Punya Coal Road Lines vs Madhya Pradesh Power Generating Co. Ltd. And Others

Vijay Kumar Shukla, J

Heard on admission.

The present writ petition is filed under Article 226 of the Constitution of India challenging condition No.C(v) of the Notice Inviting Tender (NIT)

and sub-clause (g) of Clause 1.20 of the bid document whereby it is provided that the bidder who has been declared blacklisted/debarred from

participating in the tender by the State owned Power Generating Companies/NTPC/Govt./PSUs in India on the date of submission of tender, would

not be eligible to submit tender.

The factual expose’ in a nutshell is that the petitioner-company along with its joint venture was blacklisted by the Central Coalfields Ltd. at

Ranchi (Jharkhand) due to non-performance of the contract, for a period of three years vide order dated 13-9-2017. The said order of blacklisting is

under challenge in Writ Petition (C) No.6151/2017 before the High Court of Jharkhand at Ranchi. It is submitted that the said writ petition is still

pending for adjudication. Learned counsel appearing for the petitioner submitted that the aforesaid condition is arbitrary, unreasonable and violative of

Fundamental Rights guaranteed under Articles 14 and 19(1)(g) of the Constitution of India. Further, the aforesaid condition has been incorporated with

a motive to extend benefit to some tenderers. It is also contended that it is an onerous condition. To substantiate his contention, learned counsel for the

petitioner has placed reliance on the judgments of the Apex Court rendered in the cases of B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd. and

others, (2006) 11 SCC 548 and Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited and another, (2016) 16 SCC 818

We do not find any merit in the aforesaid contentions. The Apex Court in the case of Michigan Rubber (India) Limited vs. State of Karnataka and

others, (2012) 8 SCC 216 dealing with the scope of interference in the matter of tender conditions ruled thus:

“23. From the above decisions, the following principles emerge:

(a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play.

These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any

ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;

(b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for

striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy

standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;

(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State

authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not

warranted;

(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to

successfully execute the work; and

(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very

restrictive since no person can claim fundamental right to carry on business with the Government.

Therefore, a Court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following

questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or

decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in

accordance with relevant law could have reachedâ€​; and

(ii) Whether the public interest is affected. If the answers to the above questions are in negative, then there should be no interference under Article

226.â€​

In the case of Siemens Aktiengeselischaft and Siemens Ltd. vs. Delhi Metro Rail Corporation Ltd. and another, (2014) 11 SCC 28 8the Supreme

Court quoted from the judgment reported as (1994) 6 SCC 651 (Tata Cellular v. Union of India) and (2007) 14 SCC 517 (Jagdish Mandal v. State of

Orissa) to hold as under:

“23. There is no gainsaying that in any challenge to the award of contact before the High Court and so also before this Court what is to be

examined is the legality and regularity of the process leading to award of contract. What the Court has to constantly keep in mind is that it does not sit

in appeal over the soundness of the decision. The Court can only examine whether the decision making process was fair, reasonable and transparent.

In cases involving award of contracts, the Court ought to exercise judicial restraint where the decision is bona fide with no perceptible injury to public

interest.â€​

In the case of Montercarlo Ltd. vs. N.T.P.C Ltd., (2016) 15 SCC 272 it was held that in the competitive commercial field in the matter of award of

contract through tender, the conditions regarding bidder’s expertise and technical capability and capacity are decided by the experts. In the matter

of financial assessment, consultants are appointed. It is because to check and ascertain that technical ability and the financial feasibility have

sanguinity and are workable and realistic.

In the case of Afcons Infrastructure Ltd. (supra) it was held that the owner or the employer of a project, having authored the tender documents, is

the best person to understand and appreciate its requirements to achieve the work which is sought to be executed. The constitutional Courts must

defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in

the application of the terms of the tender conditions.

A co-ordinate Bench of this Court in a recent judgment passed in Mahavir Coal Resources Pvt. Ltd. vs. M.P. Power Generating Co. Ltd. and

others [W.P. No.9000/2019, decided on 2-5-2019] has held that in the matter of formulating conditions of a tender document and awarding contract,

greater latitude is required to be conceded to the authorities unless the action of the authority is found to be malicious and the process adopted or

decision made by the authority is irrational or arbitrary or is vitiated by him by favouratism or malafide.

The principle deducible from the above discussion, is that interference by the Courts in such matter is required only when the decision taken by the

authority is irrational or arbitrary, or is vitiated by bias, favouratism or malafide.

In view of the aforesaid, we do not perceive any illegality or arbitrariness in the Condition No.C(v) of the NIT and Sub-clause (g) of Clause 1.20

of the bid document warranting interference in exercise of power of judicial review under Article 226 of the Constitution of India.

Ex-consequenti, the writ petition being sans substance, is hereby dismissed. There shall be no order as to costs.