.2008 by the second respondent to all the three bidders, including the appellant. The said reasons assigned by the respondents 1 to 3 for issuing fresh tender are perfectly valid, hence, the averment relating to the same also rejected.
29. In the second tender, Section I Clause 14.0, the respondents 1 and 2 reserved "their right to withdraw from the tendering process or any part thereof, to accept or reject any or all tenders in full scope or part scope at any stage of process and/or to modify the process or any part thereof at any stage thereof without assigning any reasons whatsoever. No financial obligation shall accrue to SAIL, SSP in such an event.". If respondents 1 to 3 felt that in view of the background of the cases it is impossible to accept the tender of the appellant and exercise the said power of cancellation, the same is not open to judicial review in the absence of any proved malafide or irrationality.
30. The appellant did not participate in the third tender. The tender process is complete in which the fourth respondent is 'L1'. The appellant could have submitted its bids pursuant to the third tender even without prejudice to its rights and contention in the writ petition, but it failed. The appellant herein also received earnest money deposit when it was returned. Such being the position, it is not open to it to seek for Mandamus to accept their tender. Followed (Haryana State Agricultural Marketing Board and Ors. v. Sadhu Ram and etc., etc.) AIR2008SC2411 .
31. It is affirmed by the respondents 1 to 3 that they have gained financially because of lower price and NPV quoted in the third tender by the fourth respondent and also assured of supply of required quantity of gases.
32. In view of the above discussions, the order passed by the learned single Judge is confirmed and the writ appeals are dismissed as devoid of merits. No costs.