THE BHARAT COKING COAL LTD. & ORS. versus AMR DEV PRABHA & ORS. on 18 March 2020

[2020] 7 S.C.R. 603

THE BHARAT COKING COAL LTD. & ORS.

v.

AMR DEV PRABHA & ORS.

(Civil Appeal No. 2197 of 2020)

MARCH 18, 2020

[S. A. BOBDE, CJI. B. R. GAVAI AND SURYA KANT, JJ.]

Tenders – A notice inviting tender was issued by appellant-BCCL for purposes of ‘Hiring of HEMM for removal of OB,extraction and transportation of coal with fire fighting.....’ – Theappellant aimed of contracting firm which offered the lowest costestimate for fulfilment of the tender work – The bidding was statedto be conducted online – When the auction proceeded, there wereconnectivity problems leading to failure in submission bids – In theinterregnum, the last bid of Rs. 2345 crores made by respondentNo. 1 at 12:33 p.m. went unresponded for thirty minutes and auctionwas automatically closed at 1:03 p.m. – Respondent no. 1 wasdeclared lowest bidder – However, taking notice of technical issues,the auction was restarted at 2.30 p.m. and same was communicatedto all bidders – Accordingly, various bids were received by manyparticipants including respondent no. 1 – The auction proceededto the extended time of 1 hour and 27 minutes – The LOA was issuedto the successful bidder, i.e. respondent no. 6 – Respondent no. 1filed writ petition for declaring that it was successful bidder andfor quashing the LOA issued to respondent no. 6 – It was contendedthat there were lapses on the part of the appellant – The SingleJudge of the High Court dismissed it – However, a Division Benchof the High Court held that there were procedural lapses andquashed the LOA issued by the appellant and directed reconductionof the auction – On appeal, held: The Division Bench of the HighCourt was cognizant of the principles surrounding scope of judicialreview in tenders, however, it failed to effectively evaluate whetherlarger public interest was being affected – The interest of therespondent no.1 was purely private and monetary in nature – Thereare concurrent finding of the second Independent External Monitors,CERT-In, TCL, as well as the Central Vigilance Commission that theauction process was not afflicted by collusion, and confirmed theexistence of connectivity problems which necessitated resumption

A

B

CD

EF

G

H

Aof the auction process – Before resumption of auction process, it isclear that the message was communicated to all the bidders, statingthat the auction process would be extended by a period equivalentto the time between closure of auction at 1:03 p.m. and resumptionat 2.30 p.m. – Not only did such uniform communication put allbidders on an equal footing, but there was no possibility of anyBconfusion given the clear wordings of the email – The minutes afterthe resumption of the auction process, bids started coming in andmore than a dozen bids were received subsequently – Therefore, theimpugned order of the Division Bench of the High Court is notcorrect in its conclusion that there were substantial procedural lapsesCon part of the appellant – Resultantly, the judgment of the DivisionBench is set aside.

Disposing of the appeals, the Court

Conclusion

Disposing of the appeals, the Court

HELD: Maintainability of Writ PetitionD1. The scope of judicial review in tenders has been exploredin-depth in a catena of cases. It is settled that constitutional courtsare concerned only with lawfulness of a decision, and not itssoundness. Phrased differently, Courts ought not to sit in appealover decisions of executive authorities or instrumentalities.Plausible decisions need not be overturned, and latitude oughtEto be granted to the State in exercise of executive power so thatthe constitutional separation of powers is not encroached upon.However, allegations of illegality, irrationality and proceduralimpropriety would be enough grounds for courts to assumejurisdiction and remedy such ills. This is especially true givenFour unique domestic circumstances, which have demonstratedthe need for judicial intervention numerous times. Hence, it wouldonly be the decision-making process which would be the subjectof judicial enquiry, and not the end result (save as may benecessary to guide determination of the former). [Para 29][616-C-E]G

2. In cases where a constitutional right is infringed, writswould ordinarily be the appropriate remedy. In tender matters,such can be either when a party seeks to hold the State to itsduty of treating all persons equally or prohibit it from actingarbitrarily; or when executive actions or legislative instrumentsH

are challenged for being in contravention to the freedom ofcarrying on trade and commerce. However, writs areimpermissible when the allegation is solely with regard to violationof a contractual right or duty. Hence, the persons seeking writrelief must also actively satisfy the Court that the right it is seekingis one in public law, and not merely contractual. In doing so, abalance is maintained between the need for commercial freedomand the very real possibility of collusion, illegality and squanderingof public resources. [Para 32][617-C-E]

3. In the present case, although it is clear that the DivisionBench of the High Court was cognizant of these principlessurrounding scope of judicial review, however, it failed toeffectively evaluate whether larger public interest was beingaffected. On the contrary, this Court feels that the interest ofRespondent No. 1 was purely private and monetary in nature.[Para 36][618-G]

4. The first respondent has failed to demonstrate whichpublic law right it was claiming. The main thrust of AMR-DevPrabha's case has been on the fact that at 1:03PM on 05.05.2015it was declared the lowest bidder (or L-1). However, beingdeclared the L-1 bidder does not bestow upon any entity a publiclaw entitlement to award of the contract. [Para 40][620-C]

Infirmities in the auction process

5. Having the benefit of a detailed inquiry report of theCentral Vigilance Commission (“CVC”), this Court is of the firmopinion that both the appellant and Respondent No. 4 acted in abona fide manner and as per their abilities. Even if it is true thatBCCL could have assumed more responsibility and C1-India couldhave exercised a more proactive role in checking for internetissues, yet the possibility of improvement can’t be a ground forstriking down an authority’s action. Additionally, no allegation ofthe decisions being accentuated by illegal gratification, orotherwise being fraudulent or contrary to a statute have eitherbeen clearly made or established. [Para 44][621-E-G]

6. This Court does not deem it necessary to venture intothe existence of technical problems of limited bandwidth, for the AB

C

DE

F

G

H

Asame is a question of fact. However, given the concurrent findingof the second IEM, CERT-In, TCL, as well as the CVC, we feelthat the Division Bench erred in holding that there were notechnical difficulties. Furthermore, such a conclusion is at oddswith subsequent occurrences. A finding that there were no internetproblems implies that no other bidder deemed it appropriate toBcounter the bid of Rs 2345 crores offered by Respondent No. 1at 12:33PM and that it was the competitively determined lowestprice. However, it is obvious that minutes into the resumption ofthe auction process bids started coming in and more than a dozenbids were received subsequently, with the last bid of Rs 2043Ccrores having been made mere seconds before closure of theauction at 7:27PM. [Para 46][622-H; 623-A-B]

7. There is also no need to venture into questionsconcerning quantum of extension of time. It is clear that the samemessage was communicated by CI–India to all, stating that theDauction process would be extended by a period equivalent to thetime between closure of auction at 1:03PM and resumption at2:30PM. Not only did such uniform communication put all bidderson an equal footing, but there was no possibility of any confusiongiven the clear wordings of the email. When it is not the case ofRespondent No. 1 that they thought that auction would close atE7:35PM and hence they were taken by surprise at the earlyclosure, nor did they in fact highlight or object to suchinterpretation over the course of the resumed auction process,the question is moot and a finding ought not to be given on it.[Para 49][623-G; 624-A-B]

FDeference to authority’s interpretation

8. Lastly, this Court deems it necessary to deal with anotherfundamental problem. It is obvious that Respondent No. 1 seeksto only enforce terms of the NIT. Inherent in such exercise isinterpretation of contractual terms. However, it must be notedGthat judicial interpretation of contracts in the sphere of commercestands on a distinct footing than while interpreting statutes.[Para 51][624-D-E]

9. In the present facts, it is clear that BCCL and C1-Indiahave laid recourse to Clauses of the NIT, whether it be to justifyH

A

condonation of delay of Respondent No. 6 in submittingperformance bank guarantees or their decision to resume auctionon grounds of technical failure. BCCL having authored thesedocuments, is better placed to appreciate their requirements andinterpret them. [Para 52][624-E-F]

10. The High Court ought to have deferred to thisunderstanding, unless it was patently perverse or mala fide. Givenhow BCCL’s interpretation of these clauses was plausible andnot absurd, solely differences in opinion of contractualinterpretation ought not to have been grounds for the High Courtto come to a finding that the appellant committed illegality.[Para 53][624-F-G]

B

C

Jagdish Mandal v. State of Orissa (2007) 14 SCC 517: [2006] 10 Suppl. SCR 606; Maa Binda ExpressCarrier v. North-East Frontier Railway (2014) 3 SCC760 : [2013] 12 SCR 529; Shobikaa Impex (P) Ltd. v.Central Medical Services Society (2016) 16 SCC 233 :[2016] 5 SCR 319; Raunaq International Ltd. v. IVRConstruction Ltd. (1999) 1 SCC 492 : [1998] 3 Suppl.SCR 421 – relied on.

D

RD Shetty v. International Airport Authority of India(1979) 3 SCC 489 : [1979] 3 SCR 1014; Tata Cellularv. Union of India (1994) 6 SCC 651 : [1994] 2 Suppl.SCR 122; Ram and Shyam Co v. State of Haryana (1985)3 SCC 267 : [1985] 1 Suppl. SCR 541; Master MarineServices (P) Ltd v. Metcalfe & Hodg Kinson (P) Ltd.(2005) 6 SCC 138 : [2005] 3 SCR 666 – referred to.

E

F

Case Law Reference

H

[2020] 7 S.C.R.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2197of 2020.

BFrom the Judgment and Order dated 12.04.2018 of the High Courtof Jharkhand at Ranchi in LPA No. 466/2017.

With

Civil Appeal Nos. 2198, 2199 and 2200 of 2020.

K.K. Venugopal, AG, A.N.S. Nadkarni, ASG, P.S. Narasimha,CN.K. Kaul, Dr. A.M. Singhvi, Ajit Kumar Sinha, Jamshed P. Cama, KiranSuri, Sr. Advs., Amit Sharma, Dipesh Sinha, Ms. Ayiala Imti, AnkurTalwar, Ms. Chinmayee Chandra, Muneesh Malhotra, Manpreet Kaur,Vanya Khanna, Rajat Bhardwaj, Avishkar Singhvi, Ms. Ashwarya Sinha,Alok K. Singh, Nipun Katyal, Ivan, L. Nidhram Sharma, Anil KumarDMishra-I, Ms. Suruchi Kumar, Mayan Parsad, Idrish Mohammed,Supantha Sinha, Rajnish Prasad, Mukul Singh, Sayooj Mohandas, GurmeetSingh Makker, Arvind Kumar Sharma, Santosh Sharma, B.V. BalaramDas, Advs. for the appearing parties.

The following Judgment of the Court was delivered:

JUDGMENT

E

1. Leave Granted.

2. These appeals have been preferred by Bharat Coking CoalLtd. (hereinafter, “BCCL”) being aggrieved by the order dated12.04.2018 passed by a Division Bench of the High Court of JharkhandFat Ranchi, wherein a writ petition filed by AMR-Dev Prabha (RespondentNo. 1) had been allowed and the auction process conducted by M/s C1India Pvt Ltd (Respondent No. 4, hereinafter “C1-India”) was set asideand the resultant award of tender by BCCL to M/s RK Transport Co(Respondent No. 6) had also been quashed.

GFACTUAL BACKGROUND

3. BCCL, a subsidiary of Coal India Ltd, operates coking coalmines in India and as part of its operations regularly outsources manymining and processing functions to external entities. Such allocation oftasks is done through competitive bidding processes, with RespondentNo. 4 [M/s C1 India Pvt Ltd (hereinafter “C1 India”) – an onlineH

procurement facilitator] being appointed as the service provider for e-tendering of its contracts.

4. A Notice Inviting Tender (“NIT”) was issued by the appellanton 09.03.2015 for purposes of ‘Hiring of HEMM for removal of OB,extraction and transportation of coal with fire fighting from XIV,XII, XI/XII, XII, XI, IX/X, V/VI/VII/VIII, IV/VIII, IV(T), IV(B), III, III(T) and I(B) seams at Patch-DE (Mega Project) of Dhansar-Enacolliery of Kusunda Area along with crushing of coal by portablecrusher’ (NIT No 312). An initial estimate of Rs 1694.84 crores wasprepared by the appellant, with the aim of contracting the firm whichoffered the lowest cost estimate for fulfilment of the tender work.

5. The bidding was slated to be conducted on the online e-reverseauction platform of C1-India on 04.05.2015 and 05.05.2015, with C1-India having near complete supervision and autonomy over the auctionprocess. In turn, C1-India had hosted its server with Tata CommunicationsLtd (“TCL”) which was also providing internet connectivity through aleased line to C1-India. As per terms of the NIT, the auction would closeat 6:00PM on 05.05.2015. However, the auction would automaticallyterminate in case any particular bid went unresponded for a period of 30minutes. In case of any technical faults at the service provider’s end,the auction period was to be paused and extended by the period of thefault; however, bidders were to be responsible for connectivity problemsat their end.

6. Although the auction proceeded smoothly on the first day, on05.05.2015 at around 12:55PM, C1-India is stated to have received certaintelephone calls from various participants claiming that there wereconnectivity problems leading to failure in submitting bids. An email wasthus sent by C1-India to TCL at 12:59PM stating “my link is down”. Inresponse, TCL informed C1-India through an email at 2:11PM thatbandwidth issues had indeed been experienced owing to a dual fiber cutin their intra-city network as well as a fault in their patch cord. In theinterregnum, the last bid of Rs 2345 Crores made by M/s AMR-DevPrabha (Respondent No. 1) at 12:33PM went unresponded for thirtyminutes, and the auction was automatically closed at 1:03PM.

7. Taking conscious notice of these technical issues communicatedby TCL and estimating that a lower price could be discovered had suchfault not arisen, C1-India (allegedly with the concurrence of BCCLofficials) took a decision to restart the auction process at 2:30PM. Such A

B

C

DE

F

G

H

Aresumption, with the possibility of extension of time, was communicatedto all bidders telephonically, as well as through emails sent between2:17PM and 2:36PM. Accordingly, various bids were received by manyparticipants, including numerous bids from the now aggrieved RespondentNo. 1 and the ultimately successful Respondent No. 6. The auctionproceeded to the extended time of 1 hour and 27 minutes (calculated asBbeing the time of interruption between the erroneous closure at 1:03PMand subsequent resumption at 2:30PM), and Respondent No. 6 wasdeclared successful with a bid of Rs 2043 crores at 7:27PM.

8. This was communicated to BCCL, which then after assessingeligibility of M/s RK Transport (Respondent No. 6, hereinafter “RKCTransport”), issued Letter of Acceptance (“LOA”) on 30.05.2015. Asper earlier agreed contractual terms, a Performance Bank Guaranteehad to be submitted within 28 days of receipt of LOA. Respondent No.6 was unable to do so, and it requested BCCL to provide an additionaltwo months for compliance. The appellant returned the Earnest MoneyDDeposit (“EMD”) to all unsuccessful bidders, including Respondent No.1, through speed post on 18.06.2015. Finally, the requisite guaranteeswere submitted after a delay of 49 days, which was condoned by theappellant and job was started on the ground.

9. Three months after closure of the auction, Respondent No. 1Epreferred a Writ Petition before the High Court of Jharkhand at Ranchion 10.08.2015, praying for a declaration that it emerged as the successfulL-1 bidder at 1:03 PM on 05.05.2015, and for quashing of the LOAissued by the appellant to Respondent No. 6 for being arbitrary.Simultaneously, it was also prayed that directions be issued to BCCL forawarding the contract to them and for conducting enquiry into the entireFmatter.

10. During the pendency of the Writ Petition, Respondent No. 1invoked Clause 20 of the NIT which provided for an integrity pact underwhich two Independent External Monitors (“IEM”) had been appointed.A report was received from one of these two IEMs on 23.09.2016 whichGheld that there had been no technical problem and that resumption of theauction process at 2:30PM was unjustified. It is relevant to mention thatthis report was submitted by the first IEM, acting unilaterally and withoutaccording hearing to C1-India and RK Transport.

11. Simultaneously, the appellant approached the second IEM whoHpost receiving response from all parties presented a divergent report with the observation that there was no possibility of collusion and notingthat the interruption in bandwidth had been established and thus thesubsequent resumption by C1-India was in consonance with specifiedprocedure.

12. In light of such conflict, BCCL first approached theStandardization, Testing & Quality Certification (STQC) Directorateseeking an audit, and later upon them expressing inability to do so owingto the technical nature of the dispute; the appellant approached theDirector General of CERT-In (an independent body under the Ministryof Communications & IT of the Government of India). An ‘IncidentAnalysis Report’ was consequently submitted by the CERT-In to BCCLon 30.12.2015. This report broadly concurred with the observations ofthe second IEM and found that the process was not afflicted by collusion,and confirmed the existence of connectivity problems which necessitatedresumption of the auction process.

13. On 16.08.2017, the learned Single Judge dismissed the firstrespondent’s writ, holding that a level playing field had been provided byBCCL to all bidders; there indeed was a connectivity issue and thesubsequent resumption of auction was as per terms of the NIT; awardof contract to RK Transport was not arbitrary for not only was it L-1 butalso had offered a bid much better than that of AMR-Dev Prabha. Further,the first respondent was held to have acquiesced to any possibleirregularity in the process by participating in the resumed auction, andBCCL’s condonation of delay in submission of guarantee by RK Transportwas held to be permissible and in public interest.

14. This was challenged by Respondent No. 1, before a DivisionBench of the High Court. During the pendency of the letters patentappeal, on 18.09.2017, counsel for AMR-Dev Prabha offered a lowerbid of Rs 1950 Crores for the job, which they portrayed as being farbetter than their earlier bid of Rs 2345 Crores which they had made at12:33PM on 05.05.2015. This, however, was refused by the appellantand instead a work order was issued to Respondent No. 6 on 23.11.2017,who shortly afterwards commenced work.

15. The Division Bench allowed the appeal vide impugnedjudgment dated 12.04.2018 and quashed the LOA issued by BCCL infavour of RK Transport and held that all consequent work was invalid.The Division Bench of the High Court further directed reconduction ofthe auction and ordered a vigilance enquiry into the matter. Taking A

BC

DE

F

G

H

Acognizance of the ratio of RD Shetty v. International Airport Authorityof India[1 ]and Tata Cellular v. Union of India[2 ]wherein this Court hadelucidated the breadth and permissibility of judicial review in tendermatters, the High Court opined that it was concerned not with the outcomebut only the manner in which the decision to award work-contract wasarrived at.B

16. Analysing the terms of the NIT, the High Court held that itwas the bidder’s responsibility to comply with system requirements, withBCCL not being liable for any technical difficulties or connectivity failures.Tender could be paused only in case of technological/system failure atthe service provider’s end and once concluded, could only be revoked inClimited circumstances. Not only were the complaints non-actionable forC1-India was continuously connected to TCL which meant there wereno problems at the service provider’s end, but even otherwise C1-Indiafailed to pause the auction process during the crucial period which itought to have as per the terms of the NIT.D

17. Noting the absence of any call records or other proof oftechnical complaints by the bidders, the delay in communication ofresumption of auction process (observing how emails were sent till2:37PM whereas auction resumed at 2:30PM), failure to revoke/canceldeclaration of AMR-Dev Prabha as L1 bidder and erroneous calculationEof the extended time (7:27PM instead of 7:35PM), the Court held thatBCCL and C1-India failed to maintain the sanctity of the auction processand committed serious illegality which raised doubts on proceduralpropriety and indicated arbitrariness in the decision making process. Suchdeviations from terms of the NIT were held to not only be mereaberrations, but indicative of a complete lack of fair play which affectedFintegrity of the entire process, rendering it contrary to public interest andconsequently illegal.

CONTENTIONS OF PARTIES

18. Assailing the order of the High Court primarily on preliminaryGcounts, BCCL vehemently contended that the present case was not onewhere judicial review was possible. It highlighted that the scope of writjurisdiction in contractual dealings of the State or its instrumentalitieswas extremely limited, and deference to commercial wisdom of the 1 (1979) 3 SCC 489.H2 (1994) 6 SCC 651.

Arguments

executive ought to be the norm. The decision making process was shownas not being illegal as there was no allegation of receipt of extraneousgratification or violation of any statute; nor irrational as the decision ofresuming the auction process to arrive at a better price wasn’t suchwhich would offend the sensibilities of a reasonable person; nor arbitraryas there was substantial discretion granted by the terms of the NIT.Respondent No. 1’s participation in the tender process post-resumptionwas contended to bind him from making any further judicial challenge,and alternate remedies under contract and civil law were demonstrated.It was further stated that the entire process had been upheld by multipleindependent authorities, not least being the CERT-In and one of the twoIEMs.

19. Adopting such stand, Respondent No. 4 (C1-India) contendedthat the slight delay in the decision-making process, wherein it did notimmediately take action, was because C1-India as a responsible e-servicesprovider was first attempting to determine whether the interruption wasat the bidders’ end or its own. By the time a response had been receivedfrom the entity responsible for hosting and connectivity (i.e. TCL), theauction had stopped by itself. Instead, it was argued that upon receipt ofwritten response from TCL at 2:11 PM, C1-India expeditiously took adecision in consultation with BCCL, and started informing all participantsand resumed bidding at 2:30PM. It was underscored that no prejudicehad been caused to any bidder. Respondent No.1 had more than anadequate opportunity of bidding, as it itself submitted eight bids duringthe resumed time frame. Further, such participation combined with silencefor three-months afterwards evidenced that AMR-Dev Prabha did notconsider itself to be L-1 and the present legal challenge was nothing butcommercial opportunism. With regard to the calculation of extended time,counsel for C1-India submitted that such was immaterial as the quantumof extension had uniformly been communicated to all bidders, andeveryone had the same information and hence an equal opportunity. Theresumption decision was claimed to have been taken in good faith andupon a judicious consideration of all factors. It was thought to be inpublic interest, and in retrospect, had only resulted in substantial savingsfor the public exchequer.

20. Counsel for the appellant, along with that for C1-Indiahighlighted how the goalpost was being changed by Respondent No.1throughout the litigation. Whereas before the High Court AMR-Dev AB

C

D

E

F

G

H

APrabha sought adherence to terms of NIT and strict proceduralcompliance, but later they wished to settle the matter at a lower priceclaiming larger public interest. This was claimed to demonstrate howAMR-Dev Prabha’s interest was, in fact, personal and not public, andonly to win the tender one way or the other and not to maintain thesanctity of the auction process. The lack of on-the-spot protest, neitherBduring the auction process, nor at the time of availing refund of theEarnest Money Deposit; and the substantial delay in filing the writ petition(after more than 3 months of close of the auction process and 2 monthsfrom issue of the LOA) was nothing but an afterthought aimed at makinga commercial opportunity out of litigation. Hence, the present proceedingsCwere claimed to be an abuse of the process of law by AMR-Dev Prabhaand only a chance for arm twisting BCCL to award to it the tender, nobetter than a contractual enforcement of private rights.

21. Instead, it was submitted, that any possible infirmity was merelyminor and inconsequential. There had been a substantive compliance ofDthe tender process and the Clauses of the Notive Inviting Tender (NIT),and public interest of ensuring the lowest price discovery had been keptat the forefront. It was contended that hyper technical compliance wasoften not possible, nor desirable as often-a-times strict proceduralcompliance could defeat the ends of substantive equality, like in thepresent case.E

22. Reliance was placed on the CERT-IN report to demonstratelack of any mala fide or tampering in the process. The interruptions atthe end of TCL were claimed to be but natural and a part of operationalinefficiencies which were not unheard of in e-tendering processes.F23. On the other side, Respondent No. 1 claimed that it had beendeclared as the lowest bidder (L-1) by virtue of automatic conclusion ofthe auction process at 1:03PM, post which any resumption wasimpermissible and contrary to contractual terms. Further, a colour wassought to be cast, by claiming that such resumption was to benefitparticular parties. The refusal of BCCL to accept the new bid whichGwas more than Rs 400 crores less than the previous offer was claimedto demonstrate this. Per AMR-Dev Prabha, public interest ought to beprioritised, which according to Ram and Shyam Co v. State ofHaryana[3 ]would entail that the State instrumentality accept the bestavailable price, irrespective of formal technicalities.H3 (1985) 3 SCC 267.

24. No adverse inference could be drawn against Respondent 1’sparticipation in the resumed bidding process as the resumption itself wasillegal. The auction was closed and not paused, and hence no resumptionof a closed bidding process was possible. Even otherwise, it was assertedthat grant of extension of 1 hour and 27 minutes was wrong. The timeshould have been calculated from the time when the internet was affected,which as per the appellant themselves was from 12:55PM as informedto them by TCL. Hence an extension of 1 hour and 35 minutes (and not1 hour and 27 minutes) was appropriate, per which the auction ought tohave concluded at 7:35 PM, and not 7:27 PM. Similarly, emails forresumption at 2:30PM, were shown as having been sent to someparticipants at 2:17PM and to others at 2:36PM. Further, two personswere claimed to have logged into the system at 2:29PM, that is, oneminute before resumption of the e-auction process, which wrongly gavethem an upper hand in the e-auction process. Other allegations werealso made regarding login by one entity using two accounts, which wascontended as being impermissible per the NIT.

25. All this was postulated to cast a serious cloud of doubt overthe entire auction process. Even during the pendency of the writ petitionbefore the High Court, instead of complying with an order dated04.11.2015 to produce all relevant records, BCCL was said to haveimpermissibly referred the matter to CERT-In. However, the first IEMhad held that the server of the appellant was well connected to theserver of the TCL and that there was no problem on the appellant’s endwhich would necessitate stoppage or resumption of the auction process.

26. On maintainability, although Respondent No. 1 admitted tohaving alternate remedies, but it argued that there could be no hard andfast rule preventing it from approaching writ courts. On the point ofdelay, in their counter-affidavit, Respondent No. 1 has contended thatthe cause of action arose after Respondent No. 6 failed to submit thePerformance Guarantee within 28 days per the tender clauses.

27. Substantial emphasis was placed on the offer made by theRespondent No. 1 to the appellant during the course of hearing of thewrit petition, the rejection of which was claimed as being contrary topublic interest and settled law which aims at prioritising valuemaximisation of the public exchequer.

AB

C

D

E

F

G

H

AANALYSIS

28. Two clear issues-in-dispute arise from the above discussion.The first pertains to the maintainability of the writ considering the natureof tender processes, and the second concerns application of that standardto the facts of the present case to determine whether there were lapsesBon part of BCCL and C1-India.

(I) Maintainability of Writ Petition

29. The scope of judicial review in tenders has been exploredin-depth in a catena of cases. It is settled that constitutional courts areCconcerned only with lawfulness of a decision, and not its soundness.[4]Phrased differently, Courts ought not to sit in appeal over decisions ofexecutive authorities or instrumentalities. Plausible decisions need notbe overturned, and latitude ought to be granted to the State in exerciseof executive power so that the constitutional separation of powers is notencroached upon.[5] However, allegations of illegality, irrationality andDprocedural impropriety would be enough grounds for courts to assumejurisdiction and remedy such ills. This is especially true given our uniquedomestic circumstances, which have demonstrated the need for judicialintervention numerous times. Hence, it would only be the decision-makingprocess which would be the subject of judicial enquiry, and not the endEresult (save as may be necessary to guide determination of the former).30. This position of law has been succinctly summed up in TataCellular v. Union of India (supra), where it was famously opined that:

“77. ... Therefore, it is not for the court to determine whetherFa particular policy or particular decision taken in thefulfilment of that policy is fair. It is only concerned with themanner in which those decisions have been taken. The extentof the duty to act fairly will vary from case to case. Shortlyput, the grounds upon which an administrative action issubject to control by judicial review can be classified as under:G

(i) Illegality: This means the decision-maker must understandcorrectly the law that regulates his decision-making powerand must give effect to it.

4 Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium), (2016) 8 SCC 622;Siemens Aktiengeselischaft & Siemens Ltd. v. DMRC Ltd., (2014) 11 SCC 288.H5 Air India Ltd v. Cochin International Airport Limited (2000) 2 SCC 617.

(ii) Irrationality, namely, Wednesbury unreasonableness,

(iii) Procedural impropriety.”

31. But merely because the accusations made are against theState or its instrumentalities doesn’t mean that an aggrieved person canbypass established civil adjudicatory processes and directly seek writrelief. In determining whether to exercise their discretion, writ courtsought not only confine themselves to the identity of the opposite partybut also to the nature of the dispute and of the relief prayed for. Thus,although every wrong has a remedy, depending upon the nature of thewrong there would be different forums for redress.

32. In cases where a constitutional right is infringed, writs wouldordinarily be the appropriate remedy. In tender matters, such can beeither when a party seeks to hold the State to its duty of treating allpersons equally or prohibit it from acting arbitrarily; or when executiveactions or legislative instruments are challenged for being in contraventionto the freedom of carrying on trade and commerce. However, writs areimpermissible when the allegation is solely with regard to violation of acontractual right or duty. Hence, the persons seeking writ relief mustalso actively satisfy the Court that the right it is seeking is one in publiclaw, and not merely contractual. In doing so, a balance is maintainedbetween the need for commercial freedom and the very real possibilityof collusion, illegality and squandering of public resources.

33. Such a proposition has been noticed by this Court even earlierin Jagdish Mandal v. State of Orissa[6 ]in the following words:

“22. Judicial review of administrative action is intended toprevent arbitrariness, irrationality, unreasonableness, biasand mala fides. Its purpose is to check whether choice ordecision is made “lawfully” and not to check whether choiceor decision is “sound”. When the power of judicial review isinvoked in matters relating to tenders or award of contracts,certain special features should be borne in mind. A contractis a commercial transaction. Evaluating tenders and awardingcontracts are essentially commercial functions. Principles ofequity and natural justice stay at a distance. If the decisionrelating to award of contract is bona fide and is in publicinterest, courts will not, in exercise of power of judicial review, A

B

C

D

E

F

G

H

Ainterfere even if a procedural aberration or error inassessment or prejudice to a tenderer, is made out. The powerof judicial review will not be permitted to be invoked to protectprivate interest at the cost of public interest, or to decidecontractual disputes. The tenderer or contractor with agrievance can always seek damages in a civil court. AttemptsBby unsuccessful tenderers with imaginary grievances,wounded pride and business rivalry, to make mountains outof molehills of some technical/procedural violation or someprejudice to self, and persuade courts to interfere by exercisingpower of judicial review, should be resisted. SuchCinterferences, either interim or final, may hold up public worksfor years, or delay relief and succour to thousands and millionsand may increase the project cost manifold.”

34. Such conscious restraint is also necessary because judicialDintervention by itself has effects of time and money, which if uncheckedwould have problematic ramifications on the State’s ability to enter intocontracts and trade with private entities. Further, it is not desirable orpracticable for courts to review the thousands of contracts entered intoby executive authorities every day. Courts also must be cognizant thatEoften-a-times the private interest of a few can clash with public interestof the masses, and hence a requirement to demonstrate effect on ‘publicinterest’ has been evolved by this Court.[7]

35. It is thus imperative that in addition to arbitrariness, illegalityor discrimination under Article 14 or encroachment of freedom underFArticle 19(1)(g), public interest too is demonstrated before remedy issought. Although the threshold for the latter need not be high, but it isnevertheless essential to prevent bypassing of civil courts and use ofconstitutional avenues for enforcement of contractual obligations.

36. In the present case, although it is clear that the Division BenchGof the High Court was cognizant of these principles surrounding scopeof judicial review, however, it failed to effectively evaluate whether largerpublic interest was being affected. On the contrary, we feel that theinterest of Respondent No. 1 was purely private and monetary in nature.

H7 Jagdish Mandal v. State of Orrisa, (2007) 14 SCC 517 ¶ 22.

37. First, AMR-Dev Prabha’s initial prayer sought to nullify theaward of contract, which if granted, would have increased the sumspayable by the State instrumentality from Rs 2043 crores to Rs 2345crores. Second, the conduct of Respondent No. 1 over the course ofthe present proceedings, as highlighted by the appellants, further bolstersthe lack of public interest. Whereas initially the first respondent wasseeking quashing of the LOA issued to Respondent No. 6 owing toarbitrariness on part of BCCL and on the ground that sanctity of theauction process had been violated; later, before the Division Bench,Respondent No. 1 sought to make a new offer of Rs 1950 Crores. Thisshows how AMR-Dev Prabha’s priority was only to secure the contractand not to uphold the law or protect larger public interest.

38. Even otherwise, granting such a prayer means that RespondentNo. 1 would have gotten a special opportunity of negotiation, to thedetriment of all other participants, which would probably be a moreegregious violation of equality envisaged under Article 14 than theprocedural adherence which they were initially seeking to protect.

39. Additionally, we are not impressed with the first respondent’sargument that there is a certain public interest at stake whenever thepublic exchequer is involved. There are various factors in play, in additionto mere bidding price, like technical ability and timely completion whichmust be kept in mind. And adopting such interpretation would permanentlyblur the line between contractual disputes involving the State and thoseaffecting public law. This has aptly been highlighted in RaunaqInternational Ltd. v. IVR Construction Ltd.[8]

“11. When a writ petition is filed in the High Court challengingthe award of a contract by a public authority or the State, thecourt must be satisfied that there is some element of publicinterest involved in entertaining such a petition. If, forexample, the dispute is purely between two tenderers, the courtmust be very careful to see if there is any element of publicinterest involved in the litigation. A mere difference in theprices offered by the two tenderers may or may not be decisivein deciding whether any public interest is involved inintervening in such a commercial transaction. It is importantto bear in mind that by court intervention, the proposed projectmay be considerably delayed thus escalating the cost far more 8 (1999) 1 SCC 492.

A

B

C

D

E

F

G

H

A

Athan any saving which the court would ultimately effect inpublic money by deciding the dispute in favour of one tendereror the other tenderer. Therefore, unless the court is satisfiedthat there is a substantial amount of public interest, or thetransaction is entered into mala fide, the court should notintervene under Article 226 in disputes between two rivalBtenderers.”

40. Further, the first respondent has failed to demonstrate whichpublic law right it was claiming. The main thrust of AMR-Dev Prabha’sCcase has been on the fact that at 1:03PM on 05.05.2015 it was declaredthe lowest bidder (or L-1). However, being declared the L-1 bidder doesnot bestow upon any entity a public law entitlement to award of thecontract, as noted in Maa Binda Express Carrier v. North-EastFrontier Railway[9]:

D“8. The scope of judicial review in matters relating to awardof contracts by the State and its instrumentalities is settled bya long line of decisions of this Court. While these decisionsclearly recognise that power exercised by the Governmentand its instrumentalities in regard to allotment of contract issubject to judicial review at the instance of an aggrieved party,Esubmission of a tender in response to a notice inviting suchtenders is no more than making an offer which the State or itsagencies are under no obligation to accept. The biddersparticipating in the tender process cannot, therefore, insistthat their tenders should be accepted simply because a givenFtender is the highest or lowest depending upon whether thecontract is for sale of public property or for execution of workson behalf of the Government. All that participating biddersare entitled to is a fair, equal and non-discriminatory treatmentin the matter of evaluation of their tenders. It is also fairlywell settled that award of a contract is essentially a commercialGtransaction which must be determined on the basis ofconsideration that are relevant to such commercial decision.This implies that terms subject to which tenders are invitedare not open to the judicial scrutiny unless it is found that thesame have been tailor-made to benefit any particular tenderer D

H9 (2014) 3 SCC 760.

or class of tenderers. So also, the authority inviting tenderscan enter into negotiations or grant relaxation for bona fideand cogent reasons provided such relaxation is permissibleunder the terms governing the tender process.”

41. Instead, precedent laid down by this Court in Master MarineServices (P) Ltd v. Metcalfe & Hodg Kinson (P) Ltd,[10 ]illustrates thatif a prayer for re-bidding is on account of a desire to get a better price,then involvement of Article 14 of the Constitution would not be madeout.

42. Further, regular recourse was made over the course ofproceedings by learned senior counsel for the first respondent on termsof the NIT. Findings in the impugned order too were based upon disputedinterpretation of such contractual terms. Thus, it is clear that there wasneither any public law right of the first respondent which was affected,nor was there any public interest sought to be furthered.

(II) Infirmities in the auction process

43. On merits also, we do not feel that the impugned order iscorrect in its conclusion that there were substantial procedural lapses onpart of BCCL and C1-India which amount to arbitrariness, and ought tobe remedied by way of judicial review.

44. Instead, having the benefit of a detailed inquiry report of theCentral Vigilance Commission (“CVC”), we are of the firm opinion thatboth the appellant and Respondent No. 4 acted in a bona fide mannerand as per their abilities. Even if it is true that BCCL could have assumedmore responsibility and C1-India could have exercised a more proactiverole in checking for internet issues, yet the possibility of improvementcan’t be a ground for striking down an authority’s action. Additionally,no allegation of the decisions being accentuated by illegal gratification,or otherwise being fraudulent or contrary to a statute have either beenclearly made or established.

45. It would thus be apt at this stage to reproduce the concludingpassage of fact finding enquiry conducted by CVC, which reads asfollows:

A

B

C

D

E

F

G

H

SUPREME COURT REPORTS

A

A“It is significant to place on record that the notification ofclosure of the reverse auction generated by system at 13:03:47hrs on 05.05.2015 submitted by M/s AMR Dev Prabha, infact, belongs to another bidder M/s. Montecarlo Ltd. NeitherBCCL nor C1 India Pvt. Ltd. have ever placed suchnotification on record. It remaims unclear as to how and whenBM/s. AMR Dev Prabha got possession of this document, whichactually belonged to M/s. Montecarlo Ltd. and which becamethe basis for M/s. AMR Dev Prabha to stake their claim ofbeing the lowest bidder at 13.03.47 hrs. It is also seen thatthis important fact, of generation of notification of closure ofCthe auction by the system at 13:03:47 Hours, as the bid of M/s AMR Dev Prabha remained unresponded for the specifiedperiod of 30 minutes, was neither reported by C1 India toBCCL nor to the participating bidders. Such, notification ofclosure of the auction, even though generated during theperiod of interruption in connectivity of the bidders with theDserver, should have been declared as ‘null and void’ beforerestarting the auction process. Even, BCCL did not demandany report from C1 India Pvt. Limited for the interruptionperiod so as to take a call before proceeding further forrestart of the reverse auction process. Further, consideringEthat during this period BCCL was aware of the connectivityproblem being faced by the bidders, it should have exercisedintense real time monitoring which have not been done. Failureto do so is a reflection of the fact the adequate incidentmanagement system was not put in place by the serviceprovider M/s. C1 India Pvt. Ltd. to handle such eventualityFeffectively.

While there was lack of control and supervision on part ofBCCL, however, the Committee has not come across anyevidence suggesting mala-fide on their part. As regards toC1 India Pvt. Ltd., their conduct has been found to be farGfrom satisfactory.”

46. We do not deem it necessary to venture into the existence oftechnical problems of limited bandwidth, for the same is a question offact. However, given the concurrent finding of the second IEM, CERT-In, TCL, as well as the CVC, we feel that the Division Bench erred in H

holding that there were no technical difficulties. Furthermore, such aconclusion is at odds with subsequent occurrences. A finding that therewere no internet problems implies that no other bidder deemed itappropriate to counter the bid of Rs 2345 crores offered by RespondentNo. 1 at 12:33PM and that it was the competitively determined lowestprice. However, it is obvious that minutes into the resumption of theauction process bids started coming in and more than a dozen bids werereceived subsequently, with the last bid of Rs 2043 crores having beenmade mere seconds before closure of the auction at 7:27 PM.

47. With regard to other allegations concerning condonation ofRespondent No. 6’s delay in producing guarantees, we would onlyreiterate that there is no prohibition in law against public authoritiesgranting relaxations for bona fide reasons. In Shobikaa Impex (P) Ltd.v. Central Medical Services Society[11], it has been noted that:

“… the State can choose its own method to arrive at a decisionand it is free to grant any relaxation for bona fide reasons, ifthe tender conditions permit such a relaxation. It has beenfurther held that the State, its corporations, instrumentalitiesand agencies have the public duty to be fair to all concerned.Even when some defect is found in the decision-makingprocess, the Court must exercise its discretionary powers underArticle 226 with great caution and should exercise it only infurtherance of public interest and not merely on the makingout of a legal point.”

48. Even if there had been a minor deviation from explicit termsof the NIT, it would not be sufficient by itself in the absence of mala fidefor courts to set aside the tender at the behest of an unsuccessful bidder.[12]This is because notice must be kept of the impact of overturning anexecutive decision and its impact on the larger public interest in the formof cost overruns or delays.

49. There is also no need to venture into questions concerningquantum of extension of time. It is clear that the same message wascommunicated by CI–India to all, stating that the auction process wouldbe extended by a period equivalent to the time between closure of auctionat 1:03PM and resumption at 2:30 PM. Not only did such uniformcommunication put all bidders on an equal footing, but there was no A

B

C

D

E

F

G

H

Apossibility of any confusion given the clear wordings of the email. Whenit is not the case of Respondent No. 1 that they thought that auctionwould close at 7:35PM and hence they were taken by surprise at theearly closure, nor did they in fact highlight or object to such interpretationover the course of the resumed auction process, the question is mootand a finding ought not to be given on it.B

50. Additionally, we also do not see merit in the justification fordelay in filing writ proffered by the first respondent. It is claimed that thecause of action arose when Respondent No. 6 failed to submit guaranteeswithin a period of 28 days. However, we do not see how that wouldallow AMR-Dev Prabha to challenge the entire process of auction, orCovercome the settled legal principle of privity of contract betweenRespondent No. 6 and the appellant.

(III) Deference to authority’s interpretation

51. Lastly, we deem it necessary to deal with another fundamentalDproblem. It is obvious that Respondent No. 1 seeks to only enforce termsof the NIT. Inherent in such exercise is interpretation of contractualterms. However, it must be noted that judicial interpretation of contractsin the sphere of commerce stands on a distinct footing than whileinterpreting statutes.

E52. In the present facts, it is clear that BCCL and C1-India havelaid recourse to Clauses of the NIT, whether it be to justify condonationof delay of Respondent No. 6 in submitting performance bank guaranteesor their decision to resume auction on grounds of technical failure. BCCLhaving authored these documents, is better placed to appreciate theirrequirements and interpret them.[13]F

53. The High Court ought to have deferred to this understanding,unless it was patently perverse or mala fide. Given how BCCL’sinterpretation of these clauses was plausible and not absurd, solelydifferences in opinion of contractual interpretation ought not to havebeen grounds for the High Court to come to a finding that the appellantGcommitted illegality.

CONCLUSION

54. In light of the above discussion, the appeal filed by BharatCoking Coal Ltd, as well as connected appeals filed by M/s RK Transport H13 Afcons Infrastructure Ltd v. Nagpur Metro Rail Corporation Ltd, (2016) 16 SCC 818at ¶ 15.

and M/s C1 India Pvt Ltd, are allowed. Resultantly, the appeal filed byAMR-Dev Prabha is dismissed. The Division Bench judgment of theHigh Court dated 12.04.2018 is set-aside and the writ petition filed byAMR-Dev Prabha is dismissed. No order as to costs.

Ankit Gyan

Appeals disposed of.

A

B

C

D

E

F

G

H