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Judgment
Category,Project/Construction experience on Eligible Projects,Factors,
1,"Project in Highway sector that qualify under Clause
2.2.2.6 (i)",1,
2,"Project in core sector that qualify under Clause
2.2.2.6 (i)",0.70,
3,"Construction in Highway sector that qualify under
Clause 2.2.2.6 (ii)",1,
4,"Construction in core sector that qualify under Clause
2.2.2.6 (ii",0.70,
Clause No.,Clause,Query,Reply
Clause 2.2.2.2 (ii) and
Clause 2.2.2.5 (i)","Provided that at least one
similar work of 25% of
Estimated Project Cost Rs.
84.16 crore shall have
been completed from the
eligible Projects in
category 1 and/or
Category 3 specified in
Clause 2.2.2.5. For this
purpose, a project shall
be considered to be
completed, if more than
90% of the value of work
has been completed and
such completed value of
work is equal to or more
than 25% of the estimated
project cost.","As per clause 2.2.2.5 (i),
Railway works are under
category 1 & 3.
Request you to clarify
whether construction of
Railway tracks are
considered as similar
work for eligibility criteria
?
I n continuation to the
above, please clarify the
completion date for the
certificate should be
current year before the
bid submission or
previous financial year ?","Refer clause 2.2.2.5 (iii)
(a) which is amply clear.
Experience over the past
5 financial years
preceding the bid due
date shall be considered
for evaluating the
experience.
1.,Annex IV,"Project Code A,B,C,D,I: Please clarify why project should not be considered unde
category 4.
Project Code E, F, G, H: The scope of Project is majorly earthwork which does not fall
under category of eligible project. Please clarify why the project should be considered
or determining technical capacity",
and millions and may increase the project cost manifold. 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€;,,,
(ii) Whether public interest is affected.†(emphasis added),,,
If the answers to the questions posed in the aforesaid judgment are in the negative, there should be no interference by courts under Article 226 of the",,,
Indian Constitution.,,,
In Michigan Rubber (India) Ltd. v. State of Karnataka, reported as (2012) 8 SCC 21,6 after examining the case law laid down on the scope of",,,
interference by courts in tender matters, the following principles have been carved out:-",,,
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 the 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 the 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 a fundamental right to carry on business with the Government.""",,,
(emphasis added),,,
It is also well settled that the owner of the project being the author of the tender documents, is the best person to appreciate its requirement and",,,
interpret the documents and the High Court must defer to the understanding of the author in matters of appreciation of the terms and conditions of the,,,
tender documents. Unless there are some mala fides or perversity in the understanding or appreciation of the author, the interpretation given by the",,,
author must be given primacy. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., reported as (2016) 16 SCC 81,8 the Supreme Court",,,
has observed as under:-,,,
“15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand",,,
and appreciate its requirements and interpret its documents. 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. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not,,,
acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.â€,,,
(emphasis added),,,
The aforesaid judgment has been cited and followed in JSW Infrastructure Ltd. v. Kakinada Seaports Ltd., reported as (2017) 4 SCC 170.",,,
In Nabha Power Ltd. v. Punjab SPCL, reported as (2018) 11 SCC 508, the Supreme Court made the following observation:-",,,
“72. We may, however, in the end, extend a word of caution. It should certainly not be an endeavour of commercial courts to look to",,,
implied terms of contract. In the current day and age, making of contracts is a matter of high technical expertise with legal brains from all",,,
sides involved in the process of drafting a contract. It is even preceded by opportunities of seeking clarifications and doubts so that the,,,
parties know what they are getting into. Thus, normally a contract should be read as it reads, as per its express terms. The implied terms is a",,,
concept, which is necessitated only when the Penta test referred to aforesaid comes into play. There has to be a strict necessity for it. In the",,,
present case, we have really only read the contract in the manner it reads. We have not really read into it any “implied term†but from",,,
the collection of clauses, come to a conclusion as to what the contract says. The formula for energy charges, to our mind, was quite clear.",,,
We have only expounded it in accordance to its natural grammatical contour, keeping in mind the nature of the contract.â€",,,
(emphasis added),,,
The view expressed above, has been followed in Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd., reported as (2019) 14 SCC 8,1 where",,,
after quoting the abovementioned paragraphs in Nabha Power Ltd.(supra), the Supreme Court has observed as under:-",,,
“43. We have considered it appropriate to, once again, emphasise the aforesaid aspects, especially in the context of endeavours of courts",,,
to give their own interpretation to contracts, more specifically tender terms, at the behest of a third party competing for the tender, rather",,,
than what is propounded by the party framing the tender. The object cannot be that in every contract, where some parties would lose out,",,,
they should get the opportunity to somehow pick holes, to disqualify the successful parties, on grounds on which even the party floating the",,,
tender finds no meritâ€. (emphasis added),,,
A perusal of the aforementioned judgments would show that constitutional courts must show restraint in interfering with administrative actions.,,,
The correctness of the decision taken by the employer cannot be interfered with. Only the decision making process can be subjected to judicial,,,
review. The soundness of the decision may be in question only if it is irrational or so perverse that no responsible authority acting reasonably and in,,,
accordance with law could have reached such a decision or it is found that the process was meant to favour someone. Keeping these principles in,,,
mind, the question that has to be considered is whether in the instant case, rejection of the bid of the petitioner would warrant any interference or not?",,,
The records placed before us would show that the tender submitted by 19 bidders have been accepted by the respondent/NHAI as responsive and,,,
they have cleared the first stage of evaluation. Their financial bids are yet to be opened. They could not be opened because of the order dated,,,
25.06.2020, passed in the present proceedings, restraining the respondent/NHAI from proceeding ahead with opening of the financial bid. The",,,
principle argument of the petitioner hinges on Clause 2.2.2.5 (iii) (a) of the tender documents which states that highway sector would be deemed to,,,
include railways (construction/re-construction of railway tracks, yards for keeping containers, etc.). The petitioner therefore states that the projects",,,
which it has executed, should be considered as “similar workâ€, to satisfy the requirements of the Notice inviting tender.",,,
The Request For Proposal (for short “RFPâ€) issued by the respondent/NHAI is for executing a road project. Under Section 2.2.2.2 (i) of the,,,
RFP, the bidder has to demonstrate that over the past five years preceding the bid due date, it has received payments for construction of eligible",,,
projects or has undertaken construction works by itself in a PPP project and that payment received by the bidder after adjustment as provided for,,,
under the RFP, is more than Rs.504.96 crores. Under Clause 2.2.2.2 (ii), the bidder has to further establish that he has undertaken at least one ""similar",,,
work"" of 25% of estimated cost of Rs.84.16 crores from eligible projects in Category 1 and/or Category 3, as specified in Clause 2.2.2.5. The short",,,
question that arises for consideration is as to whether the projects undertaken by the petitioner shows that it has undertaken a “similar work†in,,,
Category 1 and/or Category 3, as specified in Clause 2.2.2.5 of the RFP.",,,
Category 1 and Category 3 mentioned in Clause 2.2.2.5, deal with projects in the highway sector that qualify under Clause 2.2.2.6 (i) or",,,
construction in the highway sector that qualify under Clause 2.2.2.6 (ii). Though Clause 2.2.2.5 (iii) states that highway sector would be deemed to,,,
include railways (construction/re-construction of railway tracks, yards for keeping containers, etc.), Clause 2.2.2.5 (iii) (IV) states that the project in",,,
the highway sector shall constitute the following for the purposes of consideration under Category 1 and/or Category 3, as applicable if it relates to:-",,,
i. Widening/reconstruction/up gradation works on NH/SH or on any category of road taken up under CRF, ISC, EI, SARDP, LWE,",,,
ii. Widening/ reconstruction/ up gradation works on MDRs with loan assistance from multilateral agencies or on BOT basis,",,,
iii. Widening/ reconstruction/ up gradation work of roads in Municipal corporation limits, construction of Bypasses,",,,
iv. Construction of stand-alone bridges, ROBs, tunnels w.r.t. roads,",,,
v. Long term OMT works of NHAI/MoRT&H.,,,
A conjoint reading of Clause 2.2.2.2 (i), Clause 2.2.2.5 (ii), Clause 2.2.2.5 (iii) (a) and Clause 2.2.2.5 (iii) (IV) would show that in order to qualify",,,
under Clause 2.2.2.2 (ii), even though highway sector includes railways and a company which has done projects in railways would be eligible, but the",,,
bidder must satisfy the requirements prescribed in Sub clause (IV) of Clause 2.2.2.5 (iii). Unless the bidder satisfies the requirement in Sub clause,,,
(IV) of Clause 2.2.2.5 (iii), it will not be eligible under Clause 2.2.2.2 (ii). Even though the NIT has been drafted rather unhappily, it cannot be said that",,,
the interpretation/consideration which is sought to be placed by the respondent/NHAI before us, is so perverse or irrational that would warrant",,,
interference under Article 226 of the Constitution of India.,,,
In reply to the pre-bid query raised by the petitioner, the respondent/NHAI had specified that Clause 2.2.2.5 (iii) (a) is amply clear. That the",,,
respondent/NHAI in its clarification did not mention Clause (IV) of 2.2.2.5 (iii), by itself can not lead to a conclusion that the decision making process",,,
has not been fair. It must be kept in mind that 19 other parties have successfully cleared the first step of the bidding process. Nor can it be said that,,,
the petitioner has been discriminated against. Failure on the part of the respondent/NHAI to refer to Clause 2.2.2.5 (iii) (IV) in their reply to the pre-,,,
bid query, will not vitiate the entire bidding process.",,,
Vide order dated 02.11.2020, the petitioner was called upon to file an affidavit stating inter alia as to whether it has fulfilled any of the works",,,
specified in sub-clauses (i) to (v) of Clause 2.2.2.5 (iii) (IV) of the RFP. The affidavit filed by the petitioner does not specify that it has indeed,,,
executed any of the works which can fall under Clause 2.2.2.5 (iii) (IV). The reasoning given by learned counsel for the petitioner that the railway,,,
track project executed by it would be a project that can be considered in Category 3 and that alone must be considered for purposes of eligibility, is",,,
unacceptable. The bidder must have executed a work mentioned in Clause 2.2.2.5 (iii) (IV) in order to be eligible under Clause 2.2.2.2 (ii). This,,,
interpretation sought to be given by the respondent/NHAI is found to be tenable and cannot be termed as perverse, illogical or arbitrary.",,,
Reliance placed by Mr. Sanghi, learned counsel for the petitioner, on Reliance Energy(supra) is misplaced in view of the fact that there is no",,,
ambiguity in the terms of the subject RFP. Even though the language used in the RFP is not happily worded, it cannot be said that these clauses have",,,
resulted in an unequal or discriminatory treatment vis-Ã -vis the petitioner or that it violates the doctrine of providing a level playing field to all the,,,
bidders. We may reiterate the view expressed by the Supreme Court in Caretel Infotech Ltd.(supra) that constitutional courts cannot give their own,,,
interpretation against the terms of the tender at the behest of a third party competing for the tender, rather than what is propounded by the party",,,
issuing the tender, being its author.",,,
In the result, this court is of the opinion that the decision of the respondent/NHAI in declaring the bid of the petitioner as non-responsive, does not",,,
warrant any interference. The petitioner has not been able to demonstrate that the decision making process adopted by the respondent/NHAI is,,,
perverse, irrational or tainted with mala fides or is designed to favour a particular party.",,,
The writ petition is dismissed as meritless but with no orders as to costs.,,,