Supreme Court of India
THE STATE OF MADHYA PRADESH & ANR.versusU.P. STATE BRIDGE CORPORATION LTD.& ANR.
- Citation
- 2020 INSC 686
- Decided
- 8 December 2020
- Disposal
- Disposed off
- Bench
- R F NARIMAN
Holding
UPSBC’s bid is disqualified for omission/indictment, and the tender must be awarded to Rajkamal at UPSBC’s lower bid amount, while Rachana Construction’s appeal is dismissed.
Summary
The Madhya Pradesh Public Works Department issued a tender for a 7.473 km flyover and received bids from UPSBC, Rajkamal Builders and Rachana Construction. UPSBC was rejected on the ground that it omitted the fact of an FIR and charge‑sheet relating to a collapsed bridge, which the court held to be a material fact that must be disclosed under paragraph 13 read with paragraph 11 of Appendix IA and clause 7(b) of Annex I. The Supreme Court found that UPSBC was therefore "indicted" and its omission amounted to a fraudulent practice, rendering its bid non‑responsive. Rachana Construction’s claim that it satisfied the experience requirement under clause 2.2.2.2(ii) was rejected because the combined span of its two bridges fell short of the 50% threshold of the proposed flyover. Consequently, the Court set aside the High Court order directing a Letter of Intent to UPSBC, directed the State to issue the LOI to Rajkamal at UPSBC’s lower bid amount, and dismissed Rachana’s appeal. The appeals were disposed of accordingly.
Issues considered
- Whether UPSBC’s failure to disclose the FIR and charge‑sheet constitutes suppression of a material fact under paragraph 13 of Appendix IA and clause 7(b) of Annex I.
- Whether paragraph 13 must be read together with paragraph 11, which requires disclosure of any indictment, and the effect of such reading on bid responsiveness.
- Whether the omission amounts to a "fraudulent practice" under clause 4.3(b) of the NIT.
- Whether Rachana Construction’s experience satisfies the technical capacity requirement of clause 2.2.2.2(ii) regarding a similar work of at least 25% of the estimated project cost and the 50% span criterion.
- Whether the court may intervene in the award of the tender under the principles of judicial review.
Subjects
tenderbid rejectionomissionfraudulent practiceindictmentpublic interesttechnical bidnon‑responsive bidjudicial review
Judgment
[2020] 11 S.C.R. 821 821
THE STATE OF MADHYA PRADESH & ANR. A
v.
U.P. STATE BRIDGE CORPORATION LTD.& ANR.
(Civil Appeal No. 4002 of 2020)
DECEMBER 08, 2020 B
[R. F. NARIMAN AND K. M. JOSEPH, JJ.]
Tender – Rejection of bid on ground of omission and
suppression of relevant fact – Public Works Department of the State
issued a Notice Inviting Tender (NIT) for the construction of an
C
Elevated Corridor (Flyover) of a length of 7.473 Km – Eleven
Companies bid for the said project including UPSBC, ‘R’ Builders
and ‘Ra’ Construction Co. – The State rejected bid of UPSBC of
sum of Rs. 306.27 crores on the ground that the bidder suppressed
information required under paragraph 13 of Appendix-I-A and
clause 7(b) of Annex-I of NIT – Hence, the bid of UPSBC was D
considered to be non-responsive – Likewise, ‘Ra’ Construction Co.
bid for Rs. 293.25 crores did not fulfil the criteria under clause
2.2.2.2(ii) of the NIT for ‘one similar work’ of 25% of the estimated
project cost and was, therefore, considered non-responsive – One
‘R’ builders had bid for Rs.315.80 crores – The High Court in the
E
Writ Petition filed by UPSBC, held that as on date of submission of
the technical bid, since no investigation was pending within the
meaning of clause 7(b) of Annex-I, there was no suppression of
facts, despite the fact that an FIR had been lodged against it in
respect of a bridge constructed by it earlier and the bridge had
collapsed killing & injuring people – The High Court directed to F
issue a Letter of Intent in favour of UPSBC – As far as writ petition
filed by ‘Ra’ Construction Co. is concerned, the High Court referred
to clause 2.2.2.2(ii) of the NIT and held that there was nothing
wrong with the State’s rejection – On appeal, held : The UPSBC is
right when it refers and relies on the format which had to be strictly
G
complied with and going by the literal reading of the format for
providing declaration, which only required a disclosure of pending
investigations under clause 7(b) of Annex-I of the NIT – However,
the paragraph 13 of Appendix-I-A must be read together with
paragraph 11 thereof, which required the bidder to certify that in
regard to matters other than security and integrity of the country, H
821
822 SUPREME COURT REPORTS [2020] 11 S.C.R.
A the bidder was not convicted by a Court of law or indicted – Clearly,
in the instant case, though the investigation was no longer pending
and though there was no conviction by a Court of law, UPSBC was
certainly ‘indicted’, in that, a charge-sheet was filed against it
relatable to the FIR – So, there is an omission of a most relevant
fact and suppression of the same fact, namely that an FIR was lodged
B
against UPSBC in respect of the construction of a bridge by it – As
a result, UPSBC is disqualified – As far as ‘Ra’ Construction is
concerned, it will not be open for a Constitutional Court to substitute
their view of the view of the tendering authority, when it reads clause
2.2.2.2(ii) in the manner that was done – Therefore, the State directed
C to issue Letter of Intent to ‘R’ Builders as far as present tender is
concerned at the same financial bid as that of UPSBC.
Disposing of the appeals, the Court,
HELD: 1. It is clear that UPSBC is right when it refers to
and relies upon the Caratel Infotech judgment for the proposition
D that where there is a format which had to be strictly complied
with, his client was justified in going by the literal reading of the
aforesaid format, which only required a disclosure of pending
investigations under clause 7(b) of Annex I of the N.I.T. However,
as has correctly been pointed out by the Additional Advocate
E General and ‘R’ Builders that clause 7(b) of Annex I, which is in
terms similar to paragraph 13 of Appendix IA, must be read
together with paragraph 11 thereof, requires the bidder to certify
that in regard to matters other than security and integrity of the
country, the bidder has not been convicted by a court of law or
indicted. Clearly in the facts of the present case, though the
F investigation is no longer pending and though there is no
conviction by a court of law, UPSBC has certainly been “indicted”,
in that, a charge sheet has been filed against it relatable to the
FIR dated 15.05.2018 in which a trial is pending, though stayed
by the High Court. Also, Additional Advocate General is correct
G in stating that “fraudulent practice”, as defined in clause 4.3(b)
of the N.I.T., would include an omission of facts or disclosure of
incomplete facts in order to influence the bidding process. In the
facts of the present case, there is clearly an omission of a most
relevant fact and suppression of the same fact, namely that an
FIR had been lodged against UPSBC in respect of the
H
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 823
BRIDGE CORPORATION LTD.& ANR.
construction of a bridge by it, which had collapsed, and in which a A
charge sheet had been lodged. [Para 19][841-H; 842-A-D]
2. Adverting to UPSBC’s argument that it has been non-
suited only on application of clause 7(b) of Annex I, a reference
to the Technical Evaluation Committee’s order dated 13.03.2020
declaring UPSBC’s bid non-responsive shows that it also refers B
to Appendix IA comprising the technical bid and paragraph 13
thereof, in particular. This Court has already held that paragraph
13 has to be read along with paragraph 11, which clearly states
that a person who is “indicted” for a criminal offence has to
disclose the factum of indictment. A technical objection based on
the rejection order cannot be allowed to prevail in the face of the C
suppression of a most material fact, that is of an FIR pertaining
to the construction of a bridge by UPSBC, which has collapsed.
[Para 21][843-A-C]
3. Coming to the public interest factor, and the fact that the
financial bid of UPSBC is about Rs. 9 crores less than that of ‘R’ D
Builders, the sting has been removed inasmuch as ‘R’ Builders
readily accepts that if, as a result of UPSBC being disqualified,
his client is to be awarded the tender, he will do so at the same
amount as the financial bid of UPSBC. For all these reasons, the
impugned judgment dated 15.06.2020 (in writ petition filed by E
UPSBC) is set aside. [Para 22][843-C-D]
4. Insofar as ‘Ra’ Construction Co. is concerned, it will not
be open for a constitutional court, in accordance with all the
Supreme Court decisions, to substitute their view of the view of
the tendering authority, when it reads clause 2.2.2.2(ii) in the F
manner that has been done. Suffice it to say that the expression
“at least one similar work” could possibly mean only one such
work, namely, the construction of one such bridge and not two
such bridges, even if two bridges were to be constructed under
the same tender document. It is not possible, therefore, for this
Court to say that the construction of the aforesaid clause by the G
tendering authority is an impossible one rendering it perverse.
Also, ‘R’ Builder’s argument, though made here for the first time,
does support the State of Madhya Pradesh, in that the two road
over bridges that have been constructed under the agreement
H
824 SUPREME COURT REPORTS [2020] 11 S.C.R.
A between DFCCIL and ‘Ra’ Construction Co. have a span of only
2380 meters taken together, which is certainly less than 50% of
7.473 kilometers. For these reasons, this Court dismisses ‘Ra’
Construction Co.’s SLP and uphold the judgment dated
02.07.2020 (in writ petition filed by ‘Ra’ Construction Co.) and
the review judgment dated 04.08.2020. [Para 23][843-D-G]
B
Tata Cellular v. Union of India (1994) 6 SCC 651 :
[1994] 2 Suppl. SCR 122; Jagdish Mandal v. State of
Orissa (2007) 14 SCC 517 : [ 2006] 10 Suppl.
SCR 606; Central Coalfields Ltd. v. SLL-SML (Joint
Venture Consortium) (2016) 8 SCC 622 : [2016] 4
C SCR 890; Afcons Infrastructure Ltd. v. Nagpur Metro
Rail Corpn. Ltd, (2016) 16 SCC 818 : [2016] 3
SCR 551 – relied on.
Vinubhai Haribhai Malaviya v. State of Gujarat (2019)
17 SCC 1; Bank of India v. K. Mohandas (2009) 5 SCC
D 313 : [2009] 5 SCR 118 – inapplicable.
Secy., Deptt. of Home Secy., A.P. v. B. Chinnam Naidu
(2005) 2 SCC 746 : [2005] 1 SCR 1147 – distinguished.
Caretel Infotech Ltd. v. Hindustan Petroleum Corpn. Ltd.
E (2019) 14 SCC 81 : [2019] 6 SCR 950; Bank of India
v. K. Mohandas (2009) 5 SCC 313 : [2009] 5 SCR 118;
Montecarlo Ltd. v. NTPC Ltd. (2016) 15 SCC 272 :
[2016] 8 SCR 224 – referred to.
Case Law Reference
F [2019] 6 SCR 950 referred to Para 10
[2005] 1 SCR 1147 referred to Para 10
[2009] 5 SCR 118 referred to Para 10
[1994] 2 Suppl. SCR 122 relied on Para 13
G [2006] 10 Suppl. SCR 606 relied on Para 14
[2016] 4 SCR 890 relied on Para 15
[2016] 3 SCR 551 relied on Para 16
[2016] 8 SCR 224 referred to Para 17
H
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 825
BRIDGE CORPORATION LTD.& ANR.
[2005] 1 SCR 1147 distinguished Para 20 A
(2019) 17 SCC 1 inapplicable Para 20
[2009] 5 SCR 118 inapplicable Para 20
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4002
of 2020. B
From the Judgment and Order dated 15.06.2020 of the High Court
of Madhya Pradesh Bench at Indore in W.P. No. 6681 Of 2020.
With
Civil Appeal No. 4003 of 2020 And Civil Appeal Nos. 4004-4005
C
of 2020.
Saurabh Mishra, AAG, Anupam Lal Das, Dhruv Mehta, Sr. Advs.,
Ravindra Singh Chhabra, Dipesh Sinha, Puneet Jain, Ms. Christi Jain,
Sunny Choudhary, Manoj Munshi, Mihir Mody, Dhaval Mehrotra,
Sudhanshu Sikka, M/S. K Ashar & Co., Shekhar Sharma, B. Ramana
D
Murthy, Advs. for the appearing parties.
The Judgment of the Court was delivered by
R. F. NARIMAN, J.
1. Leave granted.
E
2. These appeals pertain to a notice inviting tender [“N.I.T.”]
dated 02.12.2019 by the State of Madhya Pradesh, Public Works
Department [“PWD”]. The N.I.T. was for the construction of an
Elevated Corridor (Flyover) from LIG Square to Navlakha Square (Old
NH 3) A-B Road in Indore district in the State of Madhya Pradesh of a
length of 7.473 kilometers. The work was for an estimated cost of Rs. F
272.66 crores, to be completed within a period of 24 months including
the rainy season. Various parts of the N.I.T. are important and are referred
to hereunder:
3. Under Section - 2, entitled “INSTRUCTIONS TO BIDDERS”,
under clause A, entitled “GENERAL”, sub-clause 2.1.4 reads as follows: G
“2.1.4 The BID shall be furnished in the format exactly as per
Appendix-I i.e. Technical Bid as per Appendix IA and Financial
Bid as per Appendix IB. BID amount shall be indicated clearly in
both figures and words, in Indian Rupees in prescribed format of
Financial Bid and it will be signed by the Bidder’s authorised H
826 SUPREME COURT REPORTS [2020] 11 S.C.R.
A signatory. In the event of any difference between figures and
words, the amount indicated in words shall be taken into account.”
Clause 2.2.2.2(ii) reads as follows:
“2.2.2.2 Technical Capacity
B xxx xxx xxx
(ii) For normal Highway projects (including Major Bridges/
ROB/ Flyovers/ Tunnels):
Provided that at least one similar work of 25% of Estimated
Project Cost Rs. 68.17 Crores (Rs.Sixty Eight Crores
C Seventeen Lakhs only) 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
D or more than 25% of the estimated project cost. If any Major
Bridge/ROB/Flyover/Tunnel is (are) part of the project, then
the sole Bidder or in case the Bidder being a Joint Venture,
any member of Joint Venture shall necessarily demonstrate
additional experience in construction of Major Bridge/ROBs/
Flyovers/Tunnel in the last 5 (Five) financial years preceding
E the Bid Due Date i.e. shall have completed at least one similar
Major Bridge/ROB/Flyover having span equal to or greater
than 50% of the longest span of the structure proposed in this
project and in case of tunnel, if any, shall have completed
construction of at least one tunnel consisting of single or twin
F tubes (including tunnel(s) for roads/ Railway/ Metro rail/
irrigation/ hydroelectric projects etc.) having at least 50% of
the cross-sectional area and 25 length of the tunnel to be
constructed in this project.”
Clause 2.2.2.5 states as follows:
G “2.2.2.5 Categories and factors for evaluation of Technical
Capacity:
(i) Subject to the provisions of Clause 2.2.2 the following
categories of experience would qualify as Technical Capacity
and eligible experience (the “Eligible Experience”) in relation
H to eligible projects as stipulated in Clauses 2.2.2.6(i) & (ii) (the
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 827
BRIDGE CORPORATION LTD.& ANR. [R. F. NARIMAN, J.]
“Eligible Projects”). In case the Bidder has experience across A
different categories, the experience for each category would
be computed as per weight of following factors to arrive at its
aggregated Eligible Experience:
Category Project/Construction experience on Factors
Eligible Projects B
1 Project in highways sector that qualify 1
under I Clause 2.2.2.6 (i)
2 Project in core sector that qualify under 0.70
Clause 2.2.2.6 (i)
3 Construction in highways sector that 1 C
qualify under Clause
2.2.2.6(ii)
4 Construction in core sector that qualify 0.70
under Clause 2.2.2.6(ii)
(ii) The Technical capacity in respect of an Eligible Project
situated in a developed country which is a member of OECD D
shall be further multiplied by a factor of 0.5 (zero point five)
and the product thereof shall be the Experience Score for such
Eligible Project.”
Under clause 2.6.2(a), the authorities reserved the right to reject
any bid, inter alia, on the following grounds: E
“2.6.2 The Authority reserves the right to reject any BID and
appropriate the BID Security if:
(a) at any time, a material misrepresentation is made or
uncovered, or…”
F
Under Section - 3, entitled “EVALUATION OF TECHNICAL
BIDS AND OPENING & EVALUATION OF FINANCIAL
BIDS”, clauses 3.1.6.1 and 3.1.6.2 state as follows:
“3.1.6. Tests of responsiveness
3.1.6.1 As a first step towards evaluation of Technical BIDs, G
the Authority shall determine whether each Technical BID is
responsive to the requirements of this RFP. Technical BID
shall be considered responsive only if:
(a) Technical BID is received online as per the format at
Appendix-IA including Annexure I, IV, V and VI (Bid Capacity H
format);
828 SUPREME COURT REPORTS [2020] 11 S.C.R.
A (b) Documents listed at clause 2.11.2 are received physically
on CPPP as mentioned;
(c) Technical Bid is accompanied by the BID Security as
specified in Clause 1.2.4 and 2.20;
(d) The Power of Attorney is uploaded on e-procurement portal
B as specified in Clauses 2.1.5;
(e) Technical Bid is accompanied by Power of Attorney for
Lead Member of Joint Venture and the Joint Bidding Agreement
as specified in Clause 2.1.6, if so required;
C (f) Technical Bid contains all the information (complete in all
respects);
(g)Technical Bid does not contain any condition or qualification;
and
(h) Copy of online receipt towards payment of cost of Bid
D document of Rs 30,000.00 (Rupees Thirty thousand only) in
favor of Chief Engineer PWD Bridge Const. Zone Bhopal is
Received;
3.1.6.2 The Authority reserves the right to reject any Technical
BID which is non-responsive and no request for alteration,
E modification, substitution or withdrawal shall be entertained by
the Authority in respect of such BID.”
Under Section - 4, entitled “FRAUD AND CORRUPT
PRACTICES”, clause 4.1 read with the definition clause contained
in clause 4.3(b), read as follows:
F “4.1 The Bidders and their respective officers, employees,
agents and advisers shall observe the highest standard of ethics
during the Bidding Process and subsequent to the issue of the
LOA and during the subsistence of the Agreement.
Notwithstanding anything to the contrary contained herein, or
G in the LOA or the Agreement, the Authority may reject a BID,
withdraw the LOA, or terminate the Agreement, as the case
may be, without being liable in any manner whatsoever to the
Bidder, if it determines that the Bidder, directly or indirectly or
through an agent, engaged in corrupt practice, fraudulent
practice, coercive practice, undesirable practice or restrictive
H
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 829
BRIDGE CORPORATION LTD.& ANR. [R. F. NARIMAN, J.]
practice in the Bidding Process. In such an event, the Authority A
shall be entitled to forfeit and appropriate the BID Security or
Performance Security, as the case may be, as Damages, without
prejudice to any other right or remedy that may be available to
the Authority under the Bidding Documents and/ or the
Agreement, or otherwise.”
B
xxx xxx xxx
“4.3 For the purpose of this Section 4, the following terms
shall have the meaning hereinafter respectively assigned to
them:
xxx xxx xxx C
(b) “fraudulent practice” means a misrepresentation or omission
of facts or suppression of facts or disclosure of incomplete
facts, in order to influence the Bidding Process”
Appendix IA consists of the letter comprising the technical bid D
addressed to the Office of the Chief Engineer, Bridge Construction
Zone - Bhopal, which has to be filled up in a particular format.
Paragraphs 11 and 13 of this letter are important and are set out
hereinbelow:
“11. I/We certify that in regard to matters other than security
E
and integrity of the country, we/ any Member of the Joint
Venture or any of our/their Joint venture member have not
been convicted by a Court of Law or indicted or adverse orders
passed by a regulatory authority which could cast a doubt on
our ability to undertake the Project or which relates to a grave
offence that outrages the moral sense of the community. F
xxx xxx xxx
13. I/We further certify that no investigation by a regulatory
authority is pending either against us/any member of Joint
Venture or against our CEO or any of our directors/ managers/
employees.” G
Appendix IB consists of the letter comprising the financial bid,
which is also in a particular format, paragraph 2 of which reads
as follows:
H
830 SUPREME COURT REPORTS [2020] 11 S.C.R.
A “2. I/We acknowledge that the Authority will be relying on the
information provided in the BID and the documents
accompanying the Bid for selection of the Contractor for the
aforesaid Project, and we certify that all information provided
in the Bid are true and correct; nothing has been omitted which
renders such information misleading; and all documents
B
accompanying the Bid are true copies of their respective
originals.”
Annex I, entitled “Details of Bidder”, contains, in clause 7, the
following:
C “7 (a) I/We further certify that no investigation by a regulatory
authority is pending either against us/any member of Joint
Venture or our sister concern or against our CEO or any of
our directors/managers/employees.
(b) I/We further certify that no investigation by any investigating
D agency in India or outside is pending either against us/ any
member of Joint Venture or our sister or against our CEO
concern or any of our directors/managers/employees.
A statement by the Bidder and each of the Members of its
Joint Venture (where applicable) disclosing material non-
E performance or contractual non-compliance in current projects,
as on bid due date ‘is given below (attach extra sheets, if
necessary) w.r.t. para 2.1.14.”
4. Eleven companies bid for the aforesaid project, including U.P.
State Bridge Corporation Limited [“UPSBC”], Rajkamal Builders
F Infrastructure Pvt. Ltd. [“Rajkamal Builders”] and Rachana
Construction Co. Insofar as UPSBC is concerned, the State of Madhya
Pradesh rejected its bid on the ground that the bidder suppressed
information required under paragraph 13 of Appendix IA and clause
7(b) of Annex I. Hence, the aforesaid bid was considered to be non-
responsive. Likewise, insofar as Rachana Construction Co. is concerned,
G it did not fulfil the criteria under clause 2.2.2.2(ii) of the N.I.T. for “one
similar work” of 25% of the estimated project cost, and was also therefore
considered non-responsive. Pursuant to the rejection of the technical bid
of UPSBC in the Technical Evaluation Committee’s meeting held on
13.03.2020, Writ Petition No. 6681 of 2020 was filed by UPSBC and by
an interim order dated 17.03.2020, the financial bid of UPSBC was
H
ordered to be opened.
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 831
BRIDGE CORPORATION LTD.& ANR. [R. F. NARIMAN, J.]
5. On the opening of the financial bids, it was found that UPSBC A
had bid for a sum of Rs. 306.27 crores and Rajkamal had bid for Rs.
315.80 crores. Being disqualified, Rachana Construction Co.’s bid for
Rs. 293.25 crores was not under consideration.
6. By the impugned judgment dated 15.06.2020 in Writ Petition
No. 6681 of 2020 filed by UPSBC, it was held that as on the date of B
submission of the technical bid, since no investigation was pending within
the meaning of clause 7(b) of Annex I, there was no suppression of
facts by UPSBC, despite the fact that an FIR dated 15.05.2018 had
been lodged against it in respect of a particular bridge constructed by it
at Janpad, Varanasi which had collapsed, killing 15 persons and injuring
11 persons. The investigation in this case resulted in a charge sheet C
being filed. After the trial commenced, the High Court of Judicature at
Allahabad, by an order dated 30.07.2019, stayed the trial. Despite these
facts not being stated in the bid document submitted by UPSBC, the
High Court found that there was no suppression of facts, as clause 7(b)
of Annex I only required details as to investigations that were pending, D
and as “investigation” as defined under the Code of Criminal Procedure
[“Cr.P.C.”] was different from inquiries and trials, there was no need to
disclose the FIR and its aftermath, as there was no “investigation pending”
strictly speaking, as it had culminated in a charge sheet. The High Court
was also swayed by the fact that there was a difference of Rs. 9 crores
between the financial bids of UPSBC and Rajkamal. Public interest E
therefore demanded that the rejection of UPSBC’s technical bid be set
aside. The State of Madhya Pradesh was therefore directed to issue a
letter of intent [“LOI”] in favour of UPSBC for the financial bid of Rs.
306.27 crores within a period of 30 days from the date of the judgment.
7. Meanwhile, Rachana Construction Co. also filed Writ Petition F
No. 8404 of 2020 challenging the rejection of its technical bid by the
State of Madhya Pradesh. By the impugned judgment dated 02.07.2020,
the High Court adverted to the judgment dated 15.06.2020 in UPSBC’s
writ petition and thereafter went on to examine whether Rachana
Construction Co.’s bid had been rightly rejected. Insofar as Rachana G
Construction Co.’s bid was concerned, the High Court referred to clause
2.2.2.2(ii) in paragraph 9 of its judgment and held that there was nothing
wrong with the State of Madhya Pradesh’s rejection, as follows:
“9. Even on merit also the petitioner has no case because as per
Clause 2.2.2.2(ii) all the tenders as also the petitioner were H
832 SUPREME COURT REPORTS [2020] 11 S.C.R.
A required to submit the proof of completion of one similar work
and the value of the executed work was to be at least 25% of the
value of the work in the present tender. Said Clause 2.2.2.2(ii) is
reproduced below:
“2.2.2.2(ii) For normal Highway projects
B (including Major Bridges/ ROB/ Flyovers/ Tunnels):
Provided that at least one similar work of 25% of Estimated
Project Cost Rs.68.17 Crores (Rs. Sixty Eight Crores
Seventeen Lakhs only) shall have been completed from the
Eligible Projects in Category 1 and/or Category 3 specified in
C 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. If any Major Bridge/ROB/
D Flyover/Tunnel is (are) part of the project, then the sole Bidder
or in case the Bidder being a Joint Venture, any member of
Joint Venture shall necessarily demonstrate additional
experience in construction of Major Bridge/ROBs/Flyovers/
Tunnel in the last 5(Five) financial years preceding the Bid
E Due Date i.e. shall have completed at least one similar Major
Bridge/ROB/Flyover having spanequal to or greater than 50%
of the longest span of the structure proposed in this project
and in case of tunnel, if any, shall have completed construction
of at least one tunnel consisting of single or twin tubes (including
tunnel(s) for roads/Railway/Metro rail/irrigation/hydro-electric
F projects etc.) having at least 50% of the cross-sectional area
and 25% length of the tunnel to be constructed in this project.”
The aforesaid Clause specifically provides that for Highway
projects including Major Bridges/ROB/Flyovers/Tunnels, at least
one similar work of 25% of Estimated Project Cost Rs.68.17
G Crores shall have been completed. The petitioner has place
reliance on the certificate issued by DFCCIL, Ahmedabad, which
reveals that the petitioner is undertaking construction work of 2
No. of road overbridges of the total contract value
Rs.76,87,90,595.00, therefore, the construction of one road
overbridge would be half of the total contract value. Though the
H
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 833
BRIDGE CORPORATION LTD.& ANR. [R. F. NARIMAN, J.]
petitioner might have signed one contract for two overbridges, A
but the cost of one overbridge would be less than 68.17 Crores
which is 25% of the present work. Hence, the Evaluation
Committee has not committed any error while declaring the
petitioner as non-responsive. Thus, even on merits, the petitioner
has no case.
B
10. Learned counsel appearing for the petitioner concluded his
arguments by submitting that the petitioner has quoted the rates
of Rs.293.25 Crores as compared to L-1 i.e. 3,06,27,00,000/-thus,
Rs. 13.00 Crores can be used for other valuable projects. As held
above, once the petitioner has been declared non-responsive, then
its financial bid and the rates quoted by the petitioner are C
immaterial.”
8. In addition, the High Court also held that Rachana Construction
Co., despite knowing that UPSBC had filed a writ petition, neither
intervened in the said writ petition nor filed an independent writ petition
on its own until much later. Considering that the UPSBC had been D
declared as L-1 by a judgment dated 15.06.2020, UPSBC should have
been arrayed as a respondent in the writ petition and not being so arrayed,
the petition also suffered from non-joinder of a necessary party and
therefore had to be dismissed.
9. Shri Saurabh Mishra, Additional Advocate General, took us E
through the N.I.T. and relied upon several clauses thereof. His principal
argument was that the expression “investigation pending” cannot be taken
to be in the sense of the Cr.P.C., as otherwise the said clause would be
rendered otiose. “Investigation pending” would necessarily include within
its scope all subsequent steps towards criminality of an accused, as a F
result of which clause 7(b) of Annex I required UPSBC to disclose
material facts. He also relied upon the clause dealing with “fraudulent
practice” and stated that the omission of a material fact would amount
to a fraudulent practice, and this being a most material fact, as a particular
bridge constructed by UPSBC had collapsed resulting in an FIR being
lodged against it, not being disclosed by UPSBC, would be fatal under G
the fraudulent practice clause also.
10. Shri Dhruv Mehta, learned Senior Advocate, appearing on
behalf of UPSBC, relied heavily on the judgment in Caretel Infotech
Ltd. v. Hindustan Petroleum Corpn. Ltd., (2019) 14 SCC 81
[“Caratel Infotech”], for the proposition that where a tender was in a H
834 SUPREME COURT REPORTS [2020] 11 S.C.R.
A particular format, nothing beyond the information that is required by that
format need be given, and since no investigation was in fact pending
against his client, clause 7(b) of Annex I could not have been invoked to
non-suit his client. He also relied upon the judgment in Secy., Deptt. of
Home Secy., A.P. v. B. Chinnam Naidu, (2005) 2 SCC 746, in which
case the petitioner concerned had to fill up a recruitment form in which
B
previous convictions had to be stated. Since merely being arrested would
not amount to a previous conviction, it was held that the petitioner could
not be said to have suppressed the fact of his being convicted. He then
argued that in any case if there is any ambiguity in the clause the rule of
contra proferentem applies, as a result of which the literal interpretation,
C which is a possible interpretation, ought to prevail, and for this he cited
Bank of India v. K. Mohandas, (2009) 5 SCC 313. He was at pains
to point out that no ground other than clause 7(b) of Annex I could now
be taken, as the ground of fraudulent practice, which was sought to be
argued by the State of Madhya Pradesh in this Court, was not a ground
on which UPSBC’s bid was rejected. He also pointed out that public
D
interest would require that the financial bid be accepted, being Rs. 9
crores less than that of Rajkamal.
11. Shri Anupam Lal Das, learned Senior Advocate appearing on
behalf of Rachana Construction Co. assailed the impugned judgments
dated 02.07.2020 and 04.08.2020 by relying upon the Contract Agreement
E dated 23.08.2017 between his client and the Dedicated Freight Corridor
Corporation of India Limited [“DFCCIL”] for the work of construction
of two nos. of road over bridges for an amount of Rs. 76.87 crores, 95%
of which had been completed, for which a payment of Rs. 68.71 crores
had been received. This being so, and this being above 25% of the
F estimated cost of the present tender (fixed at Rs. 68.17 crores), he stood
technically qualified. It was wholly incorrect for the authorities to have
bifurcated one project awarded under one tender into two, merely
because two road over bridges had to be built. He also stated that non-
joinder of a necessary party could not be held against him as all the facts
were known and UPSBC could have intervened in Rachana Construction
G Co.’s matter.
12. Shri Puneet Jain, learned counsel appearing on behalf of
Rajkamal, attacked the judgment in UPSBC’s case and supported the
judgment in Rachana Construction Co.’s case, stating that quite apart
from the clauses referred to and relied upon by the State of Madhya
H
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 835
BRIDGE CORPORATION LTD.& ANR. [R. F. NARIMAN, J.]
Pradesh, it was clear that Appendix IA had not been properly read, as A
paragraphs 11 and 13 had to be read together. Clearly paragraph 11
indicated that if UPSBC were “indicted” in a criminal case, which would
cast doubt on its ability to undertake the project, this would be sufficient
to reject UPSBC’s bid. Insofar as Rachana Construction Co. is
concerned, he referred to and relied upon clause 2.2.2.2(ii) and in
B
particular, the latter part of the clause, which required that the bidder
would have to demonstrate additional experience in respect of the bridge
to be constructed in the present tender and would have to show that it
had completed at least one similar major bridge of a span equal to or
greater than 50% of the longest span of the structure proposed in this
project. He adverted to the two road over bridges that were constructed C
under the agreement dated 23.08.2017 by Rachana Construction Co.
for DFCCIL, both being of a length of 2380 meters when taken together.
This would fall woefully short of 50% of 7.473 kilometers, which would
amount to 3.736 kilometers, and on this additional ground also, Rachana
Construction Co.’s bid ought to be rejected.
D
13. We have heard all the learned counsel for the parties. The
parameters of judicial review in matters such as the present have been
well stated in many decisions of this Court, beginning with the celebrated
Tata Cellular v. Union of India, (1994) 6 SCC 651, in which a 3
judge bench of this Court laid down the following principles:
E
“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. F
(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.
G
(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. H
836 SUPREME COURT REPORTS [2020] 11 S.C.R.
A (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
B
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.”
C
(pages 687-688)
14. Likewise, in Jagdish Mandal v. State of Orissa, (2007) 14
SCC 517, this Court held:
“22. Judicial review of administrative action is intended to
D prevent arbitrariness, irrationality, unreasonableness, bias and
mala fides. Its purpose is to check whether choice or decision
is made “lawfully” and not to check whether choice or decision
is “sound”. When the power of judicial review is invoked in
matters relating to tenders or award of contracts, certain special
E features should be borne in mind. A contract is a commercial
transaction. Evaluating tenders and awarding contracts are
essentially commercial functions. Principles of equity and
natural justice stay at a distance. If the decision relating to
award of contract is bona fide and is in public interest, courts
will not, in exercise of power of judicial review, interfere even
F if a procedural aberration or error in assessment or prejudice
to a tenderer, is made out. The power of judicial review will
not be permitted to be invoked to protect private interest at the
cost of public interest, or to decide contractual disputes. The
tenderer or contractor with a grievance can always seek
G damages in a civil court. Attempts by unsuccessful tenderers
with imaginary grievances, wounded pride and business rivalry,
to make mountains out of molehills of some technical/
procedural violation or some prejudice to self, and persuade
courts to interfere by exercising power of judicial review, should
be resisted. Such interferences, either interim or final, may
H hold up public works for years, or delay relief and succour to
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 837
BRIDGE CORPORATION LTD.& ANR. [R. F. NARIMAN, J.]
thousands and millions and may increase the project cost A
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; B
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 reached”; C
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no
interference under Article 226. Cases involving blacklisting or
imposition of penal consequences on a tenderer/contractor or D
distribution of State largesse (allotment of sites/shops, grant of
licences, dealerships and franchises) stand on a different footing
as they may require a higher degree of fairness in action.”
(pages 531-532)
15. In Central Coalfields Ltd. v. SLL-SML (Joint Venture E
Consortium), (2016) 8 SCC 622, this Court held as follows:
“47. The result of this discussion is that the issue of the
acceptance or rejection of a bid or a bidder should be looked at
not only from the point of view of the unsuccessful party but
also from the point of view of the employer. As held in Ramana F
Dayaram Shetty [Ramana Dayaram Shetty v. International
Airport Authority of India, (1979) 3 SCC 489] the terms of
NIT cannot be ignored as being redundant or superfluous. They
must be given a meaning and the necessary significance. As
pointed out in Tata Cellular [Tata Cellular v. Union of India,
(1994) 6 SCC 651] there must be judicial restraint in interfering G
with administrative action. Ordinarily, the soundness of the
decision taken by the employer ought not to be questioned but
the decision-making process can certainly be subject to judicial
review. The soundness of the decision may be questioned if it
is irrational or mala fide or intended to favour someone or a H
838 SUPREME COURT REPORTS [2020] 11 S.C.R.
A decision “that no responsible authority acting reasonably and
in accordance with relevant law could have reached” as held
in Jagdish Mandal [Jagdish Mandal v. State of Orissa, (2007)
14 SCC 517] followed in Michigan Rubber [Michigan Rubber
(India) Ltd. v. State of Karnataka, (2012) 8 SCC 216] .
B 48. Therefore, whether a term of NIT is essential or not is a
decision taken by the employer which should be respected.
Even if the term is essential, the employer has the inherent
authority to deviate from it provided the deviation is made
applicable to all bidders and potential bidders as held in Ramana
Dayaram Shetty [Ramana Dayaram Shetty v. International
C Airport Authority of India, (1979) 3 SCC 489]. However, if the
term is held by the employer to be ancillary or subsidiary, even
that decision should be respected. The lawfulness of that
decision can be questioned on very limited grounds, as
mentioned in the various decisions discussed above, but the
D soundness of the decision cannot be questioned, otherwise this
Court would be taking over the function of the tender issuing
authority, which it cannot.”
(page 638)
16. Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn.
E Ltd., (2016) 16 SCC 818, puts the proposition extremely well when it
states:
“14. We must reiterate the words of caution that this Court
has stated right from the time when Ramana Dayaram Shetty
v. International Airport Authority of India [Ramana Dayaram
F Shetty v. International Airport Authority of India, (1979) 3 SCC
489] was decided almost 40 years ago, namely, that the words
used in the tender documents cannot be ignored or treated as
redundant or superfluous — they must be given meaning and
their necessary significance. In this context, the use of the
G word “metro” in Clause 4.2(a) of Section III of the bid
documents and its connotation in ordinary parlance cannot be
overlooked.
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
H
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 839
BRIDGE CORPORATION LTD.& ANR. [R. F. NARIMAN, J.]
documents. The constitutional courts must defer to this A
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
B
acceptable to the constitutional courts but that by itself is not a
reason for interfering with the interpretation given.”
(page 825)
17. This view of the law has been subsequently reiterated and
followed in Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272 C
(see paragraph 25 at page 287) and Caratel Infotech (supra) (see
paragraphs 38-39 at pages 92-93).
18. Judged by these parameters, it is clear that this Court must
defer to the understanding of clauses in tender documents by the author
thereof unless, pithily put, there is perversity in the author’s construction D
of the documents or mala fides. As against this, Shri Dhruv Mehta is
also correct in drawing our attention to Caratel Infotech (supra), and
in particular, to paragraphs 4, 9, 22 and 23, which are set out hereinbelow:
“4. The appellant submitted the bid in respect of the e-tender
on 19-12-2017. In terms of Clause 20 extracted aforesaid, a E
format had been provided for the declaration to be made, which
is as under:
“DECLARATION NON BLACKLISTED/NON
BANNED/NON HOLIDAY LISTED PARTY
We confirm that we have not been banned or blacklisted or F
delisted or holiday listed by any government or quasi-
government agencies or public sector undertakings
Date: __________
Name of Tenderer: _______________
G
Place: __________
Signature & Seal of Tenderer: _____________
Note: If a bidder has been banned by any government or quasi-
government agencies or public sector undertakings, this fact
H
840 SUPREME COURT REPORTS [2020] 11 S.C.R.
A must be clearly stated with details. If this declaration is not
given along with the unpriced bid, the tender will be rejected
as non-responsive.”
The appellant submitted the declaration in terms aforesaid i.e.
stating that the appellant had not been blacklisted by any
B government or quasi-government agency or public sector
undertakings.”
(page 85)
C “9. The decision of the High Court is predicated on two facts—
firstly the non-disclosure of the factum of the show-cause notice
issued to the appellant amounted to violation of the undertaking.
Linked to this issue is that Clause 20(iii) of the tender provided
for an integrity pact “ensuring transparency and fair dealing”
and that integrity pact had been duly signed and submitted by
D the appellant. Secondly, the Division Bench doubted the
compliance, by the appellant, of Clause 8 read with Clause
10(g) of Section 4 of the tender. This controversy pertains to
the clause dealing with the business continuity and the
requirement of submitting a valid ISO certificate for the purpose
E of securing the tender. The relevant clauses read as under:
“8. Business continuity
OMCs currently have an agreement for inbound calls with
a service provider based in different regions. The successful
bidder has to submit the transition plan to migrate to new
F platform and facility with “zero” disruption of services with
respect to the following areas:
(a) Toll-free services.
(b) IVRS based call handling.
G (c) Diversion of call traffic at the successful bidder’s
premises.
(d) Trained operators at the time of Go-Live date.
***
H
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 841
BRIDGE CORPORATION LTD.& ANR. [R. F. NARIMAN, J.]
10. Other mandatory requirements: A
***
(g) Valid ISO Certification 27001 for security and ISO 2301
for business continuity.””
(page 86) B
“22. It is no doubt true that Clause 20 does provide for four
eventualities, as submitted by the learned counsel for
Respondent 3. The present case is not one where on the
date of submission of the tender the appellant had been
banned, blacklisted or put on holiday list. The question before C
us, thus, would be the effect of an action for blacklisting
and holiday listing being initiated. The declaration to be given
by the bidder is specified in Clause 20(ii), which deals with
the first three aspects. The format enclosed with the tender
documents also refers only to these three eventualities. It
is not a case where no specific format is provided, where D
possibly it could have been contended that the disclosure
has to be in respect of all the four aspects. The format
having been provided, if initiation of blacklisting was to be
specified, then that ought to have been included in the format.
It cannot be said that the undertaking by the appellant made E
it the bounden duty of the appellant to disclose the aspect
of a show-cause notice for blacklisting. We say so as there
is a specific clause with the specific format provided for,
requiring disclosures, as per the same.
23. It may be possible to contend that the format is not F
correctly made. But then, that is the problem of the framing
of the format by Respondent 1. It appears that Respondent
1 also, faced with the factual situation, took a considered
view that since Clause 20(i) provided for the four
eventualities, while the format did not provide for it, the
appellant could not be penalised. May be, for future the G
format would require an appropriate modification!”
(page 89)
19. It is clear that Shri Dhruv Mehta is right when he refers to
and relies upon the aforesaid judgment for the proposition that where
H
842 SUPREME COURT REPORTS [2020] 11 S.C.R.
A there is a format which had to be strictly complied with, his client was
justified in going by the literal reading of the aforesaid format, which
only required a disclosure of pending investigations under clause 7(b) of
Annex I of the N.I.T. However, as has correctly been pointed out by
Shri Saurbh Mishra and Shri Puneet Jain, clause 7(b) of Annex I, which
is in terms similar to paragraph 13 of Appendix IA, must be read together
B
with paragraph 11 thereof, which, as has been pointed out hereinabove,
requires the bidder to certify that in regard to matters other than security
and integrity of the country, the bidder has not been convicted by a court
of law or indicted. Clearly in the facts of the present case, though the
investigation is no longer pending and though there is no conviction by a
C court of law, UPSBC has certainly been “indicted”, in that, a charge
sheet has been filed against it relatable to the FIR dated 15.05.2018 in
which a trial is pending, though stayed by the High Court. Also, Shri
Saurabh Mishra is correct in stating that “fraudulent practice”, as defined
in clause 4.3(b) of the N.I.T., would include an omission of facts or
disclosure of incomplete facts in order to influence the bidding process.
D
In the facts of the present case, there is clearly an omission of a most
relevant fact and suppression of the same fact, namely that an FIR had
been lodged against UPSBC in respect of the construction of a bridge
by it, which had collapsed, and in which a charge sheet had been lodged.
20. This being the case, Secy., Deptt. of Home Secy., A.P. v.
E B. Chinnam Naidu, (2005) 2 SCC 746 is clearly distinguishable, as in
the facts of that case, the expression “convicted” could not have possibly
included the factum of arrest which was pre-conviction. On the facts of
the present case, we have seen as to how UPSBC has indulged in a
fraudulent practice and has suppressed the fact that it was indicted for
F offences relatable to the construction of a bridge by it, which had collapsed.
Equally, paragraphs 12 to 18 of the judgment in Vinubhai Haribhai
Malaviya v. State of Gujarat, (2019) 17 SCC 1, which distinguish
between investigation, inquiry and trial in a criminal case, are also of no
avail to UPSBC in view of the finding hereinabove. Equally, the well-
known rule of contra proferentem as expounded in Bank of India v. K.
G Mohandas, (2009) 5 SCC 313 (at paragraph 32) is also of no avail,
given the fact that there is no ambiguity whatsoever insofar as the
fraudulent practice clause and paragraph 11 of Appendix IA are
concerned.
H
THE STATE OF MADHYA PRADESH & ANR. v. U.P. STATE 843
BRIDGE CORPORATION LTD.& ANR. [R. F. NARIMAN, J.]
21. Adverting to Shri Dhruv Mehta’s argument that his client has A
been non-suited only on application of clause 7(b) of Annex I, a reference
to the Technical Evaluation Committee’s order dated 13.03.2020
declaring UPSBC’s bid non-responsive shows that it also refers to
Appendix IA comprising the technical bid and paragraph 13 thereof, in
particular. We have already held that paragraph 13 has to be read along
B
with paragraph 11, which clearly states that a person who is “indicted”
for a criminal offence has to disclose the factum of indictment. A technical
objection based on the rejection order cannot be allowed to prevail in the
face of the suppression of a most material fact, that is of an FIR pertaining
to the construction of a bridge by UPSBC, which has collapsed.
22. Coming to the public interest factor, and the fact that the C
financial bid of UPSBC is about Rs. 9 crores less than that of Rajkamal,
the sting has been removed inasmuch as Shri Puneet Jain readily accepts
that if, as a result of UPSBC being disqualified, his client is to be awarded
the tender, he will do so at the same amount as the financial bid of
UPSBC. For all these reasons, the impugned judgment dated 15.06.2020 D
is set aside.
23. We now come to Rachana Construction Co.’s case. Insofar
as Rachana Construction Co. is concerned, it will not be open for a
constitutional court, in accordance with all the decisions cited hereinabove,
to substitute their view of the view of the tendering authority, when it E
reads clause 2.2.2.2(ii) in the manner that has been done. Suffice it to
say that the expression “at least one similar work” could possibly mean
only one such work, namely, the construction of one such bridge and not
two such bridges, even if two bridges were to be constructed under the
same tender document. It is not possible, therefore, for this Court to say
that the construction of the aforesaid clause by the tendering authority is F
an impossible one rendering it perverse. Also, Shri Puneet Jain’s argument,
though made here for the first time, does support the State of Madhya
Pradesh, in that the two road over bridges that have been constructed
under the agreement between DFCCIL and Rachana Construction Co.
have a span of only 2380 meters taken together, which is certainly less G
than 50% of 7.473 kilometers. For these reasons, we dismiss Rachana
Construction Co.’s SLP and uphold the judgment dated 02.07.2020 and
the review judgment dated 04.08.2020.
24. Given the lapse of time taken in court proceedings, the State
of Madhya Pradesh is directed to issue a LOI as soon as is practically H
844 SUPREME COURT REPORTS [2020] 11 S.C.R.
A possible to Rajkamal insofar as the present tender is concerned at the
same financial bid as that of UPSBC. All the appeals are disposed of
accordingly.
Ankit Gyan Appeals disposed of.
B
C
D
E
F
G
H
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "tender"Sign in to search