Petitioner challenged the rejection of its technical bid in an LPG bottling plant tender due to a discrepancy in lease deed names. The court applied strict judicial restraint principles, finding no arbitrariness or mala fides in the rejection.
Petition dismissed; the rejection of the technical bid was upheld.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
M/S SILICA INFOTECH PVT. LTD.(RANCHI) ..... Petitioner Through: Mr.Vipul Ganda, Mr.Vikas Yadav, Ms.Dipika Ganda and Mr.Aman Chaudhary, Advts. versus
UNION OF INDIA AND ANR. ..... Respondents Through: Mr.Ashim Sood, CGSC for R-1. Ms.Meenakshi Arora, Sr.Adv. with Ms.Mala Naryan, Ms.Neha Dawar, Mr.Rahul Narayan and Mr.Digvijay, Advts. for R-2/IOCL.
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI
G.S.SISTANI, J. (ORAL)
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respondent No. 2 inviting E-tender for setting-up new LPG Bottling facilities at 60 different locations from private bottlers having ready built plant/willing to construct new LPG bottling facility.
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Site at Ranchi
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“Part II. For Bidders Willing to Construct New Bottling Plant at the advertised Location:
| A. Technical | (i) | Land admeasuring at least 3.0 Acres with either clear title owned by the Bidder AND / OR have |
a.Self attested Copy of Clear Title deed in the name of |
|---|---|---|---|
| registered lease in the | bidder/Registered | ||
| name of the bidder, AND/ OR Firm allotment letter from State Govt. or State Govt. body situated in the “Advertised location” and willing to construct LPG Bottling Plant as per OISD-169 guidelines on the offered land at his own cost. |
Lease deed for the land upon which the Bottling plant is constructed.” |
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“9. Selection/Evaluation Procedure:
Round I- Evaluation of Technical Bid Documents
…..Despite, the above in case of any shortfall in the documents, the bidder shall be provided with only ONE opportunity provided with only 01(One) and final chance to submit any shortfall of documents which will be communicated to them on the e-portal within a time bound period of 7 (seven) days. It will be the bidder’s responsibility to access the e-tendering portal on a daily basis to check communication in this regard. In case the bidder fails to submit any documents or submits incomplete documents within the given time, the bid will be rejected…..”
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"70. ...the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be
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considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down."
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"94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
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"11. Recently, in Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) [Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium), (2016) 8 SCC 622 : (2016) 4 SCC (Civ) 106 : (2016) 8 Scale 99] it was held by this Court, relying on a host of decisions that the decision-making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with. Interference is permissible only if the decision-making process is mala fide or is intended to favour someone. Similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that the decision is one which no responsible authority acting reasonably and in accordance with law could have reached. In other words, the decision-making process or the decision should be perverse and not merely faulty or incorrect or erroneous. No such extreme case was made out by GYT-TPL JV in the High Court or before us."
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"13. In other words, a mere disagreement with the decisionmaking process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision-making process or the decision."
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"64. Thus, the questions to be decided in this appeal are answered as follows:
64.1. Under the scope of judicial review, the High Court could not ordinarily interfere with the judgment of the expert consultant on the issues of technical qualifications of a bidder when the consultant takes into consideration various factors including the basis of non-performance of the bidder; 64.2. ...
64.3. It is not open to the court to independently evaluate the technical bids and financial bids of the parties as an appellate authority for coming to its conclusion inasmuch as unless the thresholds of mala fides, intention to favour someone or bias, arbitrariness, irrationality or perversity are met, where a decision is taken purely on public interest, the court ordinarily should exercise judicial restraint."
"19. This Court being the guardian of fundamental rights is duty bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must
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be exercised with a great deal of restraint and caution. The Courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give “fair play in the joints” to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer.
"20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the state instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case."
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CM APPL. 18316/2019 (stay)
dismissed.
G.S.SISTANI, J
‘
ANUP JAIRAM BHAMBHANI, J
NOVEMBER 06, 2019 / /
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2 issues framed by the court
Whether the High Court can interfere with the rejection of a technical bid in a public tender due to a discrepancy between the lease deed and revenue records.
Whether the rejection was arbitrary, mala fide, or irrational warranting judicial intervention.
Colour shows how this judgement treated each authority
Tata Cellular v. Union of IndiaReferred¶39
(1994) 6 SCC 651 · Who else cites this
Afcons Infrastructure Limited v. Nagpur Metro Rail Corporation Limited and AnotherReferred¶53
(2016) 16 SCC 818 · Who else cites this
Municipal Corporation, Ujjain and Another v. BVG India Limited and OthersReferred¶60
(2018) 5 SCC 462 · Who else cites this
Silppi Constructions Contractors v. Union of India and AnotherReferred¶64
2019 SCC OnLine SC 1133 · Who else cites this
M/S Silica Infotech Pvt. Ltd. (Ranchi)
Union of India
IOC Limited
G.S. Sistani
Anup Jairam Bhambhani
As recorded by the court registry
A petition under Article 226 of the Constitution asking a High Court to issue a writ against the State or a public authority in a civil matter.
Judgements on the same questions, provisions and authorities, from every court
