M/s. RKEC Projects Limited – YFC Projections pvt. Ltd. v. The Union of India & Ors.

Counsel for the Respondent(S):

#1. JUPUDI V K YAGNADUTT(CENTRAL GOVERNMENT COUNSEL) The Court made the following: ::ORDER:: The above writ petition is filed to declare the action of respondent No.2 in disqualifying the technical bid of the petitioner vide online rejection dated

31.07.2024 in relation to the tender issued vide RFP No.CPMGSUWATEN GG20203012 dated 29.12.2023 as illegal and arbitrary.

#2. The averments in the affidavit, in brief, are that RKEC Projects Limited – YFC Projects Pvt. Ltd., entered a joint venture to take part in a tender floated by respondent No.2 vide RPF No.CPMSUWATENGG2023012, dated

30.12.2023, inviting bids for the major upgradation of Visakhapatnam Railway SRS,J W.P.No.8990 of 2025 Station, Visakhapatnam, Andhra Pradesh, on EPC Mode. Both companies were incorporated under the Companies Act. The petitioner is a construction company with vast experience in executing marine structures, bridges, buildings, and electrical and firefighting projects. YFC Projects Private Limited is a private limited company that is a turnkey EPC Contractor, executing projects all over India in the line of Highway, Metro Rail, Indian Rail, buildings, etc. Eight bidders participated in the tender process. Respondent No.2 adopted a single two-packet system for the selection of a bidder for the awarding of the project. The first part is the technical bid, and the second part is the financial bid. b) The petitioners submitted the bid vide I.D.No.16315770 dated

12.02.2024 and also executed the bank guarantee. The petitioner satisfied the eligibility criteria as per the tender notification issued by respondent No.2. On

29.07.2024, respondent No.2 notified through IREPS portal that the technical bid of the petitioner stands disqualified. In remarks column, it was mentioned that “data does not meet the test of responsiveness in terms of mandatory documents, hence rejected”. c) Thereafter, the petitioner addressed two letters, dated 31.07.2024 and 21.08.2024, seeking detailed reasons for rejection of the bid. Since no reply was received, the petitioner filed W.P.No.20105 of 2024 and later withdrew the same, on 01.04.2025. Respondent No.2 opened the financial bids on 31.07.2024. The petitioner came to know that respondent No.3 is L1 among the qualified bidders. Respondent No.2, to issue the tender in favour of respondent No.3, rejected the technical bid of the petitioner without any valid reason. The petitioner quoted the financial bid for Rs.453,07,22,889.55 paise wherein respondent No.3 quoted for an amount of Rs.484,50,55,338.82 paise. Respondent No.2 acted hand in glove with respondent No.3 and rejected the technical bid of the petitioner. With these averments, the above writ petition is filed. SRS,J W.P.No.8990 of 2025

#3. Respondent No.2 filed a counter-affidavit. It was contended, inter alia, tender was floated the work of major upgradation of Visakhapatnam Railway Station, which is a national infrastructure project. The proposed work, to be undertaken under the subject tender, is : a. Construction of new Departure Air Concourse (142M X 108M) b. Construction of new station buildings c. Provision of 12m wide FOBs d. Passenger handling capacity of station 81,000 will increase to 1,50,000 e. Improved Traffic and Parking Planning in and around the Station

#4. The respondents followed the due procedure and rejected petitioner’s bid. The following are the reasons for rejecting five technical bids, including the petitioner’s bid: Name of the Bidder Remarks M/s. RKEC-YFC (JV)/Writ Petitioner M/s. Sannverse-ALTIS (JV) (1) Mandatory document at Sl.No.6 of Appendix-IA has been altered as 02 years in place of 03 years, (2) The petitioner has not fulfilled criteria for eligibility projects as per clause 2.2.2.1 of RFP, (3) JV member (M/s YFC Projects Ltd.) has not submitted the format, (4) The petitioner Power of Attorneys for signing of Bid, furnished (5) The annual statements are not tallying with net accruals. firm M/s. ALIS Holding The Corporation has failed to submit that SRS,J W.P.No.8990 of 2025 Therefore, prescribed. Articles of Association which required vide clause of 2.11.1 (h) of C of Section-2 as part of technical bid technical bid is considered incomplete the Test of responsiveness in terms of clause No.3.1.6.1 (h), section – 3. Hence the for being non- responsive in terms of clause 3.1.6.2, section-3. to meet rejected M/s. H.G. Infra Engineering Limited The bidder does not meet qualification requirement with regard to technical capacity M/s. KPC Projects Limited The bidder does not meet commercial compliance criteria as they have not submitted mandatory documents at Sl.No.7 of Commercial compliance of NIT. As submitted they have incomplete documents in regard to Annexure-VII of Appendix-IA which is a Commercial contrary to the affidavit submitted with to point No.2 and 3 of respect Appendix-VI compliance, mandatory document M/s. Varindera Constructions Ltd. The bidder has not submitted bid Security as per the format prescribed Appendix-V. Since Bid Security is improper, the bid is considered as the bid not accompanied by the Bid Security as per the clause No.2.20.2 and therefore fails to meet to the Test of responsiveness in terms of Clause 3.1.6.1 (C), Section -3 of Page 30 of RFP documents and rejected in terms of Clause 3.1.6.2, Section -3. b) A three-member tender evaluation committee, consisting of Senior Administrative Grade Officers, was formed to scrutinise the bids, and the Divisional Railway Manager /WAT was the accepting authority. The SRS,J W.P.No.8990 of 2025 committee rejected the petitioner’s bid after due deliberation and on cogent reasons. The respondents acted as per the terms of the tender document while rejecting the petitioner’s bid, and no fundamental or constitutional or legal right of the petitioner has been infringed. Since the petitioner failed to submit the mandatory documents as required under the RFP/NIT, the tender authority rightly rejected the petitioner’s technical bid vide order dated

29.07.2024.

#5. In so far as the rejection of the technical bid of the petitioner the following discrepancies were pointed out in the counter at para 17. i) That the document in Appendix-1A that the petitioner has altered the certificate to two years instead of three years at paragraph 6 in Appendix-1A. ii) That the petitioner has not fulfilled the criteria of eligibility projects and further stated that all three works done by the petitioner JV do not come under the eligibility projects, the document related to Annexure-IV of Appendix – 1A. iii) The other member of the petitioner JV has not submitted documents related to Annexure-VII of Appendix-1A. iv) The petitioner has not properly submitted the power of attorney documents as per Appendix-2 of the tender document. v) The annual statements are not tallying with the net accruals.

#6. A reply affidavit was filed by the petitioner, and it was contended that the above-mentioned reasons were not mentioned in the disqualification order dated 31.07.2024, except stating that the bidder does not meet the test of responsiveness in terms of mandatory documents. The petitioner submitted all the documents, and the same are filed along with the writ petition. Insofar as SRS,J W.P.No.8990 of 2025 the alteration about two years instead of three years is concerned, it is a clerical error. However, in Annexure-I, it was specified that for the last three years, the petitioner was neither expelled nor terminated, or court cases pending. c) Insofar as the second reason is concerned, the lead member of JV has executed contracts for Jawaharlal Nehru Port Authority, Navy Mumbai, and Delhi Metro Rail Corporation Ltd. (DMRCL) and experience/completion certificates are submitted to that effect. DMRCL has given a certificate of financial progress for completing 98%. The petitioner JV specifically mentioned that their share was 74%. Therefore, the reason that the bidder received less than 75% of the financial progress is unsustainable. d) The other member of the petitioner JV executed a work for National Building Corporation (NBCL), a government entity, whereby he received an amount of Rs.223.04 crores from the government entity. e) The petitioner has satisfied the condition under clause 2.2.2.1, which speaks about the submission of two eligible projects. The petitioner has satisfied the technical capacity, and hence, the rejection of the technical bid of the petitioner JV without verifying the same is only to favour others. The third reason for rejection is that the other member has not submitted Annexure-VII of Appendix-1A, is not a valid ground for the reason that the lead member of the petitioner JV has taken power of attorney to submit any documents regarding the said project and signature of the lead member and submission of Annexure-VII of Appendix-1A suffices. Nowhere in the tender document was it mentioned that both the members of JV shall sign Annexure VII of Appendix -1A. f) The petitioner JV submitted Appendix-II as per the proforma in the tender document, and the question of non-compliance of the requirement SRS,J W.P.No.8990 of 2025 under said appendix does not arise, and rejection of the technical bid for the fourth ground is unreasonable. g) The fifth reason of rejection relating to Annexure-III of Appendix- 1A that the annual statements are not tallying with the net accruals is false as a detailed statement of the lead member of the petitioner JV as per Annexure III, which is certified by the Chartered Accountant, is filed The petitioner JV was disqualified only for the reason that he is the lowest bidder (L1) of the project whereby the petitioner quoted for Rs.453.07 crores whereas respondent No.3 quoted for an amount of Rs.484.50 crores. The petitioner, JV, satisfied all the requirements regarding technical and financial capacity, and rejection of the petitioner’s bid is illegal.

#7. Heard Sri Gudapati Venkateswar Rao, learned counsel assisted by Sri Venkat Sailendra G, learned counsel for the petitioner and Sri Challa Dhananjai, learned Assistant Solicitor General, for the official respondents.

#8. Learned Senior Counsel for the petitioner would contend that the rejection of the technical bid of the petitioner is arbitrary and irrational. The rejection was made to confer benefit on respondent No.3 and the authority acted with malice. Learned Senior Counsel would further contend that two years mentioned at para 6 of the format of Appendix-1A, is clerical. Insofar as the non-tallying of Annexure III of Appendix-1A, the annual statements, with the net accruals, he would contend that the lead member adopted the Indian Accounting Standards (IND AS) in the year, 2020-21 as it is mandatory requirement for the shares to be listed on Stock Exchange Main board and thus, there was change in the net accruals. However, the same was certified by Chartered Accountant. Learned Senior Counsel would further submit that despite the petitioner complied with all the requirements, the technical bid of the petitioner was rejected. SRS,J W.P.No.8990 of 2025

#9. Learned Assistant Solicitor General, would contend that due to non- compliance of certain requirements, as pointed out at para 17 of the counter affidavit, the petitioner’s technical bid was rejected. He would also contend that the portal, concerning the reasons, does not exceed 190 characters and hence, the rejection order was briefly mentioned. He would further submit that the official respondents acted neither arbitrarily nor hand in glove with respondent No.3.

#10. Both the counsels argued the matter elaborately and cited a number of judgments regarding the scope of judicial review vis-à-vis the tender.

#11. The points for consideration are:

#1. Whether respondent No.2 exceeded its power and committed any error?

#2. Whether respondent No.2 acted hand in glove with respondent No.3? CONSIDERATION

#12. Before proceeding further, let this Court examine the scope of judicial review vis-à-vis, the tenders. The scope of judicial review of administrative action has been well crystallized by a Three-Bench Judge of the Hon’ble Apex Court in Tata Cellular v. Union of India1. Subsequently, the said decision has been followed in several judgments. The Hon’ble Apex Court at paras 70,77 and 94 observed as under: “70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is 1 (1994) 6 SCC 651 SRS,J W.P.No.8990 of 2025 expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. . . .

#77. The duty of the court is to confine itself to the question of legality. Its concern should be:

#1. Whether a decision-making authority exceeded its powers?

#2. Committed an error of law,

#3. committed a breach of the rules of natural justice,

#4. reached a decision which no reasonable tribunal would have reached or,

#5. abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, Wednesbury unreasonableness. (iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. SRS,J W.P.No.8990 of 2025 Secretary of State for the Home Department, ex Brind [(1991) 1 AC 696] , Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, “consider whether something has gone wrong of a nature and degree which requires its intervention”. . . .

#94. The principles deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. SRS,J W.P.No.8990 of 2025 Based on these principles we will examine the facts of this case since they commend to us as the correct principles.”

#13. It is a settled principle that the owner or employer of the Project, having authored the tender document, is the best person to understand and appreciate its requirements and interpret its documents. The Hon’ble Apex Court in Afcons Insfrastrucutre Limited v. Nagpur Metro Rail Corporation Limited & Anr.2, at paras 13 and 15 observed thus:

#13. In other words, a mere disagreement with the decision-making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision-making process or the decision. . . .

#15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.

#14. In Galaxy Transport Agencies v. New J.K. Roadways3. The Hon’ble Apex Court reiterated the above principle and further considered the aspect of equity and natural justice vis-à-vis tenders.