II. UNION OF INDIA (Civil Appeal No. 6515 6f 2008) NOVEMBER 6 & Ors. v. U.0.1 . raised by & Ors.

Judgment

15 S.C.R. 585 .... >-- SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. LTD. & ANR. II. UNION OF INDIA & ORS. (Civil Appeal No. 6515 6f 2008) NOVEMBER 6, 2008 [DR. ARIJIT PASAYAT, C.K. THAKKER AND LOKESHWAR SINGH PANTA, JJ.] Constitution of India, 1950; Article 226: Government contracts - Tender - Award of contract - Administrative decision, judicial review of - Held: Evaluating tenders and awarding contracts are essentially commercial functions - When the decision relating to award of contract found bonafide and in public interest, Courts should not exercise the power of judicial review to interfere with such administrative decision even if there was procedural lacunae - In the instant case, the contract was for sensitive army equipments needed on urgent basis - Expert Committee rightly determined price of requisite quantity of goods by multiplying with unit price quoted in the bid documents submitted by all the tenderers - There was no scope for the authority to read into the tender documents suggestion by the appellant, which did not exist in the bid documents ..r. Moreover, no personal allegation of malafideslfavouritism levelled against the authority- Hence, no fault could be found with the decision taken by the authority/process adopted in Indian Contract Act, 1872 - awarding the contract - Government contracts - Administrative decision - Power of Judicial Review - Exercise of. '-+ Respondent No. 2, a Public Sector Undertaking of Government of India, floated a Request for Proposal (RFP)/Tender for procurement of Digital Radio Trunking 585 A B c D E F G H 586 SUPREME .COURT REPORTS [2008] 15 S.C.R. 0 A System (DRTS)/Terrestrial Trunked Radio (TETRA), a pa.rt of, Technical Communication· System for lndi.an Army/ M•nistry of Defence, Government of India, respondent No. f. In terms of. the tender ·document, the evaluation,· trials and completion of the contract was proposed to be B carried out in five phases. In each phase committees of, experts have been entrusted the task of evaluation of bids and short listing the ~ld~ers by eliminating "those not qualified in terms of ev~luation criteria. In all, eight bidders submitted their bids. After the end of phase Ill, c three bidders viz. appellant No.1, respondent Nos. 3 & 4 have been declared qualified for evaluation in phase IV. In Phase~IVj commercial· bids were opened in the presence of the representatives of all .three bidders and the prices of the main items as per their commercial bids were read out. The total price of appellant No.1, as worked out, was lowest. However, as the proposals of the bidders comprised various details contained in the en.closures to the bid, they.·were informed that a comprehensive evaluation would be.carried out by the Expert Committee for arriving at L 1 bidder and that any further interaction would only be held with L 1 bidders. The Evaluation Committee asked for certain clarifications in the form of queries from all the three bidders including appellant No. · 1. The bidders gave their clarifications. The Committee, after completion of evaluation of the bids, finalized the total package cost for each of the bidders. Since name of L-1 lenderer was not announced by the respondents, · appellants filed a representation. Respondents ailegedly did not declare outcome of tenders after Phase IV but negotiated with them. Appellants, one of the bidders, filed G a writ petition praying for issuance of directions to respondent Nos. 1 & 2 to award the contract in their favour as they being the lowest bidders and not to negotiate with other bidders. The other two bidders were also impleaded as. parties; The petition was dismissed by E F H , __ L .;:, \ . I 'I - .. >- ~ .. ~ SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 587 LTD. & ANR. v. U.0.1 & ORS. the High Court. Hence the present appeal. A Appellants, inter alia, contended that the bid of appellant No.1 was the lowest of the three technically qualified bidders; that appellant No. 1 was being ousted by adding an imaginary price to its bid, which the appellants never quoted and such an addition to the bid was unwarranted and amounted to artificially loading the bid; and that a confusion was being created about the nature of the bid. It was clearly the intention of the appellants to indicate the price for 100 units. The unit c base is 1 for 100 and that is how the appellants have understood the matter and had accordingly put the figure. B Respondents, inter alia, submitted that the appellants with their eyes open had quoted the figures and at different points of time have taken totally varying stands; D that they had stated the quantity to be "as required" and indicating the unit price. However, the total price was left blank. At that point of time the quantity was not known and that a similar indication was made by each of the bidders; that all the bidders understood the required E quantity to be 1200 units but the appellants had indicated the quantity to be 1 and had quoted the price; that nothing could have precluded the appellants from turning around later on, and seeking to bind respondent No. 2 down to the rates as offered by it for a single unit in the F' original, the same being part of the original tender documents. Dismissing the appeal, the Court HELD: 1.1. hi the composite price schedule in G respect of Item No.11 of the bid document, appellant No. 1 endorsed the figure "1" in the column of "Quantity", an·d while filling in the price in the column of "Unit Price Euro" as also "Total Price Euro", inserted the figure, "8,977.34". The said composite price statement was at variance with H 588 SUPREME COURT REPORTS [2008] 15 S.C.R. A the original Bill of Materials submitted by the appellant . No. 1 in respect of item No.11 for the reason that in the original Bill of Materials, in the column of "Quantity" the appellant had indicated nAs required" and the' column of "Totaf Price Euro" was left blank by it. [Para 23l [615-H; ...... .. B 616-A, B]

1.2. The appellants have placed heavy reliance on the composite price schedule to state that there was no correlation of the quantity of 1200 given for Vehicular Mobile Stations, as specified in Item No4.1, with item No.11 to state that the quantity against item No.11 was never declared and further, that at best the respondent No.2 could have bound the appellant No.1 down to the price indicated in the column "Total Price Euro" indicated in the composite price schedule, but it could not have multiplied the rate given in the "Unit Price" with the figure of 1200 which had resulted in absurdity. [Para 23] [616- c, DJ c D 1 ... E

1.3. The High Court rightly noted that any reference to or reliance upon the composite price schedule submitted by the appellants after opening of the commercial bids of all the vendors on an earlier date, is impermissible. Had respondent No.2 taken the composite price schedule into consideration in respect of item F No.11, it would have created justifiable doubts in the minds of respondents No. 3 and 4 and defeated the rule of transparency and fairness on the part of respondent No. 2, as it would have amounted to improving the bid made originally by appellant No. 1, by supplying details upon ascertaining the rates quoted by the others. [Para 24] [616-E, F, G] G

1.4. Specific queries were put forward by respondent No. 2 to each of the three bidders wherever clarifications were required qua particular items in the Bill of Materials H submitted and other aspects of the bid. No query was ~· \ ; . y > • --- " ( SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. 589 LTD. & ANR. v. U.0.1 & ORS . raised by the respondent No. 2 on the appellant No. 1 in respect of item No.11. Hence, the question of taking into consideration the clarifications given thereon by appellant No. 1 did not arise. [Para 24] [616-G, H; 617-A] A B

1.5. While taking note of the changes made by appellant No. 1 in respect of item No.11 in the composite price schedule, as against the original Bill of Materials submitted, the former was not taken into consideration by the Committee. Instead, the Committee made a point to observe in its analysis that no technical explanation c was given by the appellant as to why the quantity had been changed by appellant No. 1 from "As required" to "1" while the "Unit Price" and "Total Price" was kept as the same in the composite price schedule. Thus the Committee multiplied the unit price furnished by appellant No. 1 with the figure 1200 to arrive at the total price, and D the same method was uniformly adopted for the other two bidders. Looking at it from another angle, respondent No. 2 cannot be faulted for strictly adhering to the rates furnished by appellant No. 1 in its original bid documents. [Para 25] (617-B-E] E

1.6. It is the common case of all the parties that commercial offers were to be made by all the bidders for quantities of 80 systems as per the Bill of Materials enclosed with the RFA. As no quantity was disclosed for item No.11 in the Bill of Materials, none of the bidders quoted rates for any spe~ific quantity, but did so only for a single unit. Thus the unit rate quote remained the deciding factor for the Committee, while finally analyzing the bids. [Para 26] [618-B, C] J

1.7. The contention ·of the appellants that they had a license for the software under which one software unit would serve 100 units of Vehicular Mobile Terminals and as a result, the total requirement of software unit was F G H 590 SUPREME COURT REPORTS [2008] 15 S.C.R. A only 12{12x100 = 1200) and ,not 1200 (1x1200=1200), is misconceived and without any basis for the reason that a perusal ·of item No. 11 of the Bill of Materials submitted by the appellants does not show that any such remarks were made therefor. In fact, the remarks column in the B said Bill of Materials was left 'blank. [Para 27] [618-C, D]

1.8. There is nothing on re.cord by way of any remarks in the bid document to effect that the said price of a single unit was to hold good for 100 units on the ground that appellant No. 1 was granted a software license which catered to 100 users at one time. [Para 28] [619-C] C

1.9. A basic distinction has to be drawn between a case where against an item, no rates or prices or o quantities are quoted, and those where some rate is quoted. Appellant No.1 having quoted a rate on a unit basis ill respect of item No.11, respondent No. 2 had no option but to make the said rate the basis for arriving at the total price. Accepting the interpretation as sought to E be given by the appellants would amount to re-writing the entries in the bid document and reading into the bid document, terms that did not exist therein. [Paras 28 and 29] [619-C, D, E] .F . _2.~. R.e~pondent No. 2 was under an obligati~n to not only maintain a great degree of transparency· and fair dealing on its part, but was also expected to maintain the sanctity and integrity of the entire process. Thus it was incumbent upon respondent No. 2 to ensure that no different yardstick were adopted for any of the vendors G and at the same time, to ensure that there was not the ·remotest possibility of discrimination, arbitrariness or favouritism. There was no scope for respondent No. 2 to read into the documents, terms and conditions which did not exist in the bid documents. The appellants have also H not levelled any personal allegations of malafides or • ~ _..,,,, ~ I ~ ~ SIEMENS PUBLIC COMMUNICATION NETWORKS PVT. LTD. & ANR. v. U.0.1 & ORS . 591 favouritism against respondent No. 2. The approach of A the High Court is in the right direction a·nd the factual position obtaining has also been noted in detail and the conclusions have been arrived at. [Paras 29, 30 and 31] [619-F, G, H; 620-A, B]