BTL EPC LTD.versusMACAWBER BEEKAY PVT LTD AND OTHERS

                  [2023] 13 S.C.R. 152 : 2023 INSC 864



                             CASE DETAILS

                              BTL EPC LTD.
                                      v.
          MACAWBER BEEKAY PVT LTD AND OTHERS
                      (Civil Appeal No. 5968 of 2023)
                          SEPTEMBER 18, 2023
          [DR. DHANANJAYA Y CHANDRACHUD, CJI,
           J.B. PARDIWALA AND MANOJ MISRA, JJ.]
                              HEADNOTES
      Issue for consideration: The issue pertains to the pre-qualification
requirement for bidders, notified by the contractor; and whether the bid
submitted by the successful bidder was liable to be rejected on the ground
that the Chinese company with whom it had entered into a consortium
agreement was not registered with the competent authority in terms of the
Public Procurement Order.
     Contract – Complex technical contract – Power of judicial review
– Writ petition by the competing bidder challenging the contract
awarded to the successful bidder on the ground that it was in breach of
conditions, the tender submitted did not meet the technical requirements
– Dismissed by the Single Judge of the High Court, however the Division
Bench set aside the order – Interference with:
      Held: In contracts involving complex technical issues, the Court should
exercise restraint in exercising the power of judicial review – Even if a party
to the contract is ‘State’ within the meaning of Art. 12 of the Constitution,
amenable to the writ jurisdiction of the High Court or the Supreme Court,
the Court should not readily interfere in commercial or contractual matters –
Court ought to defer to the discretion of the tender inviting authority which
is best placed to interpret their terms – Courts to review the decision-making
process and examine arbitrariness or mala fides, if any – Neither the State
Power Generation Company nor the contractor raised any dispute as regards
the eligibility of the successful bidder to bid for the contract – Challenge
was addressed by the competing bidder whose bid was much higher than
                                     152
    BTL EPC LTD. v. MACAWBER BEEKAY PVT LTD AND                          153
                        OTHERS

the successful bidder – Primary decision on whether the successful bidder
meets the technical requirements of the tender on account of its collaborator
being a Chinese company that was not registered had to be determined by the
contractor – Contractor has not found that there was any breach – Contractor
and the State Power Generation Company found that the agreement with
the Chinese company was in the nature of a service agreement and not a
“consortium” under the pre-qualification requirements, thus, the registration
requirement did not apply – Division Bench ought to have proceeded with
circumspection and interfered only when the order sufferred from perversity
or error – Interference of the Division Bench in the judgment of the Single
Judge not warranted – Furthermore, setting aside the award of the contract
would cause insuperable difficulties in the implementation of the contract
since the work under the contract has progressed, and both the State Power
Generation Company and the contractor, being public entities have invested
funds for the realization of the project – Thus, the judgment of the Division
Bench set aside and that of the Single Judge restored – Judicial restraint –
Constitution of India. [Paras 33-40]

       LIST OF CITATIONS AND OTHER REFERENCES

      Tata Motors Limited v. Brihan Mumbai Electric Supply & Transport
Undertaking (BEST) and Others, 2023 SCC OnLine SC 671; Monte Carlo
Limited v. National Thermal Power Corporation Limited, (2016) 15 SCC
272 : [2016] 8 SCR 224 – referred to.
       OTHER CASE DETAILS INCLUDING IMPUGNED
              ORDER AND APPEARANCES

     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5968 of 2023.
    From the Judgment and Order dated 27.07.2023 of the High Court of
Karnataka at Bengaluru in WA No.1169 of 2022.
     With
     Civil Appeal Nos. 5969 and 5970 of 2023.
     Appearances:
      Mukul Rohatgi, Shyam Divan, M. Dhyan Chinnappa, Gourab Banerjee,
V. Giri, Harish Salve, Neeraj Kishan Kaul, Sr. Advs., Mahesh Agarwal, Rishi
154            SUPREME COURT REPORTS                        [2023] 13 S.C.R.


Agrawala, Pranjit Bhattacharya, Abhirup Dasgupta, Rishabha Raj Thakur,
Chirag Nayak, Ishaan Duggal, Ms. Mukta Halbe, E.C. Agrawala, Ms. Mayuri
Raghuvanshi, Vyom Raghuvanshi, Ms. Akanksha Rathore, Dhruv Sharma,
Venkata Supreeth, Shubro, D. Abhinav Rao, Rahul Jajoo, Ms. Prerna Robin,
Devadipta Das, Ms. Rao Vishwaja, Sandeep Grover, Aditya Nayyar, Tarang
Agarwal, Abhishek Arora, Toshiv Goyal, Ritwik Mahopatra, Anshul Syal,
Ms. Bhavana Duhoon, Advs. for the appearing parties.

         JUDGMENT / ORDER OF THE SUPREME COURT

                                 JUDGMENT
       DR DHANANJAYA Y CHANDRACHUD, CJI
       1. Leave granted.
      2. These appeals arise from a judgment dated 27 July 2023 of a Division
Bench of the High Court of Karnataka. The High Court set aside a judgment
of a Single Judge, in a writ appeal1. As a consequence of the impugned
judgment, a Letter of Intent2 which was issued by Bharat Heavy Electricals
Limited3, in favour of the appellant has been quashed and BHEL has been
directed to consider the bid submitted by the first respondent in terms of a
Notice Inviting Tenders dated 24 June 2022.
     3. BHEL was awarded a contract for setting up the 5x800 MW
Yadadri Thermal Power Station. A part of the work was sought to be
subcontracted. BHEL invited bids for undertaking the work of design,
engineering, manufacturing, supply and other related works pertaining to
an Ash Handling Plant. The appellant submitted its bid. On 29 September
2022, a letter of intent was issued to the appellant for a total contract value
of Rs 378.64 crores.
     4. The controversy in the present case turns on the pre-qualification
requirement for bidders, notified by BHEL. Clause 01.00.00 deals with the
technical criteria. Clauses 01.01.01, 01.01.02, and 01.01.03 are material in



1     Writ Appeal No 1169 of 2022 (GM-TEN)
2     “LoI”
3     “BHEL” (the second respondent)
    BTL EPC LTD. v. MACAWBER BEEKAY PVT LTD AND                          155
    OTHERS [DR DHANANJAYA Y CHANDRACHUD, CJI]

the present case. Clause 01.01.01 contains certain specific requirements that
bidders had to fulfill. It read as follows:
     “The bidder should have executed at least one (1) number Ash
     Handling Plant (AHP) in India/abroad for a thermal power station using
     sea water/plain water involving design, engineering, manufacture,
     procurement, supply, erection & commissioning (or supervision of
     erection & commissioning) comprising the following systems which
     should be in successful operation for at least (1) year as on date of
     submission of the bid:
     a. Bottom ash handling system comprising jet pump system in
     conjunction with water impounded bottom ash hopper designed from
     minimum 50 TPH (on dry ash basis) capacity or more for pulverized
     coal fired boilers.
                                   AND
     b. First stage fly ash handling system for conveying fly ash from ESP
     hoppers to Intermediate Surge Hopper (ISH) by vacuum conveying
     system designed for minimum 30 TPH capacity (dry ash basis) per
     stream.
                                   AND
     c. Second stage fly ash handling system for conveying fly ash
     from Intermediate Surge Hopper (ISH) to Fly ash silos by pressure
     conveying system designed from minimum 20 TPH capacity (dry ash
     basis) per line for a distance not less than 500 mtrs.
                                   AND
     d. High Concentration Ash Slurry Disposal (HCSD) System for
     minimum 40 TPH capacity (dry ash basis) per line.
     The above Clauses 01.01.01 (a), (b), (c) and (d) can be in one single
     plant or in a combination of plants.”
      5. Clause 01.01.02 stipulated that a bidder who is a supplier of a bulk
material handling system, but does not fulfill the requirements under clause
01.01.01 could also participate, subject to certain stipulations. The clause
is extracted below:
156          SUPREME COURT REPORTS                       [2023] 13 S.C.R.


      “Bidder who is a supplier of bulk material handling system but
      does not meet the requirements under clause 01.01.01 above in
      part or in full can also participate provided he has executed at
      least the following systems design, engineering, manufacture,
      supply, erection & commissioning (or supervision of erection &
      commissioning):
      a. Fly Ash Handling System for conveying Fly Ash from ESPs in
      dry form (vacuum conveying or pressure conveying system) or in
      wet slurry mode
                                   OR
      b. Bulk material handling system, comprising of bell conveyors
      having a minimum design capacity of 800 TPH
      The systems mentioned at 01.01.02 (a) or (b) above should be in
      successful operation in at least two (2) plants for at least two (2)
      years as on date of submission of bid and should have been installed
      for pulverized coal fi red boiler units in India/abroad generating not
      less than 40 TPH of Ash per boiler.
                                  AND
      Collaborate(s)/Associate(s) with party(ies) who meet(s) either
      the total requirement under 01.01.01 (a), (b) and (c) above or
      any of the above requirement under 01.01.01 (a), (b) and (c),
      which the bidder himself is not able to meet.
      In such a case, the Bidder shall be required to furnish consortium
      agreement jointly executed by the Bidder and the collaborator(s)/
      Associate(s) and each executant, shall be jointly and severally
      liable to employer for successful performance of the relevant
      system, as per the format (Annexure -A) enclosed along with bid.
      The collaboration agreement should be submitted along with the
      bid. In such a case, each Collaborator/Associate shall be required
      to furnish a bank guarantee at the time of placement of order as
      follows:
      i.   INR 10 Lakh (Rupees Ten Lakh) for Collaborator/Associate
           for Jet pumping system
BTL EPC LTD. v. MACAWBER BEEKAY PVT LTD AND                           157
OTHERS [DR DHANANJAYA Y CHANDRACHUD, CJI]

ii.   INR 25 Lakh (Rupees Twenty Five Lakh) for Collaborator/
      Associate for Vaccum conveying system
iii. INR 25 Lakh (Rupees Twenty Five Lakh) for Collaborator/
     Associate for Pressure Transportation system
                               AND
Collaborate(s)/Associate(s) with party who meets the requirement
under 01.01.01 (d) above which the bidder himself is not able to
meet.
In such a case, the Bidder shall be required to furnish Agreement of
Support jointly executed by the Bidder and the collaborator/Associate
for successful performance of the HCSD system as per the format
(Annexure-B) enclosed along with bid. The Agreement of Support
should be submitted along with the bid.
In case bidder collaborates/associates for more than one system with
a party, then the Collaborators/Associate shall be required to furnish
a bank guarantee for an amount arrived at by adding up the amounts
for the relevant systems as above.”
6. Clause 01.01.03 then provided as follows:
“The activity of design and engineering under 01.01.01 (a), (b) and (c)
should have been carried out by the bidder and not through any external
design agency/agencies. The activity of design and engineering under
01.01.01 (d) should have been carried out by the bidder or through any
external design agency having experience of HCSD system.
For design and engineering activity referred under paras 01.01.02 the
activity should have been carried out by either the bidder or through
design agency/agencies having experience for reference systems. In
case of collaborator(s)/associate(s) meeting the balance part of total
requirement under clause 01.01.01 (a), (b), (c) and (d) the activity of
design and engineering for the reference systems should have been
carried out by them.
Bidders qualifying under Sl No.01.01.02 and collaborating/associating
with party(s) meeting total/balance part of 01.01.01 (a), (b), (c) and (d)
158           SUPREME COURT REPORTS                        [2023] 13 S.C.R.


      shall follow the following for supply and manufacturing of equipment.
      Bidder shall manufacture from their manufacturing set up based on
      collaborator(s)/associate(s) drawing for the clause which bidder himself
      is not meeting the requirement but the collaborator(s)/associate(s) is
      meeting the requirement, then the collaborator(s)/associate(s) shall
      approve bidder’s manufacturing facilities and manufacturing quality
      standards. Also after the manufacture of the items, the product shall
      be inspected by the respective collaborator(s)/associate(s) and furnish
      certificate of conformance (COC) for the product.
      Also, BHEL/Customer shall approve manufacturing facilities of the
      equipment of the vendor’s self-manufacturing items in case the items
      are being manufactured by bidder as per collaborator(s)/associate(s)
      design and manufacturing drawing.”
      7. These clauses were followed by the documents which were required
to be furnished. Among them, if the bidder had entered into a consortium
agreement in order to meet the requirements of clause 01.01.01 as permitted
by clause 01.01.02, a copy of the consortium agreement was to be submitted
along with the tender documents. If the bidder was a foreign party, there was
a mandatory requirement of having a collaboration/consortium agreement
with an Indian agency for erection and commissioning at site.
      8. Clause 01.01.02 permitted a bidder who did not meet the criteria
specified in 01.01. 01, to enter into a consortium agreement. Accordingly,
the appellant entered into a consortium agreement with a Chinese company
by the name of Fujian Longking Company Limited, the fourth respondent.
Annexure 1 of the agreement specified the rights and responsibilities of
the appellant on the one hand and the Chinese company on the other in the
following terms:
      “1. The first party (M/s BTL EPC Ltd. Kolkata) shall undertake
          complete works as detailed in NIT which includes detailed
          design & engineering, manufacturing, supply, erection, testing,
          commissioning, trial run, demonstration of PG test and handing
          over for complete ash handling plant.
      2.   The second party (M/s Fujian Longking, China) shall
           undertake basic design, vetting of detail engineering, Support in
    BTL EPC LTD. v. MACAWBER BEEKAY PVT LTD AND                          159
    OTHERS [DR DHANANJAYA Y CHANDRACHUD, CJI]

          manufacturing, Support/Supervision of erecting, commissioning
          & PG test for complete AHP (excluding HCSD system).”
      9. On 23 July 2020, the Public Procurement Division in the Department
of Expenditure of the Union Ministry of Finance issued an Order imposing
certain restrictions under Rule 144(xi) of the General Financial Rules 2017,
whereby a prospective bidder from a country that shares a land border with
India, would be eligible to bid, only if such bidder is registered with the
Competent Authority. The Order, which is described as “Public Procurement
No 1” specified a requirement of registration in the following terms:
     “Requirement of registration
           1. Any bidder from a country which shares a land border with
              India will be eligible to bid in any procurement whether of
              goods, services (including consultancy services and non-
              consultancy services) or works (including turnkey projects)
              only if the bidder is registered with the Competent Authority,
              specified in Annex I.
           2. This Order shall not apply to (i) cases where orders have
              been placed or contract has been concluded or letter/notice
              of award/acceptance (LoA) has been issued on or before the
              date of this order; and (ii) cases falling under Annex II.”
     10. Clause (6) of the Order defined a “bidder” as follows:
     “Bidder” for the purpose of this Order (including the term ‘tenderer’,
     ‘consultant’, ‘vendor’ or ‘service provider’ in certain contexts)
     means any person or firm or company, including any member of a
     consortium or joint venture (that is an association of several persons,
     or firms or companies), every artificial juridical person not falling in
     any of the descriptions of bidders stated hereinbefore, including any
     agency, branch or office controlled by such person, participating in a
     procurement process.”
     11. Similarly, clause (8) contains a definition of the expression “bidder
from a country which shares a land border with India” in the following terms:
     “Bidder from a country which shares a land border with India” for the
     purpose of this Order means
160            SUPREME COURT REPORTS                       [2023] 13 S.C.R.


       a) An entity incorporated, established or registered in such a country;
          or
       b) A subsidiary of an entity incorporated, established or registered
          in such a country; or
       c) An entity substantially controlled through entities incorporated,
          established or registered in such a country; or
       d) An entity whose beneficial owner is situated in such a country; or
       e) An Indian (or other) agent of such an entity; or
       f)   A natural person who is a citizen of such a country; or
       g) A consortium or joint venture where any member of the consortium
          or joint venture falls under any of the above.”
      12. The first respondent instituted a writ petition 4 under Article 226
of the Constitution before the High Court of Karnataka contending that the
award of the contract to the appellant was in breach of the conditions which
were imposed in the Order dated 23 July 2020 of the Union Ministry of
Finance. The contention was that the Chinese company which had entered
into a consortium agreement with the appellant so as to enable the appellant
to fulfill the eligibility conditions under the tender floated by BHEL was
required to be registered with the competent authority, according to the
Public Procurement Order dated 23 July 2020. It was urged that in the
absence of such registration, the tender submitted by the appellant did not
meet the technical requirements and could not have been considered by
BHEL.
      13. The Single Judge of the Karnataka High Court dismissed the writ
petition by a judgement dated 2 November 2022. The Single Judge held that
       (i) Entering into a consortium agreement was permissible under the
           terms of the tender;
       (ii) The submission of the tender by the appellant, along with the copy
            of the agreement, was proper;



4     Writ Petition No 20333 of 2022 (GM-TEN)
    BTL EPC LTD. v. MACAWBER BEEKAY PVT LTD AND                         161
    OTHERS [DR DHANANJAYA Y CHANDRACHUD, CJI]

     (iii) On the issue of mandatory registration under the Public
           Procurement Order, a clarification dated 8 February 2021 stated
           that a bidder can procure raw material, as opposed to finished
           goods, from an entity such as the fourth respondent even if the
           latter was not registered with the competent authority;
     (iv) Since the appellant was not even procuring raw materials but
          only sought support for design, erection and commissioning
          requirements, the bid did not violate the procurement order;
     (v) The Court’s scrutiny was limited to the decision-making
         process;
     (vi) The financial bid of the appellant was Rs 58 crores lower in
          value than the financial bid submitted by the fi rst respondent;
          and
     (vii) The decision-making process was not arbitrary and did not
          merit interference, in line with the principle of limited judicial
          scrutiny of the discretion vested in a tendering authority.
     14. The judgment of the Single Judge was carried in appeal.
     15. The Division Bench of the High Court reversed the decision of
the Single Judge and allowed the writ appeal. The respondent (who was
the appellant before the Division Bench) argued that
     (i) The consortium agreement between the appellant and the
         Chinese entity was meant to confer eligibility on the appellant,
         which did not possess the requisite qualifications on its own;
     (ii) Thus, by way of the consortium agreement, a bidding
          consortium was created where the Chinese entity was a joint
          bidder;
     (iii) As such, according to the Public Procurement Order the Chinese
           company was required to register with the competent authority
           in order to participate in the tender process; and
     (iv) In the absence of registration, the bidding consortium
          comprising the appellant and the Chinese Company did not
          meet the technical criteria of the tender.
162           SUPREME COURT REPORTS                         [2023] 13 S.C.R.


      16. The appellant on the other hand, maintained that
      (i)   The agreement was not a consortium agreement in the technical
            sense (clause 7 of the pre-qualification requirements);
      (ii) It was called a consortium agreement only because it was styled
           in accordance with the template for a consortium agreement,
           appended to the tender document;
      (iii) If it were actually a consortium agreement in the strict sense, the
            Chinese company would have contributed to the bid and had a
            share in the profits as well;
      (iv) the nature of the agreement was more like a service contract than
           like a consortium agreement strictly speaking;
      (v) The Chinese company was a mere associate who was providing
          services in relation to the designs under the terms of the
          agreement; it did not contribute to the bid and was not entitled
          to any profits that accrued in favor of the appellant;
      (vi) The bid was submitted and awarded in favour of the appellant
           as a standalone bidder and not as a part of a bidding consortium;
           and
      (vii) Considering the nature of the contract and the Chinese company’s
            limited role, the non-registration under the Procurement Order
            was inconsequential.
     17. By its impugned judgment dated 27 July 2023, the Division Bench
reversed the decision of the Single Judge. The Division Bench observed that
      (i)   The agreement between the appellant and the Chinese Company
            is an undertaking to the tendering authority as to the due
            performance of the contract;
      (ii) The agreement is central to the appellant’s bid and is thus a
           consortium agreement;
      (iii) The bid was thus made on behalf of the bidding consortium;
      (iv) According to the Single Judge, the requirement of registration was
           not applicable in view of the clarification by the subsequent Office
    BTL EPC LTD. v. MACAWBER BEEKAY PVT LTD AND                      163
    OTHERS [DR DHANANJAYA Y CHANDRACHUD, CJI]

          Memorandum dated 23 July 2020; this subsequent clarification
          applied in respect of import of raw material and whether the
          goods procured would be considered raw material or finished
          goods was relevant only after the award of the contract;
     (v) The requirement of mandatory registration had not been
         done away with by the clarification contained in the Office
         Memorandum dated 23 July 2020;
     (vi) The Chinese company, as a part of the bidding consortium
          was required to register in the absence of which the bidding
          consortium was ineligible to participate in the tender process;
          and
     (vii) BHEL, in awarding the tender, had overlooked this violation
           and wrongly based its decision only on the financial bid.
      18. The Division Bench thus, set aside the Single Judge’s decision.
The LoI which was awarded to the appellant has been set aside with
the consequential direction to process the bids submitted by the fi rst
respondent in terms of the Notice Inviting Tenders. In the meantime,
albeit in pursuance of interim directions to the effect that no equities
would be created in favour of the successful bidder, work has proceeded
apace. The stage of the work and the impact, if any, it should have on
the outcome of these proceedings would be considered subsequently.
      19. Besides this appeal which has been filed by the successful party
to whom the contract was awarded by BHEL, a companion Special Leave
Petition has been filed before this Court by BHEL and by the Telangana
State Power Generation Company Limited. The latter had awarded the
contract for the construction of a 5x800 MW Thermal Power Station
to BHEL and in its submission, the project is likely to get affected by
the orders which have been passed by the High Court in relation to the
setting up of the Ash Handling Plant.
     20. We have heard Mr Mukul Rohatgi, Mr Gaurab Banerjee and Mr
V Giri, senior counsel appearing on behalf of the appellants in support
of the appeals. Mr Harish N Salve and Mr Neeraj Kishan Kaul, senior
counsel have appeared on behalf of the original petitioner before the
High Court, namely, the first respondent. For convenience of reference,
164           SUPREME COURT REPORTS                             [2023] 13 S.C.R.


the parties as they appear in the lead appeal are referred to in these
proceedings.
      21. The controversy in the present case lies in a narrow frame. Clause
01.01.01 stipulates four requirements that each bidder has to fulfill. All the
requirements are cumulative as is indicated by the use of the word “and” after
sub-clauses (a), (b) and (c). Evidently, it is not in dispute that the appellant did
not fulfill the technical requirements specified in clause 01.01.01. However,
this was not the end of the matter for the reason that clause 01.01.02
specifically contemplated such an eventuality. This clause stipulates that a
bidder which is a supplier of bulk material handling systems, but does not
meet the requirements under clause 01.01.01 in part or in full, could also
participate provided such a bidder had executed at least the systems design,
engineering, manufacture, supply, erection and commissioning of projects of
the nature described in either (a) or (b). Apart from having experience of the
projects that were specified under clause 01.01.02, there was an additional
condition which was that such a bidder must collaborate/associate with a
party or parties who meet all the requirements of sub-clauses (a), (b), and
(c) of clause 01.01.01. In other words, though the bidder itself was not able
to meet the requirements of clause 01.01.01, such non-compliance would
be obviated if the bidder collaborated or associated with an entity that met
the requirements of sub-clauses (a), (b) and (c) either individually or in
conjunction with the bidder himself. In that case, the bidder was required
to furnish a consortium agreement jointly executed with the collaborator/
associate so as to accept joint and several responsibilities towards the
tendering authority. Clause 01.01.03 contains certain stipulations in regard
to the activity of design and engineering under clause 01.01.01.
       22. Clause 7.2 of the pre-qualification requirements contains specific
stipulations in regard to the nature of the bidding consortium. Clause 7.2
is in the following terms:
      “The members of bidding Consortium should have entered into a
      Memorandum of Association (MOA) between themselves. One of the
      members of Consortium, holding at least 51% of the equity/ownership
      stake shall be authorized and nominated as the ‘Lead member’ (Lead
      Member) to act and represent all the members of the Consortium for
      bidding and implementation of the Project.”
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     OTHERS [DR DHANANJAYA Y CHANDRACHUD, CJI]

       23. The agreement between the appellant and the Chinese company,
it is common ground, did not involve an equity, stake, or ownership of the
Chinese company. This aspect has not been disputed. The issue which fell for
determination before the High Court was whether the bid submitted by the
appellant was liable to be rejected on the ground that the Chinese company
with whom it had entered into a consortium agreement was not registered
with the competent authority in terms of the Public Procurement Order dated
23 July 2020.
      24. At this stage, it would be material to note that the Procurement Order
dated 23 July 2020 has been clarified by an OM dated 8 February 2021. The
OM stipulates that in terms of paragraph 11 of the Order dated 23 July 2020,
in the case of a works contract including a turnkey contract, the contractor
shall not be allowed to sub-contract the work to any contractor from a country
that shares a land boundary with India unless the contractor is registered with
the competent authority. The OM clarifies the earlier order by stipulating that:
     “However, no such restriction is stipulated in the Order regarding other
     procurements i.e. procurement of Goods, Services, etc.”
      25. The High Court went on to decide whether the registration
requirement applied even after the clarification and whether the absence of
such registration vitiated the bid and the decision to award the contract to
the appellant.
      26. The submissions which have been urged on behalf of the appellant
are that:
     (i)   The appellant was at all material times the sole bidder to whom a
           LoI was awarded by BHEL on 29 September 2022;
     (ii) There was no bidding consortium within the meaning of clause
          7.2 of the pre-qualification requirements;
     (iii) The Chinese company with whom a consortium agreement was
           entered into by the appellant had no equity in the project which
           was being contracted for by the appellant;
     (iv) The Procurement Order dated 23 July 2020 with the clarification
          which was issued thereafter on 8 February 2021 requires only a
          registration and does not impose a disqualification; and
166           SUPREME COURT REPORTS                        [2023] 13 S.C.R.


      (v) As a matter of public interest, the High Court ought not to have
          interfered consistently with settled legal principles since a large
          part of the work has already been completed.
    27. These submissions have been opposed on behalf of the respondents
who have urged that:
      (i)   The appellant did not qualify under clause 01.01.01 and could bid
            for the project only in pursuance of the experience of the Chinese
            entity with whom a collaboration agreement was entered into;
      (ii) The consortium agreement with the Chinese company specifically
           stated that the appellant did not qualify in terms of clause
           01.01.01;
      (iii) The definition of the expression ‘bidder’ in the OM dated 23 July
            2020 is broad enough so as to encompass a consortium agreement;
      (iv) The above position would be amplified by the responses submitted
           by the appellant in the course of the queries that were raised in
           the tendering process;
      (v) Clause 52 of the Special Conditions of Contract specifically
          emphasizes the conditions that were set out in the OM;
      (vi) The responses which were furnished by the appellant to the
           pre-qualification requirements contain a specific statement that
           the appellant had entered into a consortium agreement with the
           Chinese company; and
      (vii) Likewise, the Chinese company in its letter dated 18 July 2023
            clarified that it had entered into a consortium agreement in
            pursuance of which it was undertaking joint and several liability
            towards BHEL.
      28. The bid which was submitted by the appellant was lower than
the bid submitted by the first respondent in the vicinity of Rs 58 crores.
During the course of the hearing, it has been submitted on behalf of the
first respondent that the first respondent would be willing to match the bid
which was submitted by the appellant and if the contract is awarded to it
in pursuance of the impugned judgment of the Division Bench of the High
    BTL EPC LTD. v. MACAWBER BEEKAY PVT LTD AND                            167
    OTHERS [DR DHANANJAYA Y CHANDRACHUD, CJI]

Court, it would take over the contract from the stage where it was left by the
appellant. However, BHEL and Telangana State Power Generation Company
have stated that since the ongoing work is design intensive, substituting a
new entity would require redesigning of the whole project at a significant
cost to the exchequer.
      29. In assessing the validity of the rival submissions, it needs to be
noted that the Procurement Order issued by the Union Ministry of Finance
on 23 July 2020 imposes a requirement of registration where a bidder shares
a land border with India. The order specifies that such a bidder would be
eligible to bid in any procurement of goods, services (including consultancy
and non-consultancy services), or works, including turnkey projects if the
bidder is registered with the competent authority as set out in Annexure
I. The expression ‘bidder’ is defined in clause (6) in broad terms so as to
encompass any member of a consortium or joint venture. Similarly, clause
(8) also incorporates a consortium or joint venture.
      30. Clause 11 of the Order contains the following provision in relation
to the sub-contracting of works contracts in the following terms:
     “In works contracts, including turnkey contracts, contractors shall not
     be allowed to sub-contract works to any contractor from a country
     which shares a land border with India unless such contractor is
     registered with the Competent Authority. The definition of “contractor
     from a country which shares a land border with India” shall be as
     in paragraph 8 above. This shall not apply to sub-contracts already
     awarded on or before the date of this Order.”
      31. The above requirement in clause 11 was subsequently clarified in
the OM of the Union Ministry of Finance dated 8 February 2021 so as to
exclude from its ambit the procurement of goods and services. According to
the appellant, the relaxation which was granted on 8 February 2021 would
enure to its benefit. At this stage, it would be material to note that clause
01.01.02 of the pre-qualification requirements enables bidders who otherwise
do not fulfill the requirements of clause 01.01.01 to submit a bid so long as
they fulfill the requirements of having experience in the commissioning of
projects as spelt out in the paragraph and in addition, they would have to have
a collaborator or an associate who meets the requirements of clause 01.01.01.
In such a case, the bidder is required to furnish a consortium agreement
168          SUPREME COURT REPORTS                        [2023] 13 S.C.R.


jointly executed with the collaborator or associate. It was in pursuance of
the above requirement that the appellant submitted a consortium agreement
with the Chinese company.
      32. Clause 7 of the bid documents stipulates that a bidder may
collaborate or tie up in any legal form with other parties. As part of this
requirement, clause 7.2 envisages that a Memorandum of Association should
be executed between the members of a bidding consortium in which one
of the members holding at least 50% of the equity/ownership stake would
be treated as a lead member to act for and represent all the members of the
consortium. The agreement between the appellant and the Chinese company
does not fall within the description of clause 7.2 since the Chinese company
has no ownership or equity in the project, no MoU as required by the clause
was executed between the appellant and the Chinese entity and it has no
contribution in the bid. The agreement was pure and simple, an agreement
in terms of the requirements that were imposed by clause 01.01.02.
       33. Neither Telangana State Power Generation Company Limited nor
for that matter BHEL raised any dispute in regard to the eligibility of the
appellant to bid for the contract. The challenge was addressed by the first
respondent who is a competing bidder whose bid was admittedly higher than
the bid which was submitted by the successful bidder by approximately Rs
58 crores. The Procurement Order dated 23 July 2020 imposes a registration
requirement and also states that the bidder would not be eligible unless
it is registered in the event that it belongs to a country that shares a land
border with India. The primary decision on whether the appellant meets the
technical requirements of the tender on account of its collaborator/associate
being a Chinese company that was not registered had to be determined by
BHEL. BHEL has not found that there was a breach of the OM dated 23
July 2020 which, as noted earlier, has been relaxed by the subsequent OM
dated 8 February 2021. In this context, it has been submitted on behalf of
the appellant that out of a total contract value of Rs 378.64 crores in the
contract between BHEL and the appellant, the Chinese sub-contract for
carrying out design and other related aspects of the Ash Handling Plant
is to the extent of US dollars 95,000 corresponding approximately to Rs
78 lakhs, which is only 0.2% of the entire contract value. BHEL and the
Telangana State Power Generation Company found that the agreement with
     BTL EPC LTD. v. MACAWBER BEEKAY PVT LTD AND                            169
     OTHERS [DR DHANANJAYA Y CHANDRACHUD, CJI]

the Chinese company was in the nature of a service agreement and not a
“consortium” under clause 7.2 of the pre-qualification requirements. The bid
was made by the appellant as a standalone entity and not in a consortium
comprising the unregistered Chinese entity. It was neither a joint bid nor a
bid made by a bidding consortium. Thus, the registration requirement did
not apply. Further, in accordance with the pre-qualification requirements,
the appellant’s manufacturing facilities were duly examined and approved
by BHEL, and the bid was approved after due consideration and satisfaction
of BHEL, the tendering authority. The Union Government by its subsequent
OM dated 8 February 2021 has diluted the rigours of the earlier Procurement
Order dated 23 July 2020 by stipulating that the earlier order shall not affect
the procurement of goods and services per se.
     34. In this view of the matter, we are of the considered view that the
Division Bench which was considering an appeal against a judgment of
a Single Judge rejecting the writ petition ought to have proceeded with
circumspection.
      35. It is settled law that in contracts involving complex technical issues,
the Court should exercise restraint in exercising the power of judicial review.
Even if a party to the contract is ‘State’ within the meaning of Article 12
of the Constitution, and as such, is amenable to the writ jurisdiction of the
High Court or the Supreme Court, the Court should not readily interfere in
commercial or contractual matters. This principle has been reiterated in a
recent judgment of this Court. Justice J B Pardiwala, speaking for the Bench
in Tata Motors Limited v. BEST held:
     “48. 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 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
170            SUPREME COURT REPORTS                          [2023] 13 S.C.R.


       the Constitution are bound to act fairly and are amenable to the writ
       jurisdiction of superior courts but this discretionary power must 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. 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. 5
      36. The Court ought to defer to the discretion of the tender inviting
authority which, by reason of having authored the tender documents, is
best placed to interpret their terms. The Courts ought not to sit as courts of
appeal but review the decision-making process and examine arbitrariness
or mala fides, if any.6
      37. Even in a writ appeal, it is well settled that the Division Bench
would ordinarily not interfere with the judgment of a Single Judge unless
it suffers from perversity or error.
      38. Hence, having considered the rival submissions, and for the above
reasons, we are of the view that the interference of the Division Bench in
the judgment of the Single Judge was not warranted. That apart, during the
course of the hearing, it has emerged before this Court that the contract is
under implementation. Paragraphs 39 and 40 of the affidavit which was filed
before the High Court by BHEL are extracted below:
       39. Of the total Project work, 80% of the civil work, 72% of the
       structural work and 65% of the supply work of the Project in totality
       has been completed. BTL has completed around 80% of the mechanical


5     Tata Motors Limited vs Brihan Mumbai Electric Supply & Transport Undertaking
      (BEST) and Others, 2023 SCC OnLine SC 671.
6     Monte Carlo Limited vs National Thermal Power Corporation Limited, (2016) 15
      SCC 272.
     BTL EPC LTD. v. MACAWBER BEEKAY PVT LTD AND                            171
     OTHERS [DR DHANANJAYA Y CHANDRACHUD, CJI]

      engineering, supply and work worth about INR 50,00,00,000 so far.
      40. Further, 99% of the Engineering for the Wet Ash system has been
      completed by BTL. Moreover, 50% of the Civil and Structural Works
      of the Power station, being completed by BHEL, is already in place”
      39. At this stage, the High Court has, while setting aside the award
of the contract to the appellant, directed that the bid which was submitted
by the first respondent shall be considered in terms of the Notice Inviting
Tenders. Though during the course of the hearing, the first respondent has
made a statement through senior counsel that it would match the bid which
was submitted by the appellant, there can be no gainsaying the fact that
this will cause insuperable difficulties in the implementation of the contract
since the work under the contract has progressed. While the appellant was
placed on notice that this would not create any special equities in its favour,
there is apart from the interest of the appellant which is a private entity, the
interest of both the Telangana State Power Generation Company Limited
and of BHEL, both of which are public entities which have invested funds
for the realization of the project involving the setting up of the 5x800 MW
thermal power plant.
     40. For the above reasons, we allow the appeals and set aside the
judgment of the Division Bench of the High Court of Karnataka. The
judgment of the Single Judge dismissing the writ petition shall stand restored.
There shall be no order as to costs.
      41. The civil appeals are accordingly allowed.
      42. Pending applications, if any, stand disposed of.


Headnotes prepared by:                                           Appeals allowed.
Nidhi Jain