CARETEL INFOTECH LTD. versus HINDUSTAN PETROLEUM CORPORATION LIMITED & ORS. on 9 April 2019

950

SUPREME COURT REPORTS

[2019] 6 S.C.R.

ACARETEL INFOTECH LTD.

v.

HINDUSTAN PETROLEUM CORPORATION LIMITED & ORS.(Civil Appeal No. 3588 of 2019)

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APRIL 09, 2019

[S.A. BOBDE AND SANJAY KISHAN KAUL, JJ.]

Tender: Tender contracts – e-public tender floated byrespondent no. 1 for setting up call centres – Declaration to bemade in terms of clause 20(ii), if the bidder had been banned orCblack listed or delisted or holiday listed – Issuance of show causenotice to the appellant, one of the bidder, for blacklisting onallegation of furnishing false information and bid documents inrespect of another tender – Notice was issued after floating of thetender by respondent no. 1 but before submission of the bid –DAppellant declared L-1 and awarded letter of acceptance –Respondent No.3 declared L-2 - Writ petition by Respondent No.3challenging declaration of appellant as L-1 – Subsequently, pur-chase order issued in favour of appellant – However, next day it-self, order passed blacklisting and debarring the appellant fromparticipating in any tender process for two years – RespondentENo.3 having become aware of the factum of blacklisting of theappellant amended the petition to incorporate the said fact – WritPetition allowed by the High Court – Sustainability of – Held: Notsustainable – Impugned order misread the blacklisting clause – Showcause notice itself did not amount to the process of blacklistingFhaving already been initiated – Appellant would not be disentitledto contract – As regards, the effect of the blacklisting order, theban would have prospective effect, for future business dealings –It would have no application to the tender awarded – As regards,the business continuity certificate doubted by respondent no. 3,the High Court in the course of inquiry expressed its doubts overGthe certificate – Such a course of action was not permissible –Directions of the High Court to take appropriate decisions, reallyamounts to directing respondent no.1 to breach its contract withthe appellant – No such direction ought to have been issued tocompel a breach of the contract by the appellant.

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Constitution of India: Art. 226 – Writ proceedings under –Scrutiny of tenders – Permissibility – Held: Normally parties wouldbe governed by their contracts and the tender terms, and no writwould be maintainable u/Art. 226 – In view of Government andPublic Sector Enterprises venturing into economic activities, theCourt found it appropriate to build in certain checks and balancesof fairness in procedure – This approach has given rise to scrutinyof tenders in writ proceedings – Every small or big tender sought tobe challenged, affects the efficacy of commercial activities of thepublic sectors, in competition with the private sector –Unnecessary, close scrutiny of minute details, contrary to the viewof the tendering authority, makes awarding of contracts byGovernment and Public Sectors a cumbersome exercise –Promptness and efficiency levels in private contracts, often tend tomake tenders of public sector a non-competitive exercise.

Deeds and documents: Tender – Interpretation of – Held:Author of the document is the best person to understand andappreciate its requirements – On, facts, view of respondent No.1-company which floated the tender, must prevail – Respondent No.1itself, appreciative of the wording of clause 20 and the format, tooka considered view – Respondent No.3, one of the bidder cannotcompel its own interpretation of the contract to be thrust onrespondent No.1, or ask the court to compel respondent No.1 toaccept that interpretation – It is possible that the author of thetender may give an interpretation that is not acceptable to the court,but that itself would not be a reason for interfering with theinterpretation given.

Allowing the appeal, the Court

Conclusion

Allowing the appeal, the Court

HELD: 1.1 Both the aspects-the interpretation of clause20 read with the format, as well as with the effect of the showcause notice is concurred with. Clause 20 does provide for foureventualities. The instant case is not one where on the date ofsubmission of the tender the appellant had been banned,blacklisted or put on holiday list. The declaration to be given bythe bidder is specified in clause 20(ii), which deals with the firstthree aspects. The format enclosed with the tender documentsalso refers only to these three eventualities. It is not a case whereno specific format is provided, where possibly it could have been A

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Acontended that the disclosure has to be in respect of all the fouraspects. The format having been provided, if initiation ofblacklisting was to be specified, then that ought to have beenincluded in the format. It cannot be said that the undertaking bythe appellant made it the bounden duty of the appellant to disclosethe aspect of a show cause notice for blacklisting. It is said so asBthere is a specific clause with the specific format provided for,requiring disclosures, as per the same. [Paras 20, 21][963-G-H;964-A-C]1.2 It may be possible to contend that the format is notcorrectly made. But then, that is the problem of the framing ofCthe format by respondent No.1. It appears that respondent No.1also, faced with the factual situation, took a considered view thatsince clause 20(i) provided for the four eventualities, while theformat did not provide for it, the appellant could not be penalised.May be, for future the format would require an appropriateDmodification. [Para 22][964-D-E]

1.3 In the undertaking submitted by the appellant all it isstated is that the information furnished in the bid and attachmentsare true to the best of the knowledge and belief of the bidder. Incase any false or incorrect information is submitted, the bid canbe rejected. It cannot be said that there is any false informationEgiven by the appellant as to violate the stated condition 4 of clause20(i). Another angle of the same issue, i.e., the integrity pactprovided for in clause 20(iii) with the format thereof, a detailedone. The integrity pack provided that the “parties shall makecertain commitments to each other in regard to ensuring Ftransparency and fair dealing in the procurement activities of theCorporation.” The duly signed integrity pact is an essentialcondition for a valid bid. This clause, thus, deals with thetransparency and fair dealing of the activities carried out underthe tender were it to be awarded insofar as the procurement activities are concerned. Once again, this would not have anyGrelevance to the stated fourth part of clause 20(i). [Para 23][964-E-H]

1.4 Blacklisting has very serious consequences. A showcause notice may result in blacklisting or may not result inblacklisting. The mere show cause notice being issued, to visitH

such a severe consequence on a bidder, may be difficult tosustain. [Para 24][965-A-B]

1.5 The case of the appellant is further fortified by eventhe language used in the show cause notice. The show causenotice itself, in the last paragraph, calls upon the appellant toshow cause as to why suitable action for blacklisting “should notbe initiated.” Pursuant to the response of the appellant, the nextstage would have been the initiation of the blacklisting process,if the explanation was not found satisfactory. The term used inthe blacklisting clause 20(i), on the other hand, talks about asituation where blacklisting has already been initiated. PlainEnglish words used must be given their ordinary grammaticalmeaning. It cannot be said that the show cause notice dated5.12.2017 itself amounted to the process of blacklisting havingalready been initiated. On both these accounts it cannot be saidthat the appellant would be disentitled to the contract. Insofaras the effect of the blacklisting order dated 22.2.2018 isconcerned, in the eventuality of respondent No.1 considering itproper to initiate certain action, that would have to be in termsof the guidelines for blacklisting of HPCL. The guidelines itselfshow that the ban would have prospective effect, for futurebusiness dealings. Thus, the same would have no application tothe tender awarded. [Paras 25-28][965-B-F]

1.6 Clause 8, dealing with business continuity, requires thesuccessful bidder to submit the transition plan to migrate to newplatform and facility with zero disruption of services, with respectto four aspects provided. In terms of clause 10(g), valid ISOCertificate for security and for business continuity have to beprovided. It is not in question that the appellant did submit acertificate of business continuity, as obtained from respondentNo.2. Respondent No.3 has sought to cast doubts on thisbusiness certificates, and the Division Bench, in terms of theimpugned order, also embarked on a course of inquiry into thiscertificate by calling upon parties to file their affidavits and hasthereafter taken a call to express its own doubts over thecertificate. Such a course of action was not permissible.[Paras 29-30][964-G-H; 966-A-B]

1.7 There are serious disputes relating to the allegationsmade by respondent No.3, which are rebutted by the appellant.

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AOpportunity had to be afforded to cross-examine the deponentswho had filed affidavits. This would really not be possible in writproceedings and could have only been determined in suitproceedings. There cannot always be a shortcut, through aprocess of writ proceedings under Article 226 of theConstitution of India, when such disputes exist. [Para 31]B[966-C-D]

1.8 If respondent No.1 itself had doubts on thecertificate, that would have been another matter. This is not soas is apparent from the affidavit filed by respondent No.1. In anycase, this aspect ought to have been left to the wisdom ofCrespondent No.1, rather than the Court embarking on the courseof action it followed, as if it was sitting in appeal over a decisionof respondent No.1. If respondent No.1 itself has any doubts onthese certificates, nothing prevented, nor still preventsrespondent No.1 from looking into this aspect. [Para 32]

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1.9 The contention of the counsel for respondent No.3that the interim order dated 7.1.2019 mandated respondent No.1to enquire into all these aspects, in pursuance of the directionscontained in the impugned order cannot be accepted. All thatEwas observed was that respondent No.1 “may” take a decision,but the interdict was against implementing it. Respondent No.1in its wisdom, as submitted has chosen not to proceed further,after issuance of notice to the appellant and has decided to awaitthe decision of this Court. It was not really within the domain ofthe High Court to have issued the direction, as it sought to do.FThe operative directions of the High Court to take appropriatedecisions, in the conspectus of the observations made, reallyamounts to directing respondent No.1 to breach its contract withthe appellant. No such direction ought to have been issued tocompel a breach of the contract by the appellant. Thus, theGimpugned order cannot be sustained even on this ground.[Paras 33-35][966-G-H; 967-A-C]

1.10 Normally parties would be governed by theircontracts and the tender terms, and really no writ would bemaintainable under Article 226 of the Constitution. In view ofHGovernment and Public Sector Enterprises venturing into economic activities, this Court found it appropriate to build incertain checks and balances of fairness in procedure. It is thisapproach which has given rise to scrutiny of tenders in writproceedings under Article 226 of the Constitution. It, however,appears that the window has been opened too wide as almostevery small or big tender is now sought to be challenged in writproceedings almost as a matter of routine. This in turn, affectsthe efficacy of commercial activities of the public sectors, whichmay be in competition with the private sector. This could hardlyhave been the objective in mind. An unnecessary, close scrutinyof minute details, contrary to the view of the tendering authority,makes awarding of contracts by Government and Public Sectorsa cumbersome exercise, with long drawn out litigation at thethreshold. The private sector is competing often in the same field.Promptness and efficiency levels in private contracts, thus, oftentend to make the tenders of the public sector a non-competitiveexercise. This works to a great disadvantage to the Governmentand the Public Sector. [Para 36][967-D-H]

1.11 The author of the document is the best person tounderstand and appreciate its requirements. In the facts of theinstant case, the view, on interpreting the tender documents, ofrespondent No.1 must prevail. Respondent No.1 itself,appreciative of the wording of clause 20 and the format, has takena considered view. Respondent No.3 cannot compel its owninterpretation of the contract to be thrust on respondent No.1,or ask the Court to compel respondent No.1 to accept thatinterpretation. It is possible that the author of the tender maygive an interpretation that is not acceptable to the ConstitutionalCourt, but that itself would not be a reason for interfering withthe interpretation given. The endeavours of courts to give theirown interpretation to contracts, more specifically tender terms,at the behest of a third party competing for the tender, ratherthan what is propounded by the party framing the tender isemphasised. The object cannot be that in every contract, wheresome parties would lose out, they should get the opportunity tosomehow pick holes, to disqualify the successful parties, ongrounds on which even the party floating the tender finds no merit.

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AThe observations made should be understood in the largercontext, so as to avoid situations similar to the one found in theimpugned order. [Paras 38, 42-43][968-C-E; 971-A-B]

Roshina T v. Abdul Azeez K.T. & Ors. (2019) 2 SCC329; Afcons Infrastructure Limited v. Nagpur Metro RailBCorporation Limited & Anr. (2016) 16 SCC 818 :[2016] 3 SCR 551 ; Nabha Power Limited (NPL) v.Punjab State Power Corporation Limited (PSPCL) &Anr. (2018) 11 SCC 508; Satya Jain (Dead) ThroughLRs. and Ors. v. Anis Ahmed Rushdie (Dead) ThroughLRs. & Ors. (2013) 8 SCC 131 : [2013] 3 SCR 319 –Creferred to.

Attorney General of Belize v. Belize Telecom Ltd.(2009) 1 WLR 1988 (PC) ; Moorcock (1889) LR 14PD 64 (CA) – referred to.

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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3588of 2019

FFrom the Judgment and Order dated 21-12-2018 of the High Courtof Judicature at Bombay in WP No. 608/2018.

Shyam Diwan, Sr. Adv., Shekhar Raj Sharma, S. Sagar, Ms. VibhaMahajan Seth and Jinendra Jain, Advs. for the Appellant.

K.V. Viswanathan, Sr. Adv., Aditya Kumar Choudhary, Arjun D.GSingh, Amit Kumar, R. Venkataraman, Rajesh Singh Chauhan, ParijatSinha, Ms. Reshmi Rea Sinha, Gaurav Ghosh, Rudra Dutta, Gopal Jain,Sanjay Kumar Visen, Advs. for the Respondent.

CARETEL INFOTECH LTD. v. HINDUSTAN PETROLEUMCORPORATION LTD. & ORS.

The Judgment of the Court was delivered by SANJAY KISHAN KAUL, J.

1. Leave granted.

2. Hindustan Petroleum Corporation Limited (respondent No.1)floated an e-public tender on 4.12.2017 for setting up call centres forreceiving, recording and replying to information enquiries and complaintsfrom LPG customers of IOC/HPC/BPC. The appellant participated inthe tender. Clause 20 of the tender reads as under:

“20. Black List/Ban/Holiday List

i. Bids received from parties who have been banned/blacklisted/put on holiday list or parties in respect of whom the action forblacklisting and holiday listing has been initiated by HPCL/anyGovernment/Quasi Government Agencies or PSUs, shall not beconsidered for either evaluation or for award of work. Offer ofVendor who has not submitted declaration on black listed or holi-day listed shall be considered as non-responsive and offer shallbe rejected.

ii. The bidder shall give a written declaration indicating that theyare not on holiday list/banned/blacklisted as on due date of thistender.”

3. The appellant was issued a show cause notice on 5.12.2017 inrespect of another tender, i.e., after floating of the tender, but beforesubmitting of the bid, for blacklisting on the allegation of furnishing falseinformation and bid documents, submitted for providing Kisan Call Cen-tre Services to the Department of Agriculture, Cooperation & FarmersWelfare, Ministry of Agriculture & Farmers Welfare, Government ofIndia.

4. The show cause notice alleged that on questions being raisedabout the correctness of information furnished by the appellant in the biddocuments regarding running of call centres at different locations, aninquiry was made through officers and despite further information beingsought, the same was not forthcoming. The operative portion of theshow cause notice reads as under:

“Accordingly, in the above circumstances a situation has,prima facie, emerged that M/s Caretel Infotech Pvt. Ltd. has A

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Aendeavoured to procure the above tender by providing false,misleading and wrong information. Therefore, the Departmenthereby issues notice to M/s Caretel Infotech Pvt. Ltd. to showcause as to why suitable action for blacklisting the firm (M/s.Caretel Infotech Pvt. Ltd.) should not be initiated. You arerequested to clarify your position within 7 (seven) days from theBdate of issue of this letter. Response received after expiry of theprovided time limit will not be entertained.”

(emphasis supplied)

5. The appellant submitted the bid in respect of the e-tender onC19.12.2017. In terms of clause 20 extracted aforesaid, a format hadbeen provided for the declaration to be made, which is as under:

“DECLARATION NON BLACKLISTED/NONBANNED/NON HOLIDAY LISTED PARTY

WE CONFIRM THAT WE HAVE NOT BEEN BANNEDDOR BLACK LISTED OR DELISTED OR HOLIDAYLISTED BY ANY GOVERNMENT OR QUASIGOVERNMENT AGENCIES OR PUBLIC SECTORUNDERTAKINGS

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Date: __________Name of Tenderer: _____________

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Place: _________Signature & Sealof Tenderer : _____________

Note: If a bidder has been banned by any Government orQuasi Government Agencies or Public SectorUndertakings, this fact must be clearly stated with details.GIf this declaration is not given along with the UNPRICEDBid, the tender will be rejected as non-responsive.”

The appellant submitted the declaration in terms aforesaid, i.e.,stating that the appellant had not been blacklisted by any Government orQuasi Government Agency or Public Sector Undertakings.

6. The appellant also submitted an undertaking, once again, in theprescribed form. The format of undertaking is as under:

“ON LETTER HEAD

Undertaking by the bidder

I/we hereby undertake that the entire information furnished/givento you in our bid and attachments are true to the best of our knowledgeand belief and nothing therein is false.

I/We further undertake, that if it is found during the tender stage(before accepting our bid/placement of Purchase Order by HPCL) thatany information or document furnished/submitted by us is false orincorrect, then we agree that HPCL shall be free to reject our tender/bid. If the same is found to be false or incorrect during any stage afteraccepting of our bid/placement of Purchase Order, then HPCL shallhave the right to summarily cancel our tender and procure the balancequantity from any alternate source. HPCL shall have the right to recoverthe differential amount between the rates of our contract and the ratesat which HPCL is compelled to procure from the alternate source, if thelatter rate is higher. To this effect, the recovery can be made by HPCLby encashing any bank guarantee that we may have submitted or fromany pending bills under this contract or any other contract with HPCL.Further HPCL shall be at liberty to take any appropriate action as deemedfit in such an eventuality.

I/we further undertake as and when called upon by HindustanPetroleum Corporation Limited, to produce, for its inspection, original(s)of the document(s) of which copies have been annexed hereto.

Date: __________Name of Bidder: _____________

7. Respondent No.1 evaluated the technical and financial bidsand declared the appellant as L-1 and respondent No.3 as L-2 on16.1.2018. The letter of acceptance of the tender awarded to theappellant was issued on 12.2.2018 for a value of Rs.791 lakh basic forservices to be rendered for a period of two years.

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A8. Respondent No.3 filed a writ petition in the Bombay High Courton 17.2.2018, assailing the declaration of the appellant as L-1. Thepurchase order in favour of the appellant confirming the terms ofcontract and mode of payment was issued on 21.2.2018. One day later,on 22.2.2018, the Ministry of Agriculture and Farmers Welfare passedan order blacklisting and debarring the appellant from participating inBany tender process of the Government of India, Ministry of Agricultureand Farmers’ Welfare for two years with effect from the date of issueof the order. This order was assailed by the appellant by filing a writpetition before the Delhi High Court, which was pleased to issue noticeon 9.3.2018, and we are informed that subsequently, on 12.3.2019, thatCpetition was dismissed and a Letters Patent Appeal filed against thesame is pending.

9. Respondent No.3, having become aware of the factum ofblacklisting of the appellant amended the petition to incorporate the saidfact. The writ petition was allowed by the impugned order of theDDivision Bench dated 21.12.2018.

10. The decision of the High Court is predicated on two facts –firstly the non-disclosure of the factum of the show cause notice issuedto the appellant amounted to violation of the undertaking. Linked to thisissue is that clause 20(iii) of the tender provided for an integrity pactE“ensuring transparency and fair dealing” and that integrity pact had beenduly signed and submitted by the appellant. Secondly, the Division Benchdoubted the compliance, by the appellant, of clause 8 read with clause10(g) of Section 4 of the tender. This controversy pertains to the clausedealing with the business continuity and the requirement of submitting avalid ISO certificate for the purpose of securing the tender. The rel-Fevant clauses read as under:

“8. Business Continuity

OMCs currently have an agreement for inbound calls with a ser-vice provider based in different Regions. The successful bidderGhas to submit the transition plan to migrate to new platform andfacility with “ZERO” disruption of services with respect to fol-lowing areas:

a) Toll-free services.

b) IVRS based call handling.

c) Diversion of call traffic at the successful bidder’s premises.

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d) Trained Operators at the time of Go-Live date.”

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“10. Other Mandatory Requirements:

g) Valid ISO Certification 27001 for security and ISO 2301 forBusiness Continuity.”

It is not disputed that the certificate of registration submitted bythe appellant was issued by Elite Certifications Pvt. Ltd., respondentNo.2. However, respondent No.3 sought to throw doubts on thecertificate and the High Court found reason to believe the same eventhough in the counter affidavit filed by respondent No.1 a stand wastaken to the contrary.

11. On 7.1.2019, notice was issued on the present appeal filedagainst the impugned order and an interim order was passed in thefollowing terms:

“In the meantime, Respondent No.1 (HPCL) may take adecision but not implement it. The petitioner may continue underthe contract until further orders.”

The result of the same is that the appellant has continued to giveservices under the contract now for almost more than thirteen (13) monthsout of the contract for two years and respondent No.1, though is statedto have issued a notice to the appellant in pursuance of the directionscontained in the impugned order, has deemed it fit not to proceed withthe inquiry and to await the verdict in the present appeal.

12. We have heard Mr. Shyam Diwan, learned senior counsel forthe appellant, Mr. K.V. Vishwanathan, learned senior counsel forrespondent No.3 and Mr. Parijat Sinha, learned counsel for respondentNo.1. The submissions on the two aspects advanced by learnedcounsel for the parties and our findings are recorded hereinafter.

Blacklisting:

13. Mr. Shyam Diwan, learned senior counsel for the appellantcontends that the impugned order misreads the blacklisting clause 20.

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AThe submission was that undoubtedly, the appellant could not have beencategorised as a party who has been banned/blacklisted/put on holidaylist. This is also in the context of the fact that such blacklisting hassevere consequences and the clause itself provided that non-submissionof declaration in the prescribed format would make the bid non-respon-sive and the offer would be rejected. In terms of clause 20(ii), theBwritten declaration had to be given as on the due date of the tender. Theformat in which this declaration was to be given was specified and wasnot left to the own words of the bidder. The format extracted aforesaidclearly stated that such declaration was required to be furnished only ifthe bidder had “been banned or black listed or delisted or holiday listed.”CThat position was not prevalent on the date of submission of the bid, on19.12.2017 as by that date only a show cause notice had been issued, on5.12.2017. The order of blacklisting was passed on 22.2.2018, after thedate of acceptance of the tender and placement of the purchase orderon the appellant, on 21.2.2018.D14. In the aforesaid context, it is also contended that ‘Annexure21’ lays down the ‘Guidelines for Holiday Listing (Banning of BusinessDealing)’. That occasion would arise if the tender awarding authority,i.e., respondent No.1 would have initiated any process and as per clause2.5, the banning was to be with prospective effect, i.e., for futurebusiness dealings. The contract in question, having already been placedEon the appellant, there can be no question of retrospective blacklisting ofthe appellant.

15. The second limb of the submission is based on clause 20(i) tothe extent it refers to “or parties in respect of whom the action forblacklisting and holiday listing has been initiated by HPCL/anyFGovernment/quasi Government agencies or PSUs.” This clause, it wassubmitted, had to be read with the wordings of the show cause notice.Undisputedly, the format in which the information had to be furnishedonly provided for an eventual blacklisting having taken place. Theoperative portion of the show cause notice, extracted aforesaid, statesG“why suitable action for blacklisting the firm (M/s. Caretel Infotech Pvt.Ltd.) should not be initiated.”[1] The requirement of clause 20(i) wasthe actual initiation. Thus, it was pleaded that blacklisting had not been“initiated” by mere issuing of the show cause notice, as the notice was

to show cause as to why proceedings should not be initiated, i.e., a priorstage.

16. On the other hand, Mr. Vishwanathan, learned senior counselfor respondent No.3, contended that the format was prescribed in thecontext of clause 20(ii), which was a case where blacklisting hadalready taken place, as on the due date of the tender. However, as perclause 20(i) there were four eventualities: (a) banned; (b) blacklisted;(c) put on holiday list; or (d) action for blacklisting or holiday listing hadbeen initiated. It was his submission that the present case was onewhere blacklisting had been, at least, initiated and, therefore, theappellant was duty bound to make a disclosure of this fact along with histender, not as per the format, but in terms of the undertaking to be givenby the bidder, which required full disclosure. That undertaking, it wassubmitted, was breached, as held by the impugned order.

17. Learned counsel further contended that the plea sought to beraised by the appellant, on the interpretation of clause 20(i), was noteven the case pleaded by the appellant in their challenge to theblacklisting order, in their writ petition, but what was pleaded there wasonly the absence of an opportunity of hearing.

18. In the alternative, learned counsel also sought to contend thatrespondent No.1 had not complied with the interim directions, at thestage of issuing notice on 7.1.2019, and ought to have implemented theimpugned order and held an inquiry and that inquiry report ought to havebeen placed before the Court.

19. On the other hand, learned counsel for respondent No.1submitted that respondent No.1 had, in its wisdom, stayed its hand afterissuance of notice in pursuance to the impugned order and preferred toawait the decision of this Court.

20. On careful consideration of the rival submissions, we are ofthe view that there is force in the contention of learned counsel for theappellant. We are, in fact, in agreement with both the aspects, i.e., theinterpretation of clause 20 read with the format, as well as with theeffect of the show cause notice.

21. It is no doubt true that clause 20 does provide for foureventualities, as submitted by learned counsel for respondent No.3. The A

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Apresent case is not one where on the date of submission of the tenderthe appellant had been banned, blacklisted or put on holiday list. Thequestion before us, thus, would be the effect of an action for blacklistingand holiday listing being initiated. The declaration to be given by thebidder is specified in clause 20(ii), which deals with the first threeaspects. The format enclosed with the tender documents also refersBonly to these three eventualities. It is not a case where no specificformat is provided, where possibly it could have been contended that thedisclosure has to be in respect of all the four aspects. The formathaving beenprovided, if initiation of blacklisting was to be specified,then that ought to have been included in the format. It cannot be saidCthat the undertaking by the appellant made it the bounden duty of theappellant to disclose the aspect of a show cause notice for blacklisting.We say so as there is a specific clause with the specific format providedfor, requiring disclosures, as per the same.

22. It may be possible to contend that the format is not correctlyDmade. But then, that is the problem of the framing of the format byrespondent No.1. It appears that respondent No.1 also, faced with thefactual situation, took a considered view that since clause 20(i) providedfor the four eventualities, while the format did not provide for it, theappellant could not be penalised. May be, for future the format wouldrequire an appropriate modification!E

23. If we refer to the undertaking submitted by the appellant allthat it states is that the information furnished in the bid and attachmentsare true to the best of the knowledge and belief of the bidder. In caseany false or incorrect information is submitted, the bid can be rejected.It cannot be said that there is any false information given by theFappellant as to violate the stated condition 4 of clause 20(i). We maylook at another angle of the same issue, i.e., the integrity pact providedfor in clause 20(iii) with the format thereof, a detailed one. The integritypack provided that the “parties shall make certain commitments to eachother in regard to ensuring transparency and fair dealing in theGprocurement activities of the Corporation.” The duly signed integritypact is an essential condition for a valid bid. This clause, thus, deals withthe transparency and fair dealing of the activities carried out under thetender were it to be awarded insofar as the procurement activities areconcerned. Once again, this would not have any relevance to the statedfourth part of clause 20(i).H

24. We may also look at this aspect from another perspective.Blacklisting has very serious consequences. A show cause notice mayresult in blacklisting or may not result in blacklisting. The mere showcause notice being issued, to visit such a severe consequence on abidder, may be difficult to sustain.

25. The case of the appellant is further fortified by even thelanguage used in the show cause notice. The show cause notice itself,in the last paragraph, calls upon the appellant to show cause as to whysuitable action for blacklisting “should not be initiated.” Pursuant to theresponse of the appellant, the next stage would have been the initiationof the blacklisting process, if the explanation was not found satisfactory.The term used in the blacklisting clause 20(i), on the other hand, talksabout a situation where blacklisting has already been initiated. PlainEnglish words used must be given their ordinary grammatical meaning,an aspect discussed in a little more detail hereinafter.

26. Thus, it is difficult to accept the submission of learnedcounsel for respondent No.3 that the show cause notice dated 5.12.2017itself amounted to the process of blacklisting having already beeninitiated.

27. On both these accounts it cannot be said that the appellantwould be disentitled to the contract.

28. Insofar as the effect of the blacklisting order dated 22.2.2018is concerned, in the eventuality of respondent No.1 considering it properto initiate certain action, that would have to be in terms of the guidelinesfor blacklisting of HPCL. The guidelines itself show that the ban wouldhave prospective effect, for future business dealings. Thus, the samewould have no application to the tender awarded.

Business Continuity Certificate:

29. The second reason which found favour with the High Courtwas the doubts created by respondent No.3 over the BusinessContinuity Certificate filed by the appellant. Clause 8, dealing withbusiness continuity, requires the successful bidder to submit thetransition plan to migrate to new platform and facility with zerodisruption of services, with respect to four aspects providedhereinbefore. In terms of clause 10(g), valid ISO Certificate 27001 forsecurity and ISO 2301 for business continuity have to be provided. It is A

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Anot in question that the appellant did submit a certificate of businesscontinuity, as obtained from respondent No.2.

30. Respondent No.3 has sought to cast doubts on this businesscertificates, and the Division Bench, in terms of the impugned order, hasalso embarked on a course of inquiry into this certificate by calling uponBparties to file their affidavits and has thereafter taken a call to expressits own doubts over the certificate. In our view, such a course of actionwas not permissible.

31. There are serious disputes relating to the allegations made byrespondent No.3, which are rebutted by the appellant. Opportunity hadCto be afforded to cross-examine the deponents who had filed affidavits.This would really not be possible in writ proceedings and could haveonly been determined in suit proceedings. There cannot always be ashortcut, through a process of writ proceedings under Article 226 of theConstitution of India, when such disputes exist. We may usefully referto the observations of this Court in Roshina T v. Abdul Azeez K.T. &DOrs.,[2] opining that the writ jurisdiction under Article 226 of theConstitution of India is not intended to replace ordinary remedies byway of a civil suit, and this jurisdiction should not be exercised casuallyor lightly on mere asking by the litigant.

32. We may notice another important aspect also, i.e., reluctanceEof respondent No.1 to accept the allegations of respondent No.3. Ifrespondent No.1 itself had doubts on the certificate, that would havebeen another matter. This is not so as is apparent from the affidavit filedby respondent No.1. In any case, at best, this aspect ought to have beenleft to the wisdom of respondent No.1, rather than the Court embarkingFon the course of action it followed, as if it was sitting in appeal over adecision of respondent No.1. We may add that if respondent No.1 itselfhas any doubts on these certificates, nothing prevented, nor stillprevents respondent No.1 from looking into this aspect.

33. We do not agree with the contention of learned senior counselGfor respondent No.3 that the interim order dated 7.1.2019 mandatedrespondent No.1 to enquire into all these aspects, in pursuance of thedirections contained in the impugned order. All that was observed wasthat respondent No.1 “may” take a decision, but the interdict was againstimplementing it. Respondent No.1 in its wisdom, as submitted by learned H2 (2019) 2 SCC 329

counsel for respondent No.1, has chosen not to proceed further, afterissuance of notice to the appellant and has decided to await the decisionof this Court. We have already come to the conclusion that it was notreally within the domain of the High Court to have issued the direction,as it sought to do.

34. The operative directions of the High Court, as contained inpara 47 of the judgment, to take appropriate decisions, in the conspectusof the observations made, really amounts to directing respondent No.1to breach its contract with the appellant. We are of the view that, thus,no such direction ought to have been issued to compel a breach of thecontract by the appellant.

35. We, thus, are unable to sustain the impugned order even onthis ground.

Epilogue:

36. We consider it appropriate to make certain observations in thecontext of the nature of dispute which is before us. Normally partieswould be governed by their contracts and the tender terms, and really nowrit would be maintainable under Article 226 of the Constitution ofIndia. In view of Government and Public Sector Enterprises venturinginto economic activities, this Court found it appropriate to build in certainchecks and balances of fairness in procedure. It is this approach whichhas given rise to scrutiny of tenders in writ proceedings under Article226 of the Constitution of India. It, however, appears that the windowhas been opened too wide as almost every small or big tender is nowsought to be challenged in writ proceedings almost as a matter ofroutine. This in turn, affects the efficacy of commercial activities of thepublic sectors, which may be in competition with the private sector. Thiscould hardly have been the objective in mind. An unnecessary, closescrutiny of minute details, contrary to the view of the tenderingauthority, makes awarding of contracts by Government and PublicSectors a cumbersome exercise, with long drawn out litigation at thethreshold. The private sector is competing often in the same field.Promptness and efficiency levels in private contracts, thus, often tend tomake the tenders of the public sector a non-competitive exercise. Thisworks to a great disadvantage to the Government and the Public Sector.

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A37. In Afcons Infrastructure Limited v. Nagpur Metro RailCorporation Limited & Anr.[3], this Court has expounded further on thisaspect, while observing that the decision making process in accepting orrejecting the bid should not be interfered with. Interference ispermissible only if the decision making process is arbitrary or irrationalto an extent that no responsible authority, acting reasonably and inBaccordance with law, could have reached such a decision. It has beencautioned that Constitutional Courts are expected to exercise restraintin interfering with the administrative decision and ought not to substitutetheir view for that of the administrative authority. Mere disagreementwith the decision making process would not suffice.

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38. Another aspect emphasised is that the author of the documentis the best person to understand and appreciate its requirements. In thefacts of the present case, the view, on interpreting the tenderdocuments, of respondent No.1 must prevail. Respondent No.1 itself,appreciative of the wording of clause 20 and the format, has taken aDconsidered view. Respondent No.3 cannot compel its owninterpretation of the contract to be thrust on respondent No.1, or ask theCourt to compel respondent No.1 to accept that interpretation. In fact,the Court went on to observe in the aforesaid judgment that it is possiblethat the author of the tender may give an interpretation that is notacceptable to the Constitutional Court, but that itself would not be aEreason for interfering with the interpretation given. We reproduce theobservations in this behalf as under:

“15. We may add that the owner or the employer of a project,having authored the tender documents, is the best person tounderstand and appreciate its requirements and interpret itsFdocuments. The constitutional courts must defer to this under-standing and appreciation of the tender documents, unless thereis mala fide or perversity in the understanding or appreciation orin the application of the terms of the tender conditions. It ispossible that the owner or employer of a project may give anGinterpretation to the tender documents that is not acceptable tothe constitutional courts but that by itself is not a reason forinterfering with the interpretation given.”

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39. We may also refer to the judgment of this Court in NabhaPower Limited (NPL) v. Punjab State Power Corporation Limited(PSPCL) & Anr.,[4] authored by one of us (Sanjay Kishan Kaul, J.). Thelegal principles for interpretation of commercial contracts have beendiscussed. In the said judgment, a reference was made to theobservations of the Privy Council in Attorney General of Belize v. BelizeTelecom Ltd.[5] as under:

“16. Before discussing in greater detail the reasoning of the Courtof Appeal, the Board will make some general observations aboutthe process of implication. The court has no power to improveupon the instrument which it is called upon to construe, whether itbe a contract, a statute or articles of association. It cannotintroduce terms to make it fairer or more reasonable. It is concernedonly to discover what the instrument means. However, thatmeaning is not necessarily or always what the authors or partiesto the document would have intended…”

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“19. .....In Trollope & Colls Ltd. v. North West MetropolitanRegional Hospital Board [1973] 1 WLR 601, 609 Lord Pearson,with whom Lord Guest and Lord Diplock agreed, said:

“the court does not make a contract for the parties. The courtwill not even improve the contract which the parties have madefor themselves, however desirable the improvement might be.The court’s function is to interpret and apply the contract whichthe parties have made for themselves. If the express termsare perfectly clear and free from ambiguity, there is no choiceto be made between different possible meanings: the clearterms must be applied even if the court thinks some other termswould have been more suitable. An unexpressed term can beimplied if and only if the court finds that the parties must haveintended that term to form part of their contract: it is not enoughfor the court to find that such a term would have been adoptedby the parties as reasonable men if it had been suggested tothem: it must have been a term that went without saying, aterm necessary to give business efficacy to the contract, a 4 (2018) 11 SCC 508

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Aterm which, though tacit, formed part of the contract whichthe parties made for themselves.”

40. Nabha Power Limited (NPL)[6] also took note of the earlierjudgment of this court in Satya Jain (Dead) Through LRs. and Ors.vs. Anis Ahmed Rushdie (Dead) Through LRs. and Ors.[7], whichBdiscussed the principle of business efficacy as proposed by Bowen, L.J.in the Moorcock[8]. It has been elucidated that this test requires thatterms can be implied only if it is necessary to give business efficacy tothe contract to avoid failure of the contract and only the bare minimumof implication is to be there to achieve this goal. Thus, if the contractmakes business sense without the implication of terms, the courts willCnot imply the same.

41. The judgment in Nabha Power Limited (NPL)[9] concludedwith the following observations in para 72:

“72. We may, however, in the end, extend a word of caution. ItDshould certainly not be an endeavour of commercial courts tolook to implied terms of contract. In the current day and age,making of contracts is a matter of high technical expertise withlegal brains from all sides involved in the process of drafting acontract. It is even preceded by opportunities of seekingclarifications and doubts so that the parties know what they areEgetting into. Thus, normally a contract should be read as it reads,as per its express terms. The implied terms is a concept, which isnecessitated only when the Penta-test referred to aforesaid comesinto play. There has to be a strict necessity for it. In the presentcase, we have really only read the contract in the manner it reads.FWe have not really read into it any ‘implied term’ but from thecollection of clauses, come to a conclusion as to what thecontract says. The formula for energy charges, to our mind, wasquite clear. We have only expounded it in accordance to itsnatural grammatical contour, keeping in mind the nature of thecontract.”

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42. We have considered it appropriate to, once again, emphasisethe aforesaid aspects, especially in the context of endeavours of courtsto give their own interpretation to contracts, more specifically tenderterms, at the behest of a third party competing for the tender, rather thanwhat is propounded by the party framing the tender. The object cannotbe that in every contract, where some parties would lose out, they shouldget theopportunity to somehow pick holes, to disqualify the successfulparties, on grounds on which even the party floating the tender finds nomerit.

43. The observations made aforesaid should be understood in thelarger context, so as to avoid situations similar to the one we find in theimpugned order.

Conclusion:

44. The result of the aforesaid discussion is that the impugnedorder is set aside and the writ petition filed by respondent No.3 isaccordingly dismissed.

45. The appeal is accordingly allowed, leaving the parties to beartheir own costs.

Nidhi Jain

Appeal allowed.

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