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Technical bid & price bid – two Bids – Six were selected – the respondent No.2 quoted less bid, he was awarded with contract works – contract for the supply of 486 Standard Gauge Cars Electrical Multiple Units meant for use in Phase-III of the Mass Rapid Transit System (‘MRTS’ for short) for Delhi and its extension corridors.- Writ – D.B. Declined to interfere as there is no fraud, illegality etc., in allotment of contract – Apex court dismissed the appeal and further held that in the absence of fraud, illegality etc., no court should interfere with the judgement of experts which accepted the bid and allotted contract simply because some of the experts differ with the opinion of experts = M/s Siemens Aktiengeselischaft & S. Ltd. …Appellant Versus DMRC Ltd. & Ors. …Respondents = 2014 ( Feb. Part) judis.nic.in/supremecourt/filename=41226

Technical bid & price bid  – two Bids – Six were selected –  the respondent No.2 quoted less bid, he was awarded with contract works –  contract for the supply of 486 Standard  Gauge Cars Electrical Multiple Units meant for use in Phase-III of the Mass  Rapid Transit System (‘MRTS’ for short) for Delhi  and  its  extension  corridors.- Writ – D.B. Declined to interfere as there is no fraud, illegality etc., in allotment of contract – Apex court  dismissed the appeal and further held that in the absence of fraud, illegality etc., no court should interfere with the judgement of experts which accepted the bid and allotted contract simply because some of the experts differ with the opinion of experts =

D.B. Delhi High court declined  to

interfere with the award of a contract for the supply of 486 Standard  Gauge

Cars Electrical Multiple Units meant for use in Phase-III of the Mass  Rapid

Transit System (‘MRTS’ for short) for Delhi  and  its  extension  corridors.

 

The High Court has taken the view that the  process  of  evaluation  of  the

bids received from eligible bidders culminating in the award of  a  contract

in favour of respondent No.2-Hyundai Rotem Company   (‘HR’  for  short)  was

transparent  and  did  not  suffer  from  any  illegality,  irregularity  or

perversity of any kind to warrant interference by it. 

The  High  Court  held

that the bidders were well aware of and had accepted the  tender  conditions

which were free  from  any  vagueness  or  uncertainty.  The  parameters  of

evaluation conditions were also held to have been applied uniformly  to  all

the bidders under a  procedure  that  was  open,  transparent  and  fair  as

required by  law.  

The  present  appeal  assails  the  correctness  of  that

judgment and order.  =

That

the Committee comprised a former Finance  Secretary  to  the  Government  of

India and a Civil Engineer, none of whom could claim to  be  expert  in  the

field relevant to the achievability of the GEC values, was not  disputed  by

Mr. Parasaran who urged that the Committee may have  taken  the  opinion  of

some experts on the subject.  Even assuming that  the  Committee  has  taken

expert advice regarding the tenability of the GEC values offered by  HR,  it

would simply mean that there is a conflict between the views  taken  by  the

experts of DMRC and those consulted by the  Committee.   Any  such  conflict

cannot be resolved by this Court in  exercise  of  its  powers  of  judicial

review.  So long  as  the  view  taken  by  the  experts  of  the  authority

competent to take a final decision is a possible view  the  very  fact  that

some other experts have expressed doubts about  the  sustainability  of  the

GEC values will not be enough for us to declare that the values  offered  by

HR are indeed  unachievable.   

This  Court  has  in  Federation  of  Railway

Officers Association v. Union  of  India  (2003)  2  SCR  1085,  stated  the

wholesome principle applicable in such situations in the following words:

 “Further, when technical questions  arise  and  experts  in  the

           field have expressed various views and all  those  aspects  have

           been taken into consideration by the Government in deciding  the

           matter, could it still be said that this Court should re-examine

           to interfere with the same. The  wholesome  rule  in  regard  to

           judicial interference in administrative decisions is that if the

           Government  takes  into  consideration  all  relevant   factors,

           eschews from considering irrelevant factors and acts  reasonably

           within the parameters of the law,  courts  would  keep  off  the

           same.”

30.   Reference may also be made to the  decision  of  this  Court  in  N.D.

Jayal v. Union of India (2004) 9 SCC 362 where this Court observed:

 “This Court cannot sit in judgment  over  the  cutting  edge  of

           scientific analysis relating  to  the  safety  of  any  project.

           Experts in science may themselves differ in their opinions while

           taking  decisions  on  matters  related  to  safety  and  allied

           aspects. The opposing viewpoints of the experts will  also  have

           to be given due consideration after full  application  of  mind.

           When the Government  or  the  authorities  concerned  after  due

           consideration of all viewpoints and  full  application  of  mind

           took a decision, then it is not appropriate  for  the  court  to

           interfere.”

 

31.   Reliance by  the  appellant  upon  the  report  of  the  Committee  is

misplaced also for the reason that the same  was  ex  parte.  

It  is  common

ground that HR was never  associated  with  the  process  of  evaluation  or

verification if any conducted by the Committee.

In the absence of any  such

opportunity to the party whose GEC values were being test checked for  their

achievability, the report can hardly provide a sound basis for a writ  court

to upset a decision which  the  competent  authority  has  taken  after  due

deliberations by not one but four different Committees including experts  in

the field.  

That  apart,  Mr.  Parasaran  fairly  submitted  that  even  the

Government have not accepted the report submitted by the Committee  so  far.

He urged that since the matter was pending in  this  Court,  the  Government

has simply placed the report of the Committee in  a  sealed  cover  for  the

Court to decide as to what value has to be attached to it.  

That  being  the

position, the preparation and submission of a  report  that  does  not  even

take the view point of the party  affected  by  it  into  consideration  can

hardly provide to this Court a good reason to scuttle the entire process  at

this stage when HR, the successful bidder,  has  already  taken  substantial

steps in the direction of executing the works allotted to it.

 

32.   Last but not the least, if the note submitted by the Director  in  the

MoUD is an indication of what the Committee may have  said,  the  difference

in the GEC values pointed out in the report of the Director,  may  have  led

to CAF which was also an  eligible  bidder  emerging  as  L-1  and  not  the

appellant.  

In terms of cost of the project it would hardly make  a  sizable

difference so as to justify a reversal of the steps that have  already  been

taken for execution of a project  that  is  of  utmost  importance  for  the

people living in the national capital execution whereof can brook  no  delay

especially when the same is being financed by an  agency  from  outside  the

country.

 In the result this appeal fails and is, hereby, dismissed  with  costs

of Rs.5,00,000/- to be deposited  within  six  weeks  from  today  with  the

Supreme Court Advocates-on-Record Welfare Fund.

 

2014 ( Feb. Part) judis.nic.in/supremecourt/filename=41226

T.S. THAKUR, C. NAGAPPAN

 

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2068 OF 2014
(Arising out of S.L.P. (C) No.19233 of 2013)
M/s Siemens Aktiengeselischaft & S. Ltd. …Appellant

Versus

DMRC Ltd. & Ors. …Respondents
J U D G M E N T

T.S. THAKUR, J.

1. Leave granted.
2. A Division Bench of the High Court of Delhi has by a common order
passed in Writ Petition (C) No.1853 of 2013 filed by the appellant and Writ
Petition No.2615 of 2013 filed by Alstom Transport India Ltd. declined to
interfere with the award of a contract for the supply of 486 Standard Gauge
Cars Electrical Multiple Units meant for use in Phase-III of the Mass Rapid
Transit System (‘MRTS’ for short) for Delhi and its extension corridors.
The High Court has taken the view that the process of evaluation of the
bids received from eligible bidders culminating in the award of a contract
in favour of respondent No.2-Hyundai Rotem Company (‘HR’ for short) was
transparent and did not suffer from any illegality, irregularity or
perversity of any kind to warrant interference by it. The High Court held
that the bidders were well aware of and had accepted the tender conditions
which were free from any vagueness or uncertainty. The parameters of
evaluation conditions were also held to have been applied uniformly to all
the bidders under a procedure that was open, transparent and fair as
required by law. The present appeal assails the correctness of that
judgment and order. Alstom Transport India Ltd. & Ors.-Writ-Petitioners in
connected Writ Petition No.2615 of 2013 have, however, remained content
with the view taken by the High Court and have not chosen to appeal.

3. Respondent-Delhi Metro Rail Corporation (‘DMRC’ for short) has
planned to implement Phase-III of the MRTS for Delhi to keep pace with the
ever increasing traffic demands in Delhi. Phase-III of the MRTS, Delhi
comprises metro corridors of Mukundpur-Rajori Garden-Dhaula Kuan – Maujpur
– Gokulpuri and Janakpuri (West)–Munirka – Kalkaji – Kalindi Kunj –
Botanical Garden – (Noida). The project, it is common ground, is financed
with the help of a loan secured by the DMRC from Japan International
Cooperation Agency (‘JICA’ for short). The loan agreement, inter alia,
stipulates the bid procedure to be followed by DMRC. What is noteworthy is
that the procedure, inter alia, provides for submission of tenders to JICA
for review, concurrence and analysis of bids by the DMRC and reserves with
the JICA the discretion to convey its views regarding the analysis of the
bids and the proposal for award of the works.

4. In keeping with the requirements of the agreement between DMRC and
JICA, the former invited sealed tenders in two parts (Technical & Price
Bid) on International Competitive Bid (‘ICB’ for short) basis for the
design, manufacture, supply, testing, commissioning and training of 486
number of Standard Gauge Cars Electrical Multiple units referred to earlier
at an estimated budget cost of Rs.3500 crores funded by JICA. Pre-bid
meetings were held to answer the queries, if any, raised by the bidders.
The DMRC in the meantime issued as many as 9 Addenda which necessitated the
change in the dates fixed for submission of bids to enable the bidders to
formulate their offers and make their bids in accordance with the terms and
conditions finally stipulated for the purpose. DMRC eventually received
eight bids including one submitted by the appellant before us. The
technical bids were opened on 18th September, 2012 whereupon only six of
the bidders including the appellant were declared to be eligible. With the
opening of the technical bids GEC values which the bidders were required to
submit as a part of their technical bid and which were relevant and to a
great extent critical for evaluation of the price bid under the applicable
terms and conditions also became known to the bidders. The financial bids
offered by these six bidders were then opened on 9th February, 2013 and the
bid amount along with GEC values offered by each bidder announced by the
DMRC. The price quotations of the six bidders found eligible were as under:

|Bidder |Grand Total in |INR per Car |Position before |
| |INR |(without |Loading due to |
| | |loading) |difference in |
| | | |GEC values |
|Siemens Consortium |3625,27,92,409 |7,45,94,223 |L-1 |
|Bombardier |4242,27,83,378 |8,72,89,678 |L-2 |
|Consortium | | | |
|Hyundai ROTEM |4290,57,94,689 |8,82,83,528 |L-3 |
|Alstom Consortium |4373,87,65,001 |8,99,97,459 |L-4 |
|CAF Consortium |4614,18,66,794 |9,49,42,113 |L-5 |
|Hitachi + BHEL |4891,32,60,656 |10,06,44,569 |L-6 |

5. Significantly, however, the above did not represent the true inter se
position of the bidders. That was so because apart from the price
quotation, the terms and conditions of the tender notice required loading
of GEC values duly converted into Indian rupee to the price quotation of
each eligible bidder. The GEC values in turn comprised two distinct
components, namely, ‘X’ factor representing the electricity consumption for
the operation of the train without HVAC and ‘Y’ factor for operation of
HVAC. The GEC values offered by the six bidders found technically compliant
were as under:

|S.No. |Bidder |Other than |HVAC (‘Y’) |Total|
| | |HVAC (‘X) | | |
|1 |ALSTOM |1434 |595 |2029 |
|2 |BTC |1621 |564 |2185 |
|3 |CAFC |1159 |790 |1949 |
|4 |HBC |1767 |514 |2281 |
|5 |HRC |1259 |567 |1826 |
|6 |SIEMENS |1560 |786 |2346 |
6. In terms of Annexure ITT-8 the GEC value of respondent No.2 which was
the lowest was taken as the baseline for the purpose of loading the rupee
equivalent of the higher values offered by other bidders on to their price
bids. The Indian rupee conversion of the said value above the baseline,
proportionate to the higher GEC values was worked out as under:

|S.No.|Bidder |GEC |GEC for |INR |
| | |(‘X’ + |loading | |
| | |‘Y’) | | |
| | |KWH | | |
|1 |ALSTOM |2029 |203 |6,911,264,587.08 |
|2 |BTC |2185 |359 |12,222,384,171.24 |
|3 |CAFC |1949 |123 |4,187,613,518.28 |
|4 |HBC |2281 |455 |15,490,765453.80 |
|5 |HRC |1826 |O |0 |
| | | |(baseline) | |
|6 |SIEMENS |2346 |520 |17,703,731,947.20 |
7. The position that emerged after the GEC values component was loaded
to the price bid of the bidder was as under:

|Bidder |Grand |INR per|Posit|Grand |INR per |Posit|Total|SEC |
| |Total in |Car |ion |Total |Car |ion |Energ|valu|
| |INR |(withou|befor|(with |(with |after|y |e |
| | |t |e |energy |loading)|loadi|(kWH)|(kWH|
| | |loading|Loadi|loading) | |ng | |/ |
| | |) |ng |in INR | | | |1000|
| | | | | | | | |GTKM|
| | | | | | | | |) |
|Siemens|3625,27,92|7,45,94|L-1 |5395,65,24|11,10,21|L-4 |2346 |55.7|
|Consort|,409 |,223 | |,355 |,655 | | |1 |
|ium | | | | | | | | |
|Bombard|4242,27,83|8,72,89|L-2 |5464,51,67|11,24,38|L-5 |2185 |51.8|
|ier |,378 |,678 | |,548 |,616 | | |9 |
|Consort| | | | | | | | |
|ium | | | | | | | | |
|Hyundai|4290,57,94|8,82,83|L-3 |4290,57,94|8,82,83,|L-1 |1826 |43.3|
|ROTEM |,689 |,528 | |,690 |528 | | |6 |
|Alstom |4373,87,65|8,99,97|L-4 |5065,00,29|10,42,18|L-3 |2029 |48.1|
|Consort|,001 |,459 | |,588 |,168 | | |8 |
|ium | | | | | | | | |
|CAF |4614,18,66|9,49,42|L-5 |5032,94,80|10,35,58|L-2 |1949 |46.2|
|Consort|,794 |,113 | |,313 |,601 | | |8 |
|ium | | | | | | | | |
|Hitachi|4891,32,60|10,06,4|L-6 |6440,40,26|13,25,18|L-6 |2281 |54.1|
|+ BHEL |,656 |4,569 | |,108 |,572 | | |7 |
8. It is evident from a comparative study of the charts extracted above,
that while the appellant was L-1 in the price bid, it went down to L-4
after GEC value was loaded to its price bid. On the contrary respondent
No.2-HR who was L-3 in the price bid rose to L-1 position on account of its
low GEC value in comparison to a higher GEC value offered by the appellant.
9. Allotment of the award in favour of HR as the lowest bidder, thus,
appeared as a writing on the wall to the appellant who sent a communication
dated 12th February, 2013 to DMRC alleging that the GEC values offered by
HR were untenable and unsustainable and pointing out that since the
appellant’s price bid was lesser than that of the HR by 665 crores
(approx.) it should be taken as L-1 instead of determining the inter se
position of the bidders on the basis of a supposedly anticipated saving in
the consumption of energy on a lifecycle of 30 years. Yet another letter
dated 25th February, 2013 the appellant called for evaluation of energy
values by an independent third party agency so as to ascertain whether the
GEC values offered by HR were achievable. Yet another letter dated 1st
March, 2013 to the same effect having failed to cut any ice with the DMRC,
the appellant preferred Writ Petition No.1853 of 2013 before the High Court
of Delhi. That writ petition was notified for hearing on 1st May, 2013. In
the meantime DMRC issued a Letter of Acceptance in favour of HR under
intimation to the appellant. The appellant, therefore, sought a restraint
order against the award of the contract before the High Court who in turn
accepted an undertaking given by the counsel for the DMRC and HR that they
will not act in pursuance of the letter of award pending disposal of the
writ petition.

10. Alstom Transport India Ltd. was the only other bidder aggrieved by
the award of the contract who filed Writ Petition No.2615 of 2013
challenging the tender process. Both the writ petitions were eventually
heard by the High Court on 1st May, 2013 and dismissed by the order under
appeal before us.

11. Appearing for the appellant, Mr. U.U. Lalit, learned senior counsel,
fairly conceded that the appellant had not alleged any mala fides, bias or
bad faith in the matter of evaluation of the bids by the DMRC or any
process connected therewith nor even in the award of the contract in favour
of HR, the successful bidder. He contended that the tender notice no doubt
required GEC values to be offered by the bidders to be made use of in the
process of the evaluation of the bids but such values were not sacrosanct
or immune from scrutiny and evaluation to determine whether the same were
at all achievable. He submitted that since all the six bidders competing
for the contract are significant players in the international market, they
could with a reasonable amount of certainty say whether or not the GEC
values offered by the bidders were sustainable. It was contended by Mr.
Lalit that while the GEC value offered by the appellant was the highest,
the one offered by the respondent successful bidder for ‘X’ factor was
wholly untenable. He urged that the terms of the tender notice required the
GEC values offered by the bidders to be validated before they could be used
for processing the bids. He drew considerable support from a report
submitted by the Director, Ministry of Urban Development, Government of
India, to suggest that the stimulation test conducted by DMRC as a part of
the process of verification and validation of the GEC value offered by HR
was not accurate and urged that the Government of India had appointed a two-
member Committee to check the evaluation process of the bids. The report
of the Committee filed by the Government in this Court in a sealed cover
could, according to the learned Counsel, throw considerable light on the
subject and help this Court in deciding whether an independent verification
of the GEC values was necessary.

12. Mr. Andhyarujina, learned counsel for the respondent-DMRC, on the
other hand, argued that the bids offered by the eligible tenderers were
evaluated by three different Committees i.e. the Evaluation Committee, the
Appraisal Committee and finally by the Tender Committee in a fair and
transparent manner. On receipt of the representations from the appellant-
Siemens, Bombardier, Alstom and Hitachi regarding the GEC values offered by
HR, the Board of Directors of DMRC constituted a sub-Committee to consider
the said representations. The Board sub-Committee consisted of six
directors out of whom three were Functional Directors besides MD of the
DMRC, a nominee Director of MoUD of Indian Railways and one independent
Director. The Sub-Committee met on 4th and 5th March, 2013 and thoroughly
examined the issues raised in the representation and found the detailed
explanations provided in the Tender Committee Minutes to be satisfactory.
The Sub-Committee, therefore, agreed with the recommendations of the Tender
Committee culminating in the issue of a Letter of Acceptance to respondent-
HR. Our attention was drawn to the counter- affidavit filed by the DMRC in
which the process of evaluation of the bids and the GEC values has been set
out. The counter-affidavit further states that the DMRC was fully
satisfied about the achievability of the GEC values offered by HR. There
was, therefore, no room for validation of the GEC values by any outside
agency.

13. It was further contended by Mr. Andhyarujina that the tender
conditions specifically provide for levy of a penalty in case of failure of
the committed GEC values. He referred to ERTC 3.24.1 according to which
the defaulting Contractor shall be liable to pay penalty at the rate of
Rs.4.03 crores per unit of electricity committed in excess of the GEC
values declared by it. The penalty stipulated thus works out to be
approximately 18.47% which is significantly higher than the rupee component
loaded for each unit, argued the learned counsel. This implies that the
lowest tenderer is under an onerous obligation to make good the GEC values
or else end up paying a penalty at a rate which is higher than the amount
by which the financial bid has been loaded on a per unit of energy basis.
The Letter of Acceptance issued to HR also makes a specific provision for
levy of penalty and, thus, fully secures the interest of the DMRC.

14. Reliance upon the additional documents and the report of the
Committee appointed by the MoUD was, according to Mr. Andhyarujina, wholly
misplaced. He submitted that there was no occasion for the Government to
appoint a Committee for evaluation of the bids received by DMRC which was
an autonomous entity. The appointment of the Committee at the instance of
the Minister in disregard of the observations made by the Secretary MoUD
was not proper, argued the learned counsel, especially when the matter was
pending adjudication before the High Court. The appointment of the
Committee was in any case not disclosed to the High Court by the Union of
India on 1st May, 2013 when the matter was taken up for hearing. It was
contended that the DMRC had at all times maintained that there was no
question of any enquiry by an outside body regarding the evaluation of the
bids received by it not even by the Government of India. He drew support
for that submission from the following statement made in the affidavit
filed by the Union of India in this Court:

“All tenders are floated and finalized by respective Metro Rail
Corporations including DMRC. MoUD has no role in
award/cancellation of any contract/tender.”
15. It was argued that the DMRC had also in its reply dated 14th August,
2013 sent to the Government clearly stated that it would not respond to the
preliminary observations of the Committee as the matter had in the meantime
travelled to this Court and was sub judice. Legal opinion obtained by the
DMRC from a Senior Advocate of this Court, also advised that in a matter
that is sub judice, any report by any outside Enquiry Committee appointed
by the Government would be impermissible and improper nor would it be
advisable for DMRC to participate in any such exercise. In the premises it
was contended that the Report by the Enquiry Committee submitted to this
Court in a sealed cover need not be looked into as the same was wholly
extraneous to a judicial review of the process of evaluation and eventual
award of the contract by DMRC, the authority competent to do so. Relying
upon the decisions of this Court in Amrik Singh Lyallpuri v. Union of India
& Ors. (2011) 6 SCC 535 and Union of India v. K.M. Shankarappa (2001) 1 SCC
582, it was argued that administrative review of a judicial decision was
not legally permissible. It was also contended by Mr. Andhyarujina that
pursuant to the allotment made in his favour, HR had taken substantial
steps towards implementation of the project and that interference with the
award of the contract at this belated stage was neither in public interest
nor otherwise justified in the facts and circumstances of the case.

16. Appearing for the respondent No.2-HR, Mr. Venugopal, learned senior
counsel adopted the submissions of Mr. Andhyarujina and took strong
exception to the constitution of a Committee by the Minister of Urban
Development, Government of India on a subject which was subjudice before
the High Court. It was contended by Mr. Venugopal that the constitution of
the Committee was not only against the sound advice tendered by the
Secretary to the Government, Minister of Urban Development Department but
was tantamount to interference with the course of justice. Relying upon
the decision of the Full Bench of the High Court of Patna in The King v.
Parmanand and Ors. AIR 1949 Patna 222 and D. Jones Shield v. N. Ramesam &
Ors. AIR 1955 AP 156; In Re: P.C. Sen AIR 1970 SC 1821 and Jang Bahadur
Singh v. Baij Nath Tiwari AIR 1969 SC 30, Mr. Venugopal argued that when a
matter is pending adjudication before a Court of law, nothing can be done
which might disturb the course of justice by either interfering with the
judicial process or prejudging the merits of the case or by usurping the
functions of the Court having seisin over the proceedings. Any such
practice, argued the learned counsel, was fraught with danger and would
amount to opening the door for contempt for those responsible for such
interference. It was further contended by Mr. Venugopal that judicial
review in tender cases was limited to examining the decision-making process
and not the decision itself. Reliance in support of that submission was
placed by the learned counsel upon the decisions of this Court in Tata
Cellular v. Union of India (1994) 6 SCC 651; Asia Foundation & Construction
Ltd. v. Trafalgar House Construction (1997) 1 SCC 738; Monarch
Infrastructure (P) Ltd. v. Ulhasnagar Municipal Corpn., (2000) 5 SCC 287;
Jagdish Mandal v. State of Orissa (2007) 14 SCC 517 and Heinz India (P)
Ltd. v. State of U.P. (2012) 5 SCC 443. It was submitted that the decision
making process in the instant case was transparent, fair and reasonable and
that the High Court had after a careful examination of all aspects
correctly held that there was no illegality or irregularity in the said
process to warrant interference.

17. Principles governing judicial review of administrative decisions are
now fairly well-settled by a long line of decisions rendered by this Court,
since the decision of this Court in Ramana Dayaram Shetty v. International
Airport Authority of India and Ors. (1979) 3 SCC 489 which is one of the
earliest cases in which this Court judicially reviewed the process of
allotment of contracts by an instrumentality of the State and declared that
such process was amenable to judicial review. Several subsequent decisions
followed and applied the law to varied situations but among the latter
decisions one that reviewed the law on the subject comprehensively was
delivered by this Court in Tata Cellular’s case (supra) where this Court
once again reiterated that judicial review would apply even to exercise of
contractual powers by the Government and Government instrumentalities in
order to prevent arbitrariness or favouritism. Having said that this Court
noted the inherent limitations in the exercise of that power and declared
that the State was free to protect its interest as the guardian of its
finances. This Court held that there could be no infringement of Article
14 if the Government tried to get the best person or the best quotation for
the right to choose cannot be considered to be an arbitrary power unless
the power is exercised for any collateral purpose. The scope of judicial
review, observed this Court, was confined to the following three distinct
aspects:

(i) Whether there was any illegality in the decision which would
imply whether the decision making authority has understood
correctly the law that regulates his decision making power and
whether it has given effect to it;
(ii) Whether there was any irrationality in the decision taken by the
authority implying thereby whether the decision is so outrageous
in its defiance of logic or accepted moral standards that no
sensible person who had applied his mind to the question to be
decided could have arrived at the same; and
(iii) whether there was any procedural impropriety committed by
the decision making authority while arriving at the decision.
18. The principles governing judicial review were then formulated in the
following words:

(i) The modern trend points to judicial restraint in administrative
action.
(ii) The court does not sit as a court of appeal but merely reviews
the manner in which the decision was made.
(iii) 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.
(iv) 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.
(v) 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.
However, the decision must not only be tested by the application
of Wednesbury principle of reasonableness (including its other
facts pointed out above) but must be free from arbitrariness not
affected by bias or actuated by mala fides.
(vi) Quashing decisions may impose heavy administrative burden on the
administration and lead to increased and unbudgeted expenditure.

19. In M.P. Oil Extraction v. State of M.P. & Ors. (1997) 7 SCC 592, this
Court held that if an objective and rational foundation for the fixation of
royalty is disclosed, the Court will not interfere with the exercise of
governmental decision by undertaking an exercise to determine whether or
not a better fixation was possible in the circumstances. This Court struck
a note of caution that in economic and policy matters the scope of judicial
review was limited.

20. It is unnecessary and platitudinous for us to burden this judgment
with reference to the decisions of this Court on the subject for the
governing principles are so well-known and well-settled that any review of
the law on the subject is bound to be simply repetitive without any
meaningful contribution to the existing legal literature on the subject.
We remain content by referring to two only of a plentitude of judicial
pronouncements on the subject in which the legal position has been
succinctly restated. One of these decisions was delivered in Jagdish Mandal
v. State of Orissa & Ors. (2007) 14 SCC 517, where too this Court was
dealing with the exercise of power of judicial review in matters relating
to tenders and award of contracts. This Court identified the special
features should be borne in mind while judicially reviewing award of
contracts. We can do no better than extract the following observations of
this Court in this regard:

“22. Judicial review of administrative action is intended to
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 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 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.”
(emphasis supplied)

21. More recently in Heinz India (P) Ltd. & Anr. v. State of U.P. & Ors.
(2012) 5 SCC 443, this Court speaking through one of us (Thakur, J.)
examined the legal dimensions of judicial review and quoted with approval
the following passage from Reid v. Secy. of State for Scotland (1999) 1 All
ER 481 which succinctly sums up the law.

“Judicial review involves a challenge to the legal validity
of the decision. It does not allow the court of review to
examine the evidence with a view to forming its own view about
the substantial merits of the case. It may be that the tribunal
whose decision is being challenged has done something which it
had no lawful authority to do. It may have abused or misused the
authority which it had. It may have departed from the procedures
which either by statute or at common law as a matter of fairness
it ought to have observed. As regards the decisions itself it
may be found to be perverse, or irrational or grossly
disproportionate to what was required. Or the decision may be
found to be erroneous in respect of a legal deficiency, as for
example, through the absence of evidence, or of sufficient
evidence, to support it, or through account being taken of
irrelevant matter, or through a failure for any reason to take
account of a relevant matter, or through some misconstruction of
the terms of the statutory provision which the decision-maker is
required to apply. But while the evidence may have to be
explored in order to see if the decision is vitiated by such
legal deficiencies it is perfectly clear that in case of review,
as distinct from an ordinary appeal, the court may not set about
forming its own preferred view of evidence.”
22. There is no gainsaying that in any challenge to the award of contact
before the High Court and so also before this Court what is to be examined
is the legality and regularity of the process leading to award of contract.
What the Court has to constantly keep in mind is that it does not sit in
appeal over the soundness of the decision. The Court can only examine
whether the decision making process was fair, reasonable and transparent.
In cases involving award of contracts, the Court ought to exercise judicial
restraint where the decision is bonafide with no perceptible injury to
public interest.

23. The High Court has, in the case at hand, undertaken that exercise and
concluded that there was neither any illegality nor any irregularity in the
process of evaluation of the bids or the final allotment of the contract.
That view has come to be assailed by the appellant on what is essentially a
short point raised by Mr. Lalit in support of the appeal. The contention,
as noticed earlier, is that while no malafide or extraneous considerations
have prevailed to vitiate the decision of the DMRC allotting the contract
in favour of HR, the process of evaluation of the bids offered by the
eligible bidders should have in the facts and circumstances of the case
included validation of the GEC values offered by HR to determine whether
they were achievable having regard to the ground realities and the laws of
physics relevant to the consumption of energy. That contention does not
suggest any illegality in the process of allotment of the contract in
favour of HR, for no violation of any law, rule or regulation governing the
process of invitation of tenders by the DMRC or its evaluation and
acceptance has been alleged or argued before us. No such statutory or
other provision has been brought to our notice which could possibly provide
to the appellant a reason to contend that the allotment of the contract was
itself illegal or in breach of any such provision or procedure prescribed
thereunder. It is no body’s case that the decision-making authority had
not understood the law that regulates its decision making power or failed
to give effect to it. We have, therefore, no hesitation in holding that
the allotment of contract did not suffer from any illegality as it is
understood in the matter of judicial review of administrative action and as
that expression has been used by this Court in Tata Cellular’s case
(supra). It is also not the case of the petitioner that the decision taken
by the DMRC is so outrageous in its defiance of logic or accepted moral
standards that no sensible person who had applied his mind could have
arrived at the same. Perversity or irrationality in the decision or the
decision making process is also not a ground that can be invoked in the
case at hand.

24. The contention urged by Mr. Lalit may at best constitute an
irregularity in the process of evaluation of the bids. That an irregularity
can itself, in certain situations result in invalidating a process, cannot
be disputed. The question, however, is whether there was any irregularity
in the evaluation of the bids in the present case and if so whether the
same was sufficient to invalidate the evaluation process or the ultimate
award of the contract. Whether or not there was any irregularity in the
process of evaluation of the bids shall in turn have to be examined by a
reference to the conditions of the tender notice under which the tenders
were invited, received, processed, evaluated and eventually accepted. It
is common ground that the price bid offered by the tenderers was not itself
determinative. What was equally important was the GEC values comprising X
and Y factors which the tenderers had to disclose in their technical bids.
That the values offered had to be converted into Indian Rupees and loaded
to the price bid of the tenderers is also beyond question. That each one of
the bidders had offered their GEC values comprising X and Y factors
separately was also beyond doubt. There is no error even in the conversion
of such values in terms of Indian Rupees nor is there any dispute about the
effect of such loading of values to the price bid of all the tenderers
because of which loading the bid offered by HR eventually emerged as L-1
with appellant-Siemens sliding to L-4 position. That being so, the process
of evaluation of bids could not be faulted as the same was strictly in
accordance with the norms stipulated for such evaluation. Even Mr. Lalit
fairly conceded that there was nothing that could be criticized in that
process. What DMRC, according to him, should have done was to check whether
the GEC values offered by the bidders were achievable. Inasmuch as no such
verification was undertaken the evaluation process was flawed. There is,
in our opinion, no merit in that contention. The reasons are not far to
seek. In the first place, the contention urged by Mr. Lalit does not find
support from any provision in the tender notice. There is nothing in the
tender document to suggest that the GEC values had to be tested for their
achievability. As rightly contended by Mr. Lalit all the six bidders
declared eligible are world leaders in the field and have sufficient
expertise and know-how not only about the design and technology which they
use but also about their capacity to validate their respective GEC values.
If that be so, DMRC could be supremely confident that the GEC values
offered by HR were achievable especially when such values offered by some
of the bidders for X and Y factors were lower than those offered by HR. At
any rate the DMRC had sufficiently protected itself because under the terms
and conditions stipulated in the tender notice failure of the successful
tender to make good the GEC values offered by them would result in a
penalty which was higher than the GEC value factor that was loaded to the
price bid. We, therefore, do not see any real basis for the contention that
the DMRC was supposed to go any further than it did in protecting its
interest. In the absence of any specific stipulation or requirement for
validation of the GEC values by the DMRC and its experts or by any outside
agency such a requirement could not be implied into the tender process.
Inasmuch as the DMRC found the bid offered by HR to be acceptable, keeping
in view the GEC values offered by it, the former had committed no
illegality in the evaluation of the bids or in making its choice of the
contractor.

25. Secondly, because even assuming that the process of validation of the
GEC values and their achievability was an implied condition in the
evaluation process, DMRC had on the basis of an internal simulation
satisfied itself that the GEC values were not unachievable. The High Court
has referred to the simulation results and so has our attention been drawn
to the said result from the original record produced by DMRC. We do not see
any illegality or irregularity in the process of verification conducted by
the DMRC to test the achievability of the GEC values. It is true that DMRC
had conducted the simulation in regard to the GEC values offered by HR only
but then in the absence of any condition in the tender notice requiring
DMRC to conduct such verification even in regard to other GEC values, there
was no need for it to undertake any such exercise. DMRC was, in our
opinion, entitled to adopt such methods as were reasonable to satisfy
itself above about the GEC values and their achievability offered by lowest
tenderer in whose favour it was considering the award of the contract. The
upshot of the above discussion, therefore, is that the process by which the
bids were evaluated and eventually accepted was transparent, fair and
reasonable and does not, therefore, call for any interference from this
Court.

26. That brings us to the question whether the Government of India was
justified in appointing a Committee to test the evaluation of bids and, if
so, whether this Court ought to look into the Report of the Committee.
There is more than one aspect that needs to be kept in view in this regard.
The first and foremost is the fact that the Committee was appointed at a
stage when the matter was already pending before the High Court.
Considerable time was spent by learned counsel for the parties in debating
whether the constitution of the Committee by the Government itself
tantamounted to interference with the course of justice, hence contempt. We
do not, however, consider it necessary to pronounce upon that aspect in
these proceedings especially because we have not been called upon to
initiate such contempt proceedings. All that we need say is that once the
Government had known that the entire issue regarding the validity of the
process adopted by DMRC including the transparency and fairness of the
process of evaluation of the bids was subjudice before the High Court of
Delhi and later before this Court, it ought to have kept its hands off and
let the law take its course. It could have doubtless placed all such
material as was relevant to that question before the High Court and invited
a judicial pronouncement on the subject instead of starting a parallel
exercise. The Government could even approach the High Court and seek its
permission to review the process of evaluation either by itself or through
an expert Committee if it felt that any such process would help the Court
in determining the issues falling for consideration before the Court more
effectively. Nothing of that sort was, however, done. On the contrary
even when the Secretary to the MoUD pointed out that the matter is
subjudice and any further action in the matter could await the
pronouncement of the Court, the Hon’ble Minister heading MoUD directed the
constitution of the Committee with the following terms:

“2(1) To examine if a fair, equitable and transparent tender
process was followed by DMRC, as per the prescribed guidelines”.
27. We have no manner of doubt that the terms of reference give a clear
indication that the process initiated by the Government was a parallel
process of the adjudication of the very same issue as fell for
consideration before the High Court and at a later stage before this Court.
We fail to appreciate how the Government could have possibly done this.
Confronted with this situation Mr. Mohan Parasaran, learned Solicitor
General, argued that a reference to the Committee was not meant to subvert
judicial process but to only find ways and means to formulate policies and
procedures for future allotment of contracts. We have no hesitation in
rejecting that submission. The Reference Order extracted above speaks for
itself. It no where states that the Committee has to look at anything
beyond the process of evaluation of tenders received by DMRC. It does not
even remotely suggest that the Government is concerned about the procedures
that may be followed in the future or anxious to devise transparent methods
by which such contract should be allotted. What is notable is that the
Committee’s hands were not stayed by the Government even when the High
Court had pronounced upon the validity of the procedures adopted by the
DMRC and the matter reached this Court. Continuance of the process of
review even after the High Court had delivered its judgment amounted to
subjecting the judicial pronouncement to an administrative review. There
was no question of any such judicial determination or adjudication being
subjected to any administrative review albeit in the name of a Committee
constituted for the purpose.

28. Mr. Parasaran argued that the Committee’s proceedings did not amount
to sitting in appeal over the judgment of the High Court. The Committee may
have not said anything adverse to view taken by the High Court but if the
Committee were to find fault with the evaluation process which the High
Court has held to be valid it indirectly amounted to putting a question
mark on the judgment of the High Court itself. Suffice it to say what the
Government ought to have stayed its hands once the matter landed in the
Court. Inasmuch as the Government did nothing of this kind, it did not act
properly. Beyond that we do not consider it necessary or proper to say
anything at this stage.

29. It was contended by Mr. Lalit that the report submitted by the
Committee appointed by the Government ought to be taken as expert opinion
on the subject and given due weight. That position was disputed by Mr.
Andhyarujina appearing for DMRC and Mr. Venugopal appearing for HR. That
the Committee comprised a former Finance Secretary to the Government of
India and a Civil Engineer, none of whom could claim to be expert in the
field relevant to the achievability of the GEC values, was not disputed by
Mr. Parasaran who urged that the Committee may have taken the opinion of
some experts on the subject. Even assuming that the Committee has taken
expert advice regarding the tenability of the GEC values offered by HR, it
would simply mean that there is a conflict between the views taken by the
experts of DMRC and those consulted by the Committee. Any such conflict
cannot be resolved by this Court in exercise of its powers of judicial
review. So long as the view taken by the experts of the authority
competent to take a final decision is a possible view the very fact that
some other experts have expressed doubts about the sustainability of the
GEC values will not be enough for us to declare that the values offered by
HR are indeed unachievable. This Court has in Federation of Railway
Officers Association v. Union of India (2003) 2 SCR 1085, stated the
wholesome principle applicable in such situations in the following words:

“Further, when technical questions arise and experts in the
field have expressed various views and all those aspects have
been taken into consideration by the Government in deciding the
matter, could it still be said that this Court should re-examine
to interfere with the same. The wholesome rule in regard to
judicial interference in administrative decisions is that if the
Government takes into consideration all relevant factors,
eschews from considering irrelevant factors and acts reasonably
within the parameters of the law, courts would keep off the
same.”

30. Reference may also be made to the decision of this Court in N.D.
Jayal v. Union of India (2004) 9 SCC 362 where this Court observed:

“This Court cannot sit in judgment over the cutting edge of
scientific analysis relating to the safety of any project.
Experts in science may themselves differ in their opinions while
taking decisions on matters related to safety and allied
aspects. The opposing viewpoints of the experts will also have
to be given due consideration after full application of mind.
When the Government or the authorities concerned after due
consideration of all viewpoints and full application of mind
took a decision, then it is not appropriate for the court to
interfere.”

31. Reliance by the appellant upon the report of the Committee is
misplaced also for the reason that the same was ex parte. It is common
ground that HR was never associated with the process of evaluation or
verification if any conducted by the Committee. In the absence of any such
opportunity to the party whose GEC values were being test checked for their
achievability, the report can hardly provide a sound basis for a writ court
to upset a decision which the competent authority has taken after due
deliberations by not one but four different Committees including experts in
the field. That apart, Mr. Parasaran fairly submitted that even the
Government have not accepted the report submitted by the Committee so far.
He urged that since the matter was pending in this Court, the Government
has simply placed the report of the Committee in a sealed cover for the
Court to decide as to what value has to be attached to it. That being the
position, the preparation and submission of a report that does not even
take the view point of the party affected by it into consideration can
hardly provide to this Court a good reason to scuttle the entire process at
this stage when HR, the successful bidder, has already taken substantial
steps in the direction of executing the works allotted to it.

32. Last but not the least, if the note submitted by the Director in the
MoUD is an indication of what the Committee may have said, the difference
in the GEC values pointed out in the report of the Director, may have led
to CAF which was also an eligible bidder emerging as L-1 and not the
appellant. In terms of cost of the project it would hardly make a sizable
difference so as to justify a reversal of the steps that have already been
taken for execution of a project that is of utmost importance for the
people living in the national capital execution whereof can brook no delay
especially when the same is being financed by an agency from outside the
country.

33. In the result this appeal fails and is, hereby, dismissed with costs
of Rs.5,00,000/- to be deposited within six weeks from today with the
Supreme Court Advocates-on-Record Welfare Fund.

………………………….……….…..…J.
(T.S. THAKUR)

……………….…………………..…..…J.
New Delhi (C. NAGAPPAN)
February 14, 2014

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