Mahindra Sanyo Special Steel Private Limited vs Union Of India

The appellant, an unsuccessful bidder, filed the Writ Petition No.14847/2018, which was dismissed by the Writ Court vide its order dated 27.8.2018.

The appellant - petitioner filed this writ petition for issuance of a writ of mandamus to the Rail Wheel Factory, Indian Railways - the respondent No. 2

- to include and consider the appellant - petitioner's' bid in respect of Tender No.201710849. The appellant also prayed for an alternative relief of

declaration that the tender proceedings under Tender No.201710849 are illegal, and for issuance of a writ of mandamus directing the respondent No. 2

to re-issue fresh tender for the supplies in respect of which bids were invited under Tender No. 201710849.

Briefly the facts of the case are that on 21.2.2018, the respondent No. 2 issued a tender notification in Tender No.201710849 inviting online bids for

supply of 'Round Corner Square Steel Blooms' of various sizes. The interested participants were called upon to submit their respective bids online via

an IT application known as 'Indian Railways E-Procurement System' (for short, 'IREPS') developed and maintained by Center for Railway

Information Systems (for short, 'CRIS') - a Society incorporated by the Ministry of Railways. It was inter alia notified that the closing date and time

for receipt of bids would be fixed as 2.4.2018 at 14:15 hours.

It is the appellant's case that the appellant has been regularly supplying specific products to the respondent No.2. The appellant has been

participating in different tender auctions conducted by the respondent No.2 from 1989 onwards. The appellant has set up a manufacturing facility in an

extent of 92.31 acres of land at Khopoli, Maharashtra investing over Rs.500 crores and employing about 2000 workmen. The appellant participated in

the bid because it possessed the requisite technical capabilities to enter into contract for supply of the tendered goods. The appellant effected the

transfer of EMD on 30.3.2018, and commenced uploading the other details on 2.4.2018 at about 9:30 hours. The appellant could not quickly upload the

necessary details because the server of the respondent No. 2 was responding slowly. The appellant completed uploading the financial offer, the

penultimate stage of the bid submission process, at 11:31 hours. The only other process to be completed by the appellant was to check the relevant

Box on the Website of the respondent No.2 to confirm acceptance of the declaration and click the 'submit' button on such website. The appellant

could check the Box for confirmation of acceptance of the declaration only at 1:01 hours as the server of the respondent No. 2 continued to respond

slowly. The appellant also clicked on the 'submit' button. As such, the submit button turned from 'black' to ‘grey’.

However, the server of the respondent No. 2 did not respond because of an encryption error which could not be attributed to the appellant. The

appellant contacted CRIS over the telephone, and informed that the appellant had not received the acknowledgement message for submission of its

bid. CRIS informed the appellant that because the appellant had clicked on 'Encrypt and Submit' hyperlink, the appellant could rest assured that its bid

had been submitted and necessary acknowledgement message would be received over some time. When the appellant did not receive such

acknowledgement message, on 2.4.2018, the appellant submitted a physical copy of its bid in a sealed envelope. The appellant communicated to the

respondent No. 2 over e-mail about non-receipt of submission acknowledgement message and filing of a physical copy of the bid in a sealed envelope.

The appellant was later orally informed by the respondent No. 2 that the appellant's bid was not being considered as it was not duly submitted.

Therefore, the appellant filed the writ petition for the relief/s enumerated above.

The Union of India (respondent No. 1) and respondent No. 2 were notified of the writ petition. These respondents filed objection statements

denying the assertions made by the appellant. These respondents specifically contended that the tender participants were informed that the respondent

No. 2 would not be responsible for any technical problems that may be caused on the day of closing of the tender. Therefore, the appellant could not

assert any right alleging that there were any glitches at the eleventh hour of submission. The respondents asserted that, in fact, there were no glitches

on its website/server emphasising that, on 2.4.2018, 273 bids were received between 13:45 and 14:15 hours, and 1476 bids were received between

11:30 and 14:15 hours. They emphasized that if, indeed, there were any glitches as asserted by the appellant, these other bids could not have been

received.

The respondents relied upon an affidavit dated 19.6.2018 filed by General Manager/VIMS, CRIS. This affidavit was filed refuting the assertions

made by the appellant, and placing on record the chronology of the appellant's submission. Further, the step-by-step process of uploading of the tender

documents is also detailed in the affidavit. It is stated in the affidavit that the appellant started the bid submission process on 30.3.2018 by making

payment towards EMD. The appellant started uploading supporting documents on 1.4.2018. The first of the supporting documents was uploaded on

1.4.2018 and the last of the supporting documents was uploaded on 2.4.2018. The appellant entered and exited the bidding online interface several

times during this period. The appellant clicked 'Encrypt and Submit’ button at 13:45 hours on 2.4.2018. However, CRIS server did not receive

relevant information to perform CRIS side (Server side) validation necessary for completion of the bid submission.

Further, in the step-by-step explanation it is stated that immediately upon a client (a bidder) clicking the 'Encrypt and Submit' button, the client's (the

bidder's) system transmits some information to the CRIS server to perform a few CRIS side (server side) validation to confirm that (a) User's session

has not expired, (b) the bidder (client) has uploaded all mandatory documents stipulated in the tender, and (c) the count of the supporting documents

uploaded by the bidder is equal to the number of documents already uploaded on CRIS server. If any of the aforesaid validation from the server

(CRIS) side fails, the bid submission process would not be successful, and an appropriate message will be sent to the bidder on his computer screen.

If, on the other hand, the aforesaid validations were successful, CRIS server returns success message to the bidder's computer. Then the bid data

uploaded by the bidder (client) gets encrypted on the client's (bidder's) computer/machine, and later the web signer window opens automatically. If the

client's (bidder's) computer/machine is not connected to the Internet at the time of clicking 'Encrypt and Submit' button, the client's (bidder's)

computer/machine will not be able to either send, or receive relevant information from the CRIS server. The bid data is received by this CRIS only

after the data is encrypted on the client's (bidder's) computer/machine. In the case of the appellant, the encrypted bid data is not received by the CRIS

server from the appellant's computer, and that could be either because the appellant's computer had no Internet connection at the relevant point of

time, or because the appellant closed the signer window.

The Writ Court, after referring to the decision of the Hon'ble Supreme Court1 on the scope of judicial review in tender matters, concluded that the

judicial review under Article 226 of the Constitution of India in tender matters is confined to examining whether there was any infirmity in the decision

making process or not. Therefore, the courts would be hesitant TATA Celluar Limited vs. Union of India - AIR 1996 SC 11 and Sterling Computers

vs. M/s M & N Publications Limited and others - AIR 1996 SC 945 to interfere with tender process unless the decision making process is shown to

be flawed. The Writ Court concluded that the appellant was not able to establish any such flaw. Further, the Writ Court concluded that CRIS - an

expert - had certified that there were no technical glitches on its side in receiving online bids. As such, the court cannot sit in judgement over such

expert's evaluation under Article 226 of the Constitution of India. The Writ Court also considered the appellant's case in the background of the Hon'ble

Supreme Court's decision in Maharashtra Housing Development Authority Vs Shapoorji Pallonji and Company Private Limited and Others AIR 2018

SC Page 945 wherein the Hon'ble Supreme Court has held the absence of any glitches the technology would strongly indicate that the bid submitted

by the bidder was not a valid bid. Therefore, any direction issued in favour of the bidder in such an event would amount to conferring a second

opportunity which cannot be countenanced in law.

Mr. Uday Holla, the learned Senior Counsel appearing on behalf of the appellant canvassed the following grounds:-

Firstly, the respondents, in the affidavit dated 22.6.2018 filed by the representative of CRIS have admitted that 'access logs of IREPS Web server

indicate that the encrypt and submit button was clicked from the petitioner's public IP address at 13:45 hours on 2.4.2018.....', 'that whenever the

encrypt and submit button is clicked on the IREPS bidding page, the IREPS Web server creates an access log containing 3 lines' and that 'such log

was generated at 13:45 hours on 2.4.2018 with the same public address that was used by the petitioner to upload their supporting documents'. In the

face of these admissions, the onus of establishing that the appellant had failed to submit the bid validly rested with the respondents. But, such access

logs were neither produced, nor disclosed. The aforementioned admissions and the failure to furnish the details of the access logs, indicate that the

appellant had, indeed, submitted its bid validly.

Secondly, the appellant had produced details of the call logs (and emails) to demonstrate that the appellant had, indeed, contacted CRIS after clicking

on 'Encrypt and Submit' button, and its Internet connection was working. These circumstances established that there could not have been any glitch

from the appellant's side; the glitch ought to be with the CRIS Server.

Thirdly, the appellant's bid is not considered solely on the ground that it has not been validly submitted. The appellant has not only the requisite

expertise and experience in the concerned field, but was also a regular supplier of the material to respondent No. 2. The appellant did not suffer any

ineligibility or disqualification. The appellant had submitted a competitive bid. But the respondent No. 2 had excluded the appellant from the

competitive bidding process and eliminated competition in as much as the respondent No. 2, after invalidating the appellant's bid, had finalised the

purchase order in favour of the sole vendor.

3 Fourthly, the purpose of inviting tenders is to encourage competition in trade which sub-serves the larger public interest. The object of judicial

scrutiny under Article 226 of the Constitution of India is to safeguard such larger public interest. Exclusion of competition is an exception, and the

general rule is to permit every person to participate in the competitive process of tender subject to eligibility and qualification. He placed reliance upon

a decision of a learned Single Judge of this Court in Electronic Enterprises versus Karnataka Power Corporation Ltd Reported in ILR 1994 Kar. 125

in this regard.

Fifthly, the learned Senior Counsel also laid emphasis on the COMMON IRREGULARITIES/LAPSES OBSERVED IN STORES/PURCHASE

CONTRACTS AND GUIDELINES FOR IMPROVEMENT IN THE PROCURE TREATMENT SYSTEM issued by the Central Vigilance

Commission, Government of India to stress that in cases of proprietary purchases, the procuring authority, must place on record the detailed

justification for purchase from a single vendor. In the present case, the exclusion of the appellant on the ground that he is not validly submitted its bid,

has resulted in proprietary purchase from a single vendor. But, the respondents have not justified such purchase from a single vendor.

Mr. N S Sanjay Gowda, the learned counsel for the respondent No. 2, argued in support of the impugned order contending that the appellant's

assertion that the appellant by clicking on 'Encrypt and Submit' button at 13:45 hours on 2.4.2018 had submitted the bid validly, and the glitches were

on the CRIS server cannot be countenanced essentially for two reasons. The respondent No.2/ CRIS, between 11:30 and 14:15 hours had received

1476 bids, and more specifically between 13:45 and 14:15 hours the respondent No. 2 had received 273 bids. If there were to be any glitches on the

CRIS server, it could not be possible that these number of bids could have been received. The learned counsel emphasised that, the fact that during

the relevant period of time the bids by other participants were successfully received and appropriate acknowledgements generated in that regard

would strongly indicate that the appellant had not submitted a valid bid. If in such circumstance, the writ petition were to be allowed, it would

tantamount to affording a second opportunity to the appellant which would be impermissible in law. The counsel relied upon the decision of the Hon'ble

Supreme Court in Shapoorji Pallonji and Company Private Limited and Others (supra) to emphasise that in similar circumstances, the Hon'ble

Supreme Court had held against the bidder who had not submitted a valid bid, and no second opportunity could be extended.

Further, the learned counsel contended that the respondent No.2 had placed on record the affidavit of an authorised representative of CRIS to

demonstrate how the documents are not automatically uploaded on the CRIS server merely because the appellant had clicked on 'Encrypt and Submit'

button. He laid emphasis on the contents of Para 3 of the affidavit filed by the representative of CRS in this regard.

The entire controversy revolves around whether the appellant is justified in contending that with the clicking of Encrypt and Submit button at 13:45

hours on 2.4.2018, the appellant had successfully uploaded all the tender documents to make a valid submission, or not? And whether the appellant

should be afforded a second opportunity either by cancelling the entire tender process, or directing the respondent No. 2 to consider the physical copy

(hard copy) of the tender documents submitted by the appellant on 2.4.2018 but after 14:15 hours, the notified closing hours, or not?.

In view of the affidavit dated 9.6.2018, filed by the representative of CRIS, it is beyond the pale of dispute that the appellant had indeed clicked on

'Encrypt and Submit' button. The relevant part of the affidavit dated 9.6.2016 reads as follows:

That the access log of IREPS web serve indicate that the Encrypt & Submit button was clicked from the petitioner's public IP address at 13:45 hrs

on 2.4.2018 most probably against the impugned tender.

However, in this detailed affidavit, the representative of CRS, a domain expert, has explained that immediately on clicking the Encrypt and Submit

button, the appellant's computer/machine transmits only certain information to the CRIS server to perform a few validations without the actual transfer

of bid data. If such validation is successful, the CRIS server corresponds with the client's (bidder's) computer/machine, and the relevant signer

window opens. The client/bidder must select its own digital certificate on this signer window. If the client/bidder has selected the correct certification,

the signing process gets completed, and the encrypted bid data is transmitted to the CRIS server. Thereafter, a confirmation message is sent to the

client/bidder. These steps were completed in so far as 273 bids submitted between 13:45 and 14:15 hours. However, in the case of the appellant, the

first step of validation was successful, but the subsequent steps had not begun. It could only be because of the glitches on the appellant's

computer/machine. If, indeed, there were any glitches on the CRIS server, 273 bids could not have been received during this period between 13:45

and 14:15 hours.

These details are placed on record by an affidavit filed by the representative of CRIS, which has developed, and is maintaining, the IREPS -an IT

application for handling electronic tenders of Indian Railways. If these statements are accepted, it would undeniably be that the appellant could not,

indeed, upload the tender documents, which would be necessary for a valid submission. Further, it is also not disputed that between 13:45 hours and

14:15 hours, 273 bids were received by CRIS. If these 273 bids could be received, and acknowledgements therefor sent via IREPS, but the appellant

is unable to complete the process and receive acknowledgement in that regard, and an expert has opined that the appellant may not have been able to

complete the submission because of the circumstances delineated in the affidavit, the Courts, as rightly concluded by the Writ Court, under Article 226

of the Court Constitution of India would not examine the validity of the expert's evaluation. Further, the exercise of evaluating such expert's opinion on

the ground that the appellant contacted CRIS over telephone and the appellant was assured that it would receive necessary acknowledgement over a

period of time, or on the ground that the appellant had sent emails during the relevant period which would demonstrate its computer/machine was

working, would be even more tenuous for obvious reasons.

In Shapoorji Pallonji and Company Private Limited and Others (Supra) the Hon'ble Supreme Court has held that the generation of

acknowledgements in respect of other bidders would strongly indicate that the bid submitted was not a valid bid, and directions issued, in that case, to

Maharashtra Housing Development Authority, the tendering authority, to inter alia consider the bid submitted as a valid bid would tantamount to a

second opportunity which cannot be countenanced. This Court is of the considered opinion that this proposition would apply squarely in the facts and

circumstances of this case. Therefore, it cannot be accepted that the appellant had submitted a valid bid with clicking of the 'Encrypt and Submit'

button at 13:45 hrs on 2.4.2018 and that the appellant should be given a second opportunity. As such, no grounds are made out for interference with

the Writ Court’s impugned order in this intra-Court appeal. Accordingly, the writ appeal is rejected.