THE STATE OF MADHYA PRADESH & ANR. versus U.P. STATE BRIDGE CORPORATION LTD.& ANR.

[2020] 11 S.C.R. 821

THE STATE OF MADHYA PRADESH & ANR.

U.P. STATE BRIDGE CORPORATION LTD.& ANR.

(Civil Appeal No. 4002 of 2020)

DECEMBER 08, 2020

[R. F. NARIMAN AND K. M. JOSEPH, JJ.]

Tender – Rejection of bid on ground of omission andsuppression of relevant fact – Public Works Department of the Stateissued Notice Inviting Tender (NIT) for the construction of anElevated Corridor (Flyover) of length of 7.473 Km – ElevenCompanies bid for the said project including UPSBC, ‘R’ Buildersand ‘Ra’ Construction Co. – The State rejected bid of UPSBC ofsum of Rs. 306.27 crores on the ground that the bidder suppressedinformation required under paragraph 13 of Appendix-I-A andclause 7(b) of Annex-I of NIT – Hence, the bid of UPSBC wasconsidered to be non-responsive – Likewise, ‘Ra’ Construction Co.bid for Rs. 293.25 crores did not fulfil the criteria under clause2.2.2.2(ii) of the NIT for ‘one similar work’ of 25% of the estimatedproject cost and was, therefore, considered non-responsive – One‘R’ builders had bid for Rs.315.80 crores – The High Court in theWrit Petition filed by UPSBC, held that as on date of submission ofthe technical bid, since no investigation was pending within themeaning of clause 7(b) of Annex-I, there was no suppression offacts, despite the fact that an FIR had been lodged against it inrespect of bridge constructed by it earlier and the bridge hadcollapsed killing & injuring people – The High Court directed toissue Letter of Intent in favour of UPSBC – As far as writ petitionfiled by ‘Ra’ Construction Co. is concerned, the High Court referredto clause 2.2.2.2(ii) of the NIT and held that there was nothingwrong with the State’s rejection – On appeal, held : The UPSBC isright when it refers and relies on the format which had to be strictlycomplied with and going by the literal reading of the format forproviding declaration, which only required disclosure of pendinginvestigations under clause 7(b) of Annex-I of the NIT – However,the paragraph 13 of Appendix-I-A must be read together withparagraph 11 thereof, which required the bidder to certify that inregard to matters other than security and integrity of the country,

CDEF

Athe bidder was not convicted by Court of law or indicted – Clearly,in the instant case, though the investigation was no longer pendingand though there was no conviction by Court of law, UPSBC wascertainly ‘indicted’, in that, charge-sheet was filed against itrelatable to the FIR – So, there is an omission of most relevantfact and suppression of the same fact, namely that an FIR was lodgedBagainst UPSBC in respect of the construction of bridge by it – Asa result, UPSBC is disqualified – As far as ‘Ra’ Construction isconcerned, it will not be open for Constitutional Court to substitutetheir view of the view of the tendering authority, when it reads clause2.2.2.2(ii) in the manner that was done – Therefore, the State directedCto issue Letter of Intent to ‘R’ Builders as far as present tender isconcerned 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 toand relies upon the Caratel Infotech judgment for the propositionDthat where there is format which had to be strictly compliedwith, his client was justified in going by the literal reading of theaforesaid format, which only required disclosure of pendinginvestigations under clause 7(b) of Annex I of the N.I.T. However,as has correctly been pointed out by the Additional AdvocateEGeneral and ‘R’ Builders that clause 7(b) of Annex I, which is interms similar to paragraph 13 of Appendix IA, must be readtogether with paragraph 11 thereof, requires the bidder to certifythat in regard to matters other than security and integrity of thecountry, the bidder has not been convicted by court of law orindicted. Clearly in the facts of the present case, though theFinvestigation is no longer pending and though there is noconviction by court of law, UPSBC has certainly been “indicted”,in that, charge sheet has been filed against it relatable to theFIR dated 15.05.2018 in which trial is pending, though stayedby the High Court. Also, Additional Advocate General is correctGin stating that “fraudulent practice”, as defined in clause 4.3(b)of the N.I.T., would include an omission of facts or disclosure ofincomplete facts in order to influence the bidding process. In thefacts of the present case, there is clearly an omission of mostrelevant fact and suppression of the same fact, namely that anFIR had been lodged against UPSBC in respect of theH

construction of bridge by it, which had collapsed, and in which acharge 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, referenceto the Technical Evaluation Committee’s order dated 13.03.2020declaring UPSBC’s bid non-responsive shows that it also refersto Appendix IA comprising the technical bid and paragraph 13thereof, in particular. This Court has already held that paragraph13 has to be read along with paragraph 11, which clearly statesthat person who is “indicted” for criminal offence has todisclose the factum of indictment. technical objection based onthe rejection order cannot be allowed to prevail in the face of thesuppression of most material fact, that is of an FIR pertainingto the construction of bridge by UPSBC, which has collapsed.[Para 21][843-A-C]

3. Coming to the public interest factor, and the fact that thefinancial bid of UPSBC is about Rs. 9 crores less than that of ‘R’Builders, the sting has been removed inasmuch as ‘R’ Buildersreadily accepts that if, as result of UPSBC being disqualified,his client is to be awarded the tender, he will do so at the sameamount as the financial bid of UPSBC. For all these reasons, theimpugned judgment dated 15.06.2020 (in writ petition filed byUPSBC) is set aside. [Para 22][843-C-D]

4. Insofar as ‘Ra’ Construction Co. is concerned, it will notbe open for constitutional court, in accordance with all theSupreme Court decisions, to substitute their view of the view ofthe tendering authority, when it reads clause 2.2.2.2(ii) in themanner that has been done. Suffice it to say that the expression“at least one similar work” could possibly mean only one suchwork, namely, the construction of one such bridge and not twosuch bridges, even if two bridges were to be constructed underthe same tender document. It is not possible, therefore, for thisCourt to say that the construction of the aforesaid clause by thetendering 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 roadover bridges that have been constructed under the agreement

Abetween DFCCIL and ‘Ra’ Construction Co. have span of only2380 meters taken together, which is certainly less than 50% of7.473 kilometers. For these reasons, this Court dismisses ‘Ra’Construction Co.’s SLP and uphold the judgment dated02.07.2020 (in writ petition filed by ‘Ra’ Construction Co.) andthe 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 ofOrissa (2007) 14 SCC 517 : [ 2006] 10 Suppl.SCR 606; Central Coalfields Ltd. v. SLL-SML (JointVenture Consortium) (2016) 8 SCC 622 : [2016] 4CSCR 890; Afcons Infrastructure Ltd. v. Nagpur MetroRail Corpn. Ltd, (2016) 16 SCC 818 : [2016] 3SCR 551 – relied on.

Vinubhai Haribhai Malaviya v. State of Gujarat (2019)17 SCC 1; Bank of India v. K. Mohandas (2009) 5 SCCD313 : [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 Indiav. 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

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4002of 2020.

From the Judgment and Order dated 15.06.2020 of the High Courtof Madhya Pradesh Bench at Indore in W.P. No. 6681 Of 2020.

With

Civil Appeal No. 4003 of 2020 And Civil Appeal Nos. 4004-4005of 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. RamanaMurthy, Advs. for the appearing parties.

The Judgment of the Court was delivered by

R. F. NARIMAN, J.

1. Leave granted.

2. These appeals pertain to notice inviting tender [“N.I.T.”]dated 02.12.2019 by the State of Madhya Pradesh, Public WorksDepartment [“PWD”]. The N.I.T. was for the construction of anElevated Corridor (Flyover) from LIG Square to Navlakha Square (OldNH 3) A-B Road in Indore district in the State of Madhya Pradesh of alength of 7.473 kilometers. The work was for an estimated cost of Rs.272.66 crores, to be completed within period of 24 months includingthe rainy season. Various parts of the N.I.T. are important and are referredto hereunder:

3. Under Section - 2, entitled “INSTRUCTIONS TO BIDDERS”,under clause A, entitled “GENERAL”, sub-clause 2.1.4 reads as follows:

“2.1.4 The BID shall be furnished in the format exactly as perAppendix-I i.e. Technical Bid as per Appendix IA and FinancialBid as per Appendix IB. BID amount shall be indicated clearly inboth figures and words, in Indian Rupees in prescribed format ofFinancial Bid and it will be signed by the Bidder’s authorised

signatory. In the event of any difference between figures andwords, 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

xxx xxx xxx

(ii) For normal Highway projects (including Major Bridges/ROB/ Flyovers/ Tunnels):

Provided that at least one similar work of 25% of EstimatedProject Cost Rs. 68.17 Crores (Rs.Sixty Eight CroresSeventeen Lakhs only) shall have been completed from theEligible Projects in Category 1 and/or Category 3 specified inClause 2.2.2.5. For this purpose, project shall be consideredto be completed, if more than 90% of the value of work hasbeen completed and such completed value of work is equal toor more than 25% of the estimated project cost. If any MajorBridge/ROB/Flyover/Tunnel is (are) part of the project, thenthe sole Bidder or in case the Bidder being Joint Venture,any member of Joint Venture shall necessarily demonstrateadditional experience in construction of Major Bridge/ROBs/Flyovers/Tunnel in the last 5 (Five) financial years precedingthe Bid Due Date i.e. shall have completed at least one similarMajor Bridge/ROB/Flyover having span equal to or greaterthan 50% of the longest span of the structure proposed in thisproject and in case of tunnel, if any, shall have completedconstruction of at least one tunnel consisting of single or twintubes (including tunnel(s) for roads/ Railway/ Metro rail/irrigation/ hydroelectric projects etc.) having at least 50% ofthe cross-sectional area and 25 length of the tunnel to beconstructed in this project.”

Clause 2.2.2.5 states as follows:

“2.2.2.5 Categories and factors for evaluation of TechnicalCapacity:

(i) Subject to the provisions of Clause 2.2.2 the followingcategories of experience would qualify as Technical Capacityand eligible experience (the “Eligible Experience”) in relationto eligible projects as stipulated in Clauses 2.2.2.6(i) & (ii) (the

“Eligible Projects”). In case the Bidder has experience acrossdifferent categories, the experience for each category wouldbe computed as per weight of following factors to arrive at itsaggregated Eligible Experience:

(ii) The Technical capacity in respect of an Eligible Projectsituated in developed country which is member of OECDshall be further multiplied by factor of 0.5 (zero point five)and the product thereof shall be the Experience Score for suchEligible Project.”

Under clause 2.6.2(a), the authorities reserved the right to rejectany bid, inter alia, on the following grounds:

“2.6.2 The Authority reserves the right to reject any BID andappropriate the BID Security if:

(a) at any time, material misrepresentation is made oruncovered, or…”

Under Section - 3, entitled “EVALUATION OF TECHNICALBIDS AND OPENING & EVALUATION OF FINANCIALBIDS”, clauses 3.1.6.1 and 3.1.6.2 state as follows:

“3.1.6. Tests of responsiveness

3.1.6.1 As first step towards evaluation of Technical BIDs,the Authority shall determine whether each Technical BID isresponsive to the requirements of this RFP. Technical BIDshall be considered responsive only if:

(a) Technical BID is received online as per the format atAppendix-IA including Annexure I, IV, V and VI (Bid Capacityformat);

(b) Documents listed at clause 2.11.2 are received physicallyon CPPP as mentioned;

(c) Technical Bid is accompanied by the BID Security asspecified in Clause 1.2.4 and 2.20;

(d) The Power of Attorney is uploaded on e-procurement portalas specified in Clauses 2.1.5;

(e) Technical Bid is accompanied by Power of Attorney forLead Member of Joint Venture and the Joint Bidding Agreementas specified in Clause 2.1.6, if so required;

(f) Technical Bid contains all the information (complete in allrespects);

(g)Technical Bid does not contain any condition or qualification;and

(h) Copy of online receipt towards payment of cost of Biddocument of Rs 30,000.00 (Rupees Thirty thousand only) infavor of Chief Engineer PWD Bridge Const. Zone Bhopal isReceived;

3.1.6.2 The Authority reserves the right to reject any TechnicalBID which is non-responsive and no request for alteration,modification, substitution or withdrawal shall be entertained bythe Authority in respect of such BID.”

Under Section - 4, entitled “FRAUD AND CORRUPTPRACTICES”, clause 4.1 read with the definition clause containedin clause 4.3(b), read as follows:

“4.1 The Bidders and their respective officers, employees,agents and advisers shall observe the highest standard of ethicsduring the Bidding Process and subsequent to the issue of theLOA and during the subsistence of the Agreement.Notwithstanding anything to the contrary contained herein, orin the LOA or the Agreement, the Authority may reject BID,withdraw the LOA, or terminate the Agreement, as the casemay be, without being liable in any manner whatsoever to theBidder, if it determines that the Bidder, directly or indirectly orthrough an agent, engaged in corrupt practice, fraudulentpractice, coercive practice, undesirable practice or restrictive

practice in the Bidding Process. In such an event, the Authorityshall be entitled to forfeit and appropriate the BID Security orPerformance Security, as the case may be, as Damages, withoutprejudice to any other right or remedy that may be available tothe Authority under the Bidding Documents and/ or theAgreement, or otherwise.”

xxx xxx xxx

“4.3 For the purpose of this Section 4, the following termsshall have the meaning hereinafter respectively assigned tothem:

xxx xxx xxx

(b) “fraudulent practice” means misrepresentation or omissionof facts or suppression of facts or disclosure of incompletefacts, in order to influence the Bidding Process”

Appendix IA consists of the letter comprising the technical bidaddressed to the Office of the Chief Engineer, Bridge ConstructionZone - Bhopal, which has to be filled up in particular format.Paragraphs 11 and 13 of this letter are important and are set outhereinbelow:

“11. I/We certify that in regard to matters other than securityand integrity of the country, we/ any Member of the JointVenture or any of our/their Joint venture member have notbeen convicted by Court of Law or indicted or adverse orderspassed by regulatory authority which could cast doubt onour ability to undertake the Project or which relates to graveoffence that outrages the moral sense of the community.

xxx xxx xxx

13. I/We further certify that no investigation by regulatoryauthority is pending either against us/any member of JointVenture or against our CEO or any of our directors/ managers/employees.”

Appendix IB consists of the letter comprising the financial bid,which is also in particular format, paragraph 2 of which readsas follows:

A“2. I/We acknowledge that the Authority will be relying on theinformation provided in the BID and the documentsaccompanying the Bid for selection of the Contractor for theaforesaid Project, and we certify that all information providedin the Bid are true and correct; nothing has been omitted whichrenders such information misleading; and all documentsBaccompanying the Bid are true copies of their respectiveoriginals.”

Annex I, entitled “Details of Bidder”, contains, in clause 7, thefollowing:

“7 (a) I/We further certify that no investigation by regulatoryauthority is pending either against us/any member of JointVenture or our sister concern or against our CEO or any ofour directors/managers/employees.

(b) I/We further certify that no investigation by any investigatingDagency in India or outside is pending either against us/ anymember of Joint Venture or our sister or against our CEOconcern or any of our directors/managers/employees.

statement by the Bidder and each of the Members of itsJoint Venture (where applicable) disclosing material non-performance or contractual non-compliance in current projects,as on bid due date ‘is given below (attach extra sheets, ifnecessary) w.r.t. para 2.1.14.”

4. Eleven companies bid for the aforesaid project, including U.P.State Bridge Corporation Limited [“UPSBC”], Rajkamal BuildersFInfrastructure Pvt. Ltd. [“Rajkamal Builders”] and RachanaConstruction Co. Insofar as UPSBC is concerned, the State of MadhyaPradesh rejected its bid on the ground that the bidder suppressedinformation required under paragraph 13 of Appendix IA and clause7(b) of Annex I. Hence, the aforesaid bid was considered to be non-responsive. Likewise, insofar as Rachana Construction Co. is concerned,Git did not fulfil the criteria under clause 2.2.2.2(ii) of the N.I.T. for “onesimilar work” of 25% of the estimated project cost, and was also thereforeconsidered non-responsive. Pursuant to the rejection of the technical bidof UPSBC in the Technical Evaluation Committee’s meeting held on13.03.2020, Writ Petition No. 6681 of 2020 was filed by UPSBC and byan interim order dated 17.03.2020, the financial bid of UPSBC wasHordered to be opened.

5. On the opening of the financial bids, it was found that UPSBChad bid for sum of Rs. 306.27 crores and Rajkamal had bid for Rs.315.80 crores. Being disqualified, Rachana Construction Co.’s bid forRs. 293.25 crores was not under consideration.

6. By the impugned judgment dated 15.06.2020 in Writ PetitionNo. 6681 of 2020 filed by UPSBC, it was held that as on the date ofsubmission of the technical bid, since no investigation was pending withinthe meaning of clause 7(b) of Annex I, there was no suppression offacts by UPSBC, despite the fact that an FIR dated 15.05.2018 hadbeen lodged against it in respect of particular bridge constructed by itat Janpad, Varanasi which had collapsed, killing 15 persons and injuring11 persons. The investigation in this case resulted in charge sheetbeing filed. After the trial commenced, the High Court of Judicature atAllahabad, by an order dated 30.07.2019, stayed the trial. Despite thesefacts not being stated in the bid document submitted by UPSBC, theHigh 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,and as “investigation” as defined under the Code of Criminal Procedure[“Cr.P.C.”] was different from inquiries and trials, there was no need todisclose the FIR and its aftermath, as there was no “investigation pending”strictly speaking, as it had culminated in charge sheet. The High Courtwas also swayed by the fact that there was difference of Rs. 9 croresbetween the financial bids of UPSBC and Rajkamal. Public interesttherefore demanded that the rejection of UPSBC’s technical bid be setaside. The State of Madhya Pradesh was therefore directed to issue aletter of intent [“LOI”] in favour of UPSBC for the financial bid of Rs.306.27 crores within period of 30 days from the date of the judgment.7. Meanwhile, Rachana Construction Co. also filed Writ PetitionNo. 8404 of 2020 challenging the rejection of its technical bid by theState of Madhya Pradesh. By the impugned judgment dated 02.07.2020,the High Court adverted to the judgment dated 15.06.2020 in UPSBC’swrit petition and thereafter went on to examine whether RachanaConstruction Co.’s bid had been rightly rejected. Insofar as RachanaConstruction Co.’s bid was concerned, the High Court referred to clause2.2.2.2(ii) in paragraph 9 of its judgment and held that there was nothingwrong with the State of Madhya Pradesh’s rejection, as follows:

“9. Even on merit also the petitioner has no case because as perClause 2.2.2.2(ii) all the tenders as also the petitioner were

required to submit the proof of completion of one similar workand the value of the executed work was to be at least 25% of thevalue of the work in the present tender. Said Clause 2.2.2.2(ii) isreproduced below:

“2.2.2.2(ii) For normal Highway projects

(including Major Bridges/ ROB/ Flyovers/ Tunnels):

Provided that at least one similar work of 25% of EstimatedProject Cost Rs.68.17 Crores (Rs. Sixty Eight CroresSeventeen Lakhs only) shall have been completed from theEligible Projects in Category 1 and/or Category 3 specified inClause 2.2.2.5.

For this purpose, project shall be considered to be completed,if more than 90 % of the value of work has been completedand such completed value of work is equal to or more than25% of the estimated project cost. If any Major Bridge/ROB/Flyover/Tunnel is (are) part of the project, then the sole Bidderor in case the Bidder being Joint Venture, any member ofJoint Venture shall necessarily demonstrate additionalexperience in construction of Major Bridge/ROBs/Flyovers/Tunnel in the last 5(Five) financial years preceding the BidDue Date i.e. shall have completed at least one similar MajorBridge/ROB/Flyover having spanequal to or greater than 50%of the longest span of the structure proposed in this projectand in case of tunnel, if any, shall have completed constructionof at least one tunnel consisting of single or twin tubes (includingtunnel(s) for roads/Railway/Metro rail/irrigation/hydro-electricprojects etc.) having at least 50% of the cross-sectional areaand 25% length of the tunnel to be constructed in this project.”

The aforesaid Clause specifically provides that for Highwayprojects including Major Bridges/ROB/Flyovers/Tunnels, at leastone similar work of 25% of Estimated Project Cost Rs.68.17Crores shall have been completed. The petitioner has placereliance on the certificate issued by DFCCIL, Ahmedabad, whichreveals that the petitioner is undertaking construction work of 2No. of road overbridges of the total contract valueRs.76,87,90,595.00, therefore, the construction of one roadoverbridge would be half of the total contract value. Though the

petitioner might have signed one contract for two overbridges,but the cost of one overbridge would be less than 68.17 Croreswhich is 25% of the present work. Hence, the EvaluationCommittee has not committed any error while declaring thepetitioner as non-responsive. Thus, even on merits, the petitionerhas no case.

10. Learned counsel appearing for the petitioner concluded hisarguments by submitting that the petitioner has quoted the ratesof 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 heldabove, once the petitioner has been declared non-responsive, thenits financial bid and the rates quoted by the petitioner areimmaterial.”

8. In addition, the High Court also held that Rachana ConstructionCo., despite knowing that UPSBC had filed writ petition, neitherintervened in the said writ petition nor filed an independent writ petitionon its own until much later. Considering that the UPSBC had beendeclared as L-1 by judgment dated 15.06.2020, UPSBC should havebeen arrayed as respondent in the writ petition and not being so arrayed,the petition also suffered from non-joinder of necessary party andtherefore had to be dismissed.

9. Shri Saurabh Mishra, Additional Advocate General, took usthrough the N.I.T. and relied upon several clauses thereof. His principalargument was that the expression “investigation pending” cannot be takento be in the sense of the Cr.P.C., as otherwise the said clause would berendered otiose. “Investigation pending” would necessarily include withinits scope all subsequent steps towards criminality of an accused, as aresult of which clause 7(b) of Annex I required UPSBC to disclosematerial facts. He also relied upon the clause dealing with “fraudulentpractice” and stated that the omission of material fact would amountto fraudulent practice, and this being most material fact, as particularbridge constructed by UPSBC had collapsed resulting in an FIR beinglodged against it, not being disclosed by UPSBC, would be fatal underthe fraudulent practice clause also.

10. Shri Dhruv Mehta, learned Senior Advocate, appearing onbehalf of UPSBC, relied heavily on the judgment in Caretel InfotechLtd. v. Hindustan Petroleum Corpn. Ltd., (2019) 14 SCC 81[“Caratel Infotech”], for the proposition that where tender was in

Aparticular format, nothing beyond the information that is required by thatformat need be given, and since no investigation was in fact pendingagainst his client, clause 7(b) of Annex I could not have been invoked tonon-suit his client. He also relied upon the judgment in Secy., Deptt. ofHome Secy., A.P. v. B. Chinnam Naidu, (2005) 2 SCC 746, in whichcase the petitioner concerned had to fill up recruitment form in whichBprevious convictions had to be stated. Since merely being arrested wouldnot amount to previous conviction, it was held that the petitioner couldnot be said to have suppressed the fact of his being convicted. He thenargued that in any case if there is any ambiguity in the clause the rule ofcontra proferentem applies, as result of which the literal interpretation,Cwhich is possible interpretation, ought to prevail, and for this he citedBank of India v. K. Mohandas, (2009) 5 SCC 313. He was at painsto point out that no ground other than clause 7(b) of Annex I could nowbe taken, as the ground of fraudulent practice, which was sought to beargued by the State of Madhya Pradesh in this Court, was not groundon which UPSBC’s bid was rejected. He also pointed out that publicDinterest would require that the financial bid be accepted, being Rs. 9crores less than that of Rajkamal.11. Shri Anupam Lal Das, learned Senior Advocate appearing onbehalf of Rachana Construction Co. assailed the impugned judgmentsdated 02.07.2020 and 04.08.2020 by relying upon the Contract AgreementEdated 23.08.2017 between his client and the Dedicated Freight CorridorCorporation of India Limited [“DFCCIL”] for the work of constructionof two nos. of road over bridges for an amount of Rs. 76.87 crores, 95%of which had been completed, for which payment of Rs. 68.71 croreshad been received. This being so, and this being above 25% of theFestimated cost of the present tender (fixed at Rs. 68.17 crores), he stoodtechnically qualified. It was wholly incorrect for the authorities to havebifurcated one project awarded under one tender into two, merelybecause two road over bridges had to be built. He also stated that non-joinder of necessary party could not be held against him as all the factswere known and UPSBC could have intervened in Rachana ConstructionGCo.’s matter.

12. Shri Puneet Jain, learned counsel appearing on behalf ofRajkamal, attacked the judgment in UPSBC’s case and supported thejudgment in Rachana Construction Co.’s case, stating that quite apartfrom the clauses referred to and relied upon by the State of MadhyaH

Pradesh, it was clear that Appendix IA had not been properly read, asparagraphs 11 and 13 had to be read together. Clearly paragraph 11indicated that if UPSBC were “indicted” in criminal case, which wouldcast doubt on its ability to undertake the project, this would be sufficientto reject UPSBC’s bid. Insofar as Rachana Construction Co. isconcerned, he referred to and relied upon clause 2.2.2.2(ii) and inparticular, the latter part of the clause, which required that the bidderwould have to demonstrate additional experience in respect of the bridgeto be constructed in the present tender and would have to show that ithad completed at least one similar major bridge of span equal to orgreater than 50% of the longest span of the structure proposed in thisproject. He adverted to the two road over bridges that were constructedunder the agreement dated 23.08.2017 by Rachana Construction Co.for DFCCIL, both being of length of 2380 meters when taken together.This would fall woefully short of 50% of 7.473 kilometers, which wouldamount to 3.736 kilometers, and on this additional ground also, RachanaConstruction Co.’s bid ought to be rejected.

13. We have heard all the learned counsel for the parties. Theparameters of judicial review in matters such as the present have beenwell stated in many decisions of this Court, beginning with the celebratedTata Cellular v. Union of India, (1994) 6 SCC 651, in which 3judge bench of this Court laid down the following principles:

“94. The principles deducible from the above are:

(1) The modern trend points to judicial restraint in administrativeaction.

(2) The court does not sit as court of appeal but merely reviewsthe manner in which the decision was made.

(3) The court does not have the expertise to correct theadministrative decision. If review of the administrative decisionis permitted it will be substituting its own decision, without thenecessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicialscrutiny because the invitation to tender is in the realm of contract.Normally speaking, the decision to accept the tender or awardthe contract is reached by process of negotiations through severaltiers. More often than not, such decisions are made qualitativelyby experts.

(5) The Government must have freedom of contract. In otherwords, fair play in the joints is necessary concomitant for anadministrative body functioning in an administrative sphere orquasi-administrative sphere. However, the decision must not onlybe tested by the application of Wednesbury principle ofreasonableness (including its other facts pointed out above) butmust be free from arbitrariness not affected by bias or actuatedby mala fides.

(6) Quashing decisions may impose heavy administrative burdenon the administration and lead to increased and unbudgetedexpenditure.”

14. Likewise, in Jagdish Mandal v. State of Orissa, (2007) 14SCC 517, this Court held:

“22. Judicial review of administrative action is intended toprevent arbitrariness, irrationality, unreasonableness, bias andmala fides. Its purpose is to check whether choice or decisionis made “lawfully” and not to check whether choice or decisionis “sound”. When the power of judicial review is invoked inmatters relating to tenders or award of contracts, certain specialfeatures should be borne in mind. contract is commercialtransaction. Evaluating tenders and awarding contracts areessentially commercial functions. Principles of equity andnatural justice stay at distance. If the decision relating toaward of contract is bona fide and is in public interest, courtswill not, in exercise of power of judicial review, interfere evenif procedural aberration or error in assessment or prejudiceto tenderer, is made out. The power of judicial review willnot be permitted to be invoked to protect private interest at thecost of public interest, or to decide contractual disputes. Thetenderer or contractor with grievance can always seekdamages in civil court. Attempts by unsuccessful tendererswith imaginary grievances, wounded pride and business rivalry,to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuadecourts to interfere by exercising power of judicial review, shouldbe resisted. Such interferences, either interim or final, mayhold up public works for years, or delay relief and succour to

thousands and millions and may increase the project costmanifold. Therefore, court before interfering in tender orcontractual matters in exercise of power of judicial review,should pose to itself the following questions:

(i) Whether the process adopted or decision made by theauthority is mala fide or intended to favour someone;

Whether the process adopted or decision made is so arbitraryand irrational that the court can say: “the decision is such thatno responsible authority acting reasonably and in accordancewith relevant law could have reached”;

(ii) Whether public interest is affected.

If the answers are in the negative, there should be nointerference under Article 226. Cases involving blacklisting orimposition of penal consequences on tenderer/contractor ordistribution of State largesse (allotment of sites/shops, grant oflicences, dealerships and franchises) stand on different footingas they may require higher degree of fairness in action.”

(pages 531-532)

15. In Central Coalfields Ltd. v. SLL-SML (Joint VentureConsortium), (2016) 8 SCC 622, this Court held as follows:

“47. The result of this discussion is that the issue of theacceptance or rejection of bid or bidder should be looked atnot only from the point of view of the unsuccessful party butalso from the point of view of the employer. As held in RamanaDayaram Shetty [Ramana Dayaram Shetty v. InternationalAirport Authority of India, (1979) 3 SCC 489] the terms ofNIT cannot be ignored as being redundant or superfluous. Theymust be given meaning and the necessary significance. Aspointed out in Tata Cellular [Tata Cellular v. Union of India,(1994) 6 SCC 651] there must be judicial restraint in interferingwith administrative action. Ordinarily, the soundness of thedecision taken by the employer ought not to be questioned butthe decision-making process can certainly be subject to judicialreview. The soundness of the decision may be questioned if itis irrational or mala fide or intended to favour someone or

decision “that no responsible authority acting reasonably andin accordance with relevant law could have reached” as heldin 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] .

48. Therefore, whether term of NIT is essential or not is adecision taken by the employer which should be respected.Even if the term is essential, the employer has the inherentauthority to deviate from it provided the deviation is madeapplicable to all bidders and potential bidders as held in RamanaDayaram Shetty [Ramana Dayaram Shetty v. InternationalAirport Authority of India, (1979) 3 SCC 489]. However, if theterm is held by the employer to be ancillary or subsidiary, eventhat decision should be respected. The lawfulness of thatdecision can be questioned on very limited grounds, asmentioned in the various decisions discussed above, but thesoundness of the decision cannot be questioned, otherwise thisCourt would be taking over the function of the tender issuingauthority, which it cannot.”

(page 638)

16. Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn.ELtd., (2016) 16 SCC 818, puts the proposition extremely well when itstates:

“14. We must reiterate the words of caution that this Courthas stated right from the time when Ramana Dayaram Shettyv. International Airport Authority of India [Ramana DayaramShetty v. International Airport Authority of India, (1979) 3 SCC489] was decided almost 40 years ago, namely, that the wordsused in the tender documents cannot be ignored or treated asredundant or superfluous — they must be given meaning andtheir necessary significance. In this context, the use of theword “metro” in Clause 4.2(a) of Section III of the biddocuments and its connotation in ordinary parlance cannot beoverlooked.

15. We may add that the owner or the employer of project,having authored the tender documents, is the best person tounderstand and appreciate its requirements and interpret its

documents. The constitutional courts must defer to thisunderstanding and appreciation of the tender documents, unlessthere is mala fide or perversity in the understanding orappreciation or in the application of the terms of the tenderconditions. It is possible that the owner or employer of projectmay give an interpretation to the tender documents that is notacceptable to the constitutional courts but that by itself is not areason for interfering with the interpretation given.”

(page 825)

17. This view of the law has been subsequently reiterated andfollowed in Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272(see paragraph 25 at page 287) and Caratel Infotech (supra) (seeparagraphs 38-39 at pages 92-93).

18. Judged by these parameters, it is clear that this Court mustdefer to the understanding of clauses in tender documents by the authorthereof unless, pithily put, there is perversity in the author’s constructionof the documents or mala fides. As against this, Shri Dhruv Mehta isalso correct in drawing our attention to Caratel Infotech (supra), andin particular, to paragraphs 4, 9, 22 and 23, which are set out hereinbelow:

“4. The appellant submitted the bid in respect of the e-tenderon 19-12-2017. In terms of Clause 20 extracted aforesaid, aformat had been provided for the declaration to be made, whichis as under:

“DECLARATION NON BLACKLISTED/NONBANNED/NON HOLIDAY LISTED PARTY

We confirm that we have not been banned or blacklisted ordelisted or holiday listed by any government or quasi-government agencies or public sector undertakings

Date: __________

Name of Tenderer: _______________

Place: __________

Signature & Seal of Tenderer: _____________

Note: If bidder has been banned by any government or quasi-government agencies or public sector undertakings, this fact

must be clearly stated with details. If this declaration is notgiven along with the unpriced bid, the tender will be rejectedas non-responsive.”

The appellant submitted the declaration in terms aforesaid i.e.stating that the appellant had not been blacklisted by anygovernment or quasi-government agency or public sectorundertakings.”

(page 85)

“9. The decision of the High Court is predicated on two facts—firstly the non-disclosure of the factum of the show-cause noticeissued to the appellant amounted to violation of the undertaking.Linked to this issue is that Clause 20(iii) of the tender providedfor an integrity pact “ensuring transparency and fair dealing”and that integrity pact had been duly signed and submitted bythe appellant. Secondly, the Division Bench doubted thecompliance, by the appellant, of Clause 8 read with Clause10(g) of Section 4 of the tender. This controversy pertains tothe clause dealing with the business continuity and therequirement of submitting valid ISO certificate for the purposeof securing the tender. The relevant clauses read as under:

“8. Business continuity

OMCs currently have an agreement for inbound calls witha service provider based in different regions. The successfulbidder has to submit the transition plan to migrate to newplatform and facility with “zero” disruption of services withrespect to the following areas:

(a) Toll-free services.

(b) IVRS based call handling.

(c) Diversion of call traffic at the successful bidder’spremises.

(d) Trained operators at the time of Go-Live date.***

10. Other mandatory requirements:

(g) Valid ISO Certification 27001 for security and ISO 2301for business continuity.””

(page 86)

“22. It is no doubt true that Clause 20 does provide for foureventualities, as submitted by the learned counsel forRespondent 3. The present case is not one where on thedate of submission of the tender the appellant had beenbanned, blacklisted or put on holiday list. The question beforeus, thus, would be the effect of an action for blacklistingand holiday listing being initiated. The declaration to be givenby the bidder is specified in Clause 20(ii), which deals withthe first three aspects. The format enclosed with the tenderdocuments also refers only to these three eventualities. Itis not case where no specific format is provided, wherepossibly it could have been contended that the disclosurehas to be in respect of all the four aspects. The formathaving been provided, if initiation of blacklisting was to bespecified, then that ought to have been included in the format.It cannot be said that the undertaking by the appellant madeit the bounden duty of the appellant to disclose the aspectof show-cause notice for blacklisting. We say so as thereis 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 notcorrectly made. But then, that is the problem of the framingof the format by Respondent 1. It appears that Respondent1 also, faced with the factual situation, took consideredview that since Clause 20(i) provided for the foureventualities, while the format did not provide for it, theappellant could not be penalised. May be, for future theformat would require an appropriate modification!”

(page 89)

19. It is clear that Shri Dhruv Mehta is right when he refers toand relies upon the aforesaid judgment for the proposition that where

Athere is format which had to be strictly complied with, his client wasjustified in going by the literal reading of the aforesaid format, whichonly required disclosure of pending investigations under clause 7(b) ofAnnex I of the N.I.T. However, as has correctly been pointed out byShri Saurbh Mishra and Shri Puneet Jain, clause 7(b) of Annex I, whichis in terms similar to paragraph 13 of Appendix IA, must be read togetherBwith paragraph 11 thereof, which, as has been pointed out hereinabove,requires the bidder to certify that in regard to matters other than securityand integrity of the country, the bidder has not been convicted by courtof law or indicted. Clearly in the facts of the present case, though theinvestigation is no longer pending and though there is no conviction by aCcourt of law, UPSBC has certainly been “indicted”, in that, chargesheet has been filed against it relatable to the FIR dated 15.05.2018 inwhich trial is pending, though stayed by the High Court. Also, ShriSaurabh Mishra is correct in stating that “fraudulent practice”, as definedin clause 4.3(b) of the N.I.T., would include an omission of facts ordisclosure of incomplete facts in order to influence the bidding process.DIn the facts of the present case, there is clearly an omission of mostrelevant fact and suppression of the same fact, namely that an FIR hadbeen lodged against UPSBC in respect of the construction of bridgeby it, which had collapsed, and in which charge sheet had been lodged.20. This being the case, Secy., Deptt. of Home Secy., A.P. v.EB. Chinnam Naidu, (2005) 2 SCC 746 is clearly distinguishable, as inthe facts of that case, the expression “convicted” could not have possiblyincluded the factum of arrest which was pre-conviction. On the facts ofthe present case, we have seen as to how UPSBC has indulged in afraudulent practice and has suppressed the fact that it was indicted forFoffences relatable to the construction of bridge by it, which had collapsed.Equally, paragraphs 12 to 18 of the judgment in Vinubhai HaribhaiMalaviya v. State of Gujarat, (2019) 17 SCC 1, which distinguishbetween investigation, inquiry and trial in criminal case, are also of noavail to UPSBC in view of the finding hereinabove. Equally, the well-known rule of contra proferentem as expounded in Bank of India v. K.GMohandas, (2009) 5 SCC 313 (at paragraph 32) is also of no avail,given the fact that there is no ambiguity whatsoever insofar as thefraudulent practice clause and paragraph 11 of Appendix IA areconcerned.

21. Adverting to Shri Dhruv Mehta’s argument that his client hasbeen non-suited only on application of clause 7(b) of Annex I, referenceto the Technical Evaluation Committee’s order dated 13.03.2020declaring UPSBC’s bid non-responsive shows that it also refers toAppendix IA comprising the technical bid and paragraph 13 thereof, inparticular. We have already held that paragraph 13 has to be read alongwith paragraph 11, which clearly states that person who is “indicted”for criminal offence has to disclose the factum of indictment. technicalobjection based on the rejection order cannot be allowed to prevail in theface of the suppression of most material fact, that is of an FIR pertainingto the construction of bridge by UPSBC, which has collapsed.

22. Coming to the public interest factor, and the fact that thefinancial bid of UPSBC is about Rs. 9 crores less than that of Rajkamal,the sting has been removed inasmuch as Shri Puneet Jain readily acceptsthat if, as result of UPSBC being disqualified, his client is to be awardedthe tender, he will do so at the same amount as the financial bid ofUPSBC. For all these reasons, the impugned judgment dated 15.06.2020is set aside.

23. We now come to Rachana Construction Co.’s case. Insofaras Rachana Construction Co. is concerned, it will not be open for aconstitutional court, in accordance with all the decisions cited hereinabove,to substitute their view of the view of the tendering authority, when itreads clause 2.2.2.2(ii) in the manner that has been done. Suffice it tosay that the expression “at least one similar work” could possibly meanonly one such work, namely, the construction of one such bridge and nottwo such bridges, even if two bridges were to be constructed under thesame tender document. It is not possible, therefore, for this Court to saythat the construction of the aforesaid clause by the tendering authority isan impossible one rendering it perverse. Also, Shri Puneet Jain’s argument,though made here for the first time, does support the State of MadhyaPradesh, in that the two road over bridges that have been constructedunder the agreement between DFCCIL and Rachana Construction Co.have span of only 2380 meters taken together, which is certainly lessthan 50% of 7.473 kilometers. For these reasons, we dismiss RachanaConstruction Co.’s SLP and uphold the judgment dated 02.07.2020 andthe review judgment dated 04.08.2020.

24. Given the lapse of time taken in court proceedings, the Stateof Madhya Pradesh is directed to issue LOI as soon as is practically

Apossible to Rajkamal insofar as the present tender is concerned at thesame financial bid as that of UPSBC. All the appeals are disposed ofaccordingly.

Ankit Gyan

Appeals disposed of.