M/s. MSPL Gases Limited v. M/s. Steel Authority of India Limited

sealed tenders for establishment of new Cryogenic AirSeparation Plant (ASP) in the premises of Salem Steel Plant onBuild-Own-Operate (BOO) basis and supply Oxygen, Nitrogen andArgon gases on long term basis to steel melting shop (SMS)being put up under expansion. The first respondent appointedthe fifth respondent as Consultant-cum-Project Manager. Thetender floated on 13.03.2007 was opened on 09.05.2007 in whichsix tenderers have participated, out of which two were foundineligible, one tender was rejected and the remaining threenamely the appellant, fourth respondent and one M/s. BOCIL wereconsidered as eligible. After holding techno-commercialdiscussion with them, the price bid was opened on 04.07.2007 inwhich the fourth respondent's bid was rejected. The appellantand M/s. BOCIL were evaluated by the fifth respondent. Thefifth respondent, in his letter dated 12.07.2007, afterevaluating the price bid and the Net Present Value, hereinafterreferred to as NPV, as per the terms of the tender conditions,recommended to consider M/s. BOCIL as L1 for establishment ofASP on BOO basis for supply of industrial gas for fifteen yearsto the second respondent. (iii)While things are such, the re-tender in respectof EAF, LF and AOD packages of SMS were issued by the secondrespondent on 13.08.2007 and the process was on. In view ofthe re-tendering of SMS packages, the second respondent sent aletter dated 04.10.2007 to the fifth respondent requesting torecommend for the course of action with respect to ASP on BOObasis. The fifth respondent, by letter dated 15.10.2007recommended for re-tendering of ASP. Since the ASPspecifications required to be reviewed, the fifth respondent'sletter dated 15.10.2007 was placed before the Plant LevelTender Committee (PLTC) of the respondents 1 to 3 whichconsidered it and recommended to re-tender the packages for ASPon BOO basis with revised quantity and delivery period tosynchronise with the commissioning of re-tendered EAF, LF andAOD packages. After approval of the said tender committee andthe Executive Director of the second respondent, the second re-tender was floated for establishment of the said ASP withrevised terms on BOO basis for 15 years and tender notice waspublished in dailies and web site of the first respondent on14.11.2007. (iv)In response to the said second tender notice (1) M/s.Goyal MG Gases (2) the appellant (3) the fourth respondent and(4) M/s. Praxair have participated in which the tender of M/s.Goyal MG Gas was rejected and the remaining three were foundeligible. On evaluating the technical bids, it was found thatthe appellant has agreed to the tender conditions in toto butthe fourth respondent and M/s. Prag Air deviated, hence,opportunity was granted to all the three tenderers fordiscussion and clarification by organising a meeting. Thefourth respondent and M/s. Praxair have withdrew all thedeviations, however, intended to submit their revised pricebids on the ground that the withdrawal of deviation have had a https://hcservices.ecourts.gov.in/hcservices/ bearing on the price quoted. (v)On 10.01.2008, the Techno-Evaluation Committee andCommercial Evaluation Committee of the respondents 1 to 3recommended that all the three are techno-commerciallyeligible. The commercial evaluation committee considered therequest of the fourth respondent and M/s. Praxair forsubmitting revised price bid and suggested to seek revisedprice bids from all the three bidders. The said recommendationwas also accepted by the tender committee. The secondrespondent issued a letter dated 11.01.2008 requesting all thethree tenderers to submit their revised price bid on or before14.01.2008. The appellant stated to have initially not agreedfor submitting revised price bid, however, submitted it. Therespondents 1 to 3 stated that the appellant has not filedrevised price bid but submitted only supplementary price bid,which is not permissible as per the tender conditions. Therevised price bid tender was opened on 14.01.2008 in thepresence of all the three bidders and handed over to the fifthrespondent for the purpose of evaluation, to arrive at NPV andconsequently calculate the total cost in the contract period of15 years as contemplated in annexure-I, Section V of tenderdocument. (vi)The fifth respondent, on going through the bids statedto have informed the appellant that it emerged and qualified as'L1' and sent its report dated 30.01.2008 to that effect to thesecond respondent. It is stated by the respondents 1 to 3 thatsuch report dated 30.01.2008 was not received however receivedletters dated 01.02.2008 and 02.02.2008 of the fifthrespondent, however, the appellant sent representations dated16.01.2008, 18.01.2008, 19.01.2008, 21.01.2008 and 22.01.2008to the second respondent claiming that they are the lowestbidder and requested to issue letter of acceptance. The fourthrespondent also sent representations dated 16.01.2008,23.01.2008 and 30.01.2008 claiming that they are the lowestbidders on the basis of hourly average flow rate. M/s. PraxairIndia (P) Limited also claimed that they are the lowest biddersand sent representations dated 14.01.2008, 15.01.2008 and21.01.2008 stating that there are some lack of clarity forconsidering the evaluation of price bid and requested toevaluate on the basis of the daily average flow rate i.e.,NM3/day for all the gases. (vii)While things are such, the first respondentcancelled the second tender and issued third tendernotification dated 23.02.2008, revising the technicalconditions as follows:-"a)The oxygen quantity was revisedfrom 84,000 NM3/day (3500 NM3/hour for 24hours) to 75600 NM3/day (3150 NM3/hour for24 hours). But at the same time, therespondent DGM, Salem Steel introduced acondition that the plant should be designedto produce 50% to 105% of the contracted https://hcservices.ecourts.gov.in/hcservices/ capacity (Page Number 58 under clause No.9.2under the heading Design Basis)b)The Argon quantity was reducedfrom 11500 NM3 (20.54 TPD) to 11200 NM3/day(20 TPD). But in Note 2, Annexure II to thedraft agreement, the respondent DGM, SalemSteel introduced a stipulation that thetenderer was to supply 19600 NM3 Argon Gasper day (35 TPD) required occasionallythrough out the day in future."(viii)According to the appellant, the third respondentcolluded with the fourth respondent to favour it and instigatedthe respondents 1 to 3 to call for the third tender; that onperusal of the technical conditions in the third tender dated23.02.2008, it was seen that there is no real change in thetender conditions from that specified in the second tenderdated 12.11.2007; that the appellant's bid, which is the lowestin the second tender, could have very well met the marginallychanged requirements of the third tender.(ix)It was averred by the appellant that the thirdrespondent, in order to favour the fourth respondent isrepeatedly revising the tender conditions and such actionviolates equality before Law enshrined under Article 14 of theConstitution of India; that the appellant is qualified as 'L1'by thein the second tender, but the first respondent erred innot issuing letter of acceptance to the appellant immediatelyafter the appellant qualified as 'L1' by the fifth respondent .The respondents 1 to 3 stated that on 01.02.2008, the fifthrespondent has sent a letter to the second respondent statingthat the tenderers have not really understood the tenderrequirements/evaluation criteria as stipulated in the secondtender documents and have interpreted differently to suit theirbids and claimed themselves to be the 'L1'. Since variousrepresentations have been received from the tenderers, thefifth respondent informed the second respondent to seek freshprice bids once again from all the three eligible biddersdefining once again the evaluation criteria. The saidsuggestion was also placed before the tender committee on02.02.2008 itself which felt that after opening of price bids,seeking fresh price bid is contrary to the terms and conditionsof the tender. The Executive Director of the first respondent,after discussing the matter with the Executive Director –Project, Executive Director – Vigilance, Chief Vigilanceofficer of the first respondent, General Manager (Law) andPrincipal Law Officer of the first respondent at CorporateOffice, New Delhi stated to have found that asking for freshrevised bids after opening the price bid is a clear deviationfrom PCP-06 and such option cannot be exercised, instead, gofor fresh re-tender with necessary clarification and correctionas suggested by the fifth respondent. (x)The above said course of action for re-tendering with https://hcservices.ecourts.gov.in/hcservices/ necessary clarification/correction as suggested by theExecutive Director (Operations) on 02.02.2008 was said to haveinformed by the Executive Director of the second respondent tothe third respondent herein and it based on the informationreceived from the Executive Director of the second respondentinitiated on 02.02.2008, a proposal for re-tender for ASP. TheExecutive Director of the second respondent, on 04.02.2008,approved the decision for re-tender. The second respondent,thereafter, placed the said re-tender proposal before theExecutive Director (Operation) of the first respondent, whosought opinion from the General Manager and Principal LawOfficer and they have also opined that revised tender was thebetter alternative. Thereafter, the Executive Director(Operations) of the first respondent approved therecommendations of the Plant level tender committee for re-tendering on 22.02.2008. The second respondent, thereafter,took steps for re-tendering after obtaining opinion from thePrincipal Law Officer of the first respondent and placed thematter before the approving authority on 22.02.2008 itself withnecessary modification in respect of technical specificationsas suggested by the fifth respondent. The revision of technicalrequirements were carried out in Annexure-II of the draftagreement in the third tender incorporating the methodology tobe adopted for the calculation of NPV and for the purpose ofprice evaluation as suggested by the fifth respondent herein.The competent authority also approved the said third tender forASP package on 22.02.2008 itself. The Executive Director ofthe second respondent also approved the recommendation, whichwas informed to the third respondent by fax message on22.02.2008. (xi)On 23.02.2008, the second respondent sent a letter toall the tenderers, including the appellant, informing thecancellation of the previous tender dated 13.11.2007. It wasalso informed that return of the earnest money deposit is beingarranged and requested them to participate in the proposedthird tender. On 23.02.2008, notice inviting fresh tenders forestablishment of ASP was issued indicating the last date as15.03.2008 for submitting and opening of the tenders, which wasextended to 22.03.2008 and further extended to 31.03.2008.Till the issuance of re-tender on 23.02.2008, the price bidssubmitted by all the three tenderers in respect of the secondtender was not at all evaluated. (xii)The said third tender notification dated23.02.2008 was challenged by the appellant in W.P. No. 6425 of2008 and W.P. No. 6426 of 2008 was filed praying for a Writ ofMandamus to direct the second respondent herein to issue letterof acceptance to the appellant as he was the successful bidderrelating to the second tender notification dated 12.11.2007.Both the writ petitions were dismissed by the learned singleJudge by a common order dated 31.07.2008, hence, the presentwrit appeals. https://hcservices.ecourts.gov.in/hcservices/

2.Mr. AL. Somayaji, learned senior counsel appearingfor the appellant in W.A. No. 1125 submitted the following:-The orders for cancellation of the second tender andseeking re-tender was made to accommodate the fourthrespondent, which is ex-facie illegal, arbitrary,discriminatory and perverse. The second respondent, along withthe fifth respondent fixed the criteria that Oxygen andNitrogen would be evaluated on a hourly basis and Argon ondaily basis, based on it, the plant capacity was fixed to matchthe actual requirement of gases, which was not considered bythe respondents 1 to 3. The tender process was actuated bymalice, which is evident that the respondents 1 to 3 suppressedthe recommendations dated 30.01.2008 of the fifth respondentthat the appellant was 'L1' and chosen to act upon only ontheir subsequent letter dated 01.02.2008, that suggested forrevised price bids only however the respondents 1 to 3 decidedto favour the fourth respondent and had gone for the thirdtender, which factors were not considered by the learned singleJudge. The learned single Judge failed to note that the letterdated 01.02.2008 and 02.02.2008 were placed before the plantlevel tender committee and others and approvals have beenobtained from authorities within a short period. No validreason is assigned by the respondents 1 to 3 for not placingthe letter dated 30.01.2008 of the fifth respondent before theplant level tender committee. Once the fifth respondent hasevaluated the tenders submitted by the tenderers and givenfinal recommendations stating that the appellant is 'L1' it isobligatory on the part of the respondents 1 to 3 to consider itbefore taking a different view. There is no materials placedon record to show or valid reasons assigned why fifthrespondent changed its original decision took on 30.01.2008 andsuggested for fresh price bid in its letter dated 01.02.2008.The fifth respondent ought to have issued the letter dated01.02.2008 only at the behest of the respondents 1 to 3. Thelearned single Judge erred in not appreciating the role of theConsultant, 5th respondent and the value of its recommendationand brushed it aside on the ground that it is a mererecommendation. The stand taken by the respondents 1 to 3 thatthere was confusion in the minds of the tenderers, whichresulted in cancelling the second tender is incorrect, indeed,all the tenderers have understood the evaluation criteria andsubmitted their bids in accordance with those criteria afternumerous clarificatory meetings, which were also considered bythe fifth respondent before submitting its finalrecommendations dated 31.01.2008 mentioning that the appellantwas 'L1'. The plea of the respondents 1 to 3 that evaluationcriteria in the second tender lacks clarity or was incapable ofbeing applied is not supported by any material. The learnedjudge erred in not noticing the fact that final quantitiesfrozen and clarified in the third tender are the same asclaimed by the appellant in the second tender and was evaluatedby the fifth respondent in the final recommendation dated30.01.2008. The second tender was cancelled with malafide https://hcservices.ecourts.gov.in/hcservices/ intention to give another opportunity to the fourth respondent,that too at the cost of delaying the project. The thirdrespondent is also a party in the plant level tender committeeand he colluded with the fourth respondent to favour them,which factors have been elicited by the appellant but notconsidered by the learned single Judge and prayed for settingaside the common order passed by the learned single Judge inW.P. Nos. 6425 and 6426 of 2008. In support of theircontention, the learned counsel for the appellant relied on thedecisions of the Honourable Supreme Court reported ini)In (Delhi Development Authority vs. UEE ElectricalsEngineering) (2004) 11 SCC 213 the Honourable Supreme Courtheld in Para No.16 as follows:-"16. Doubtless, he who seeks toinvalidate or nullify any act or order mustestablish the charge of bad faith, an abuseor a misuse by the authority of its powers.While the indirect motive or purpose, or badfaith or personal ill will is not to be heldestablished except on clear proof thereof,it is obviously difficult to establish thestate of a man’s mind, for that is what theemployee has to establish in this case,though this may sometimes be done. Thedifficulty is not lessened when one has toestablish that a person apparently acting inthe legitimate exercise of power has, infact, been acting mala fide in the sense ofpursuing an illegitimate aim. It is not thelaw that mala fides in the sense of impropermotive should be established only by directevidence. But it must be discernible fromthe order impugned or must be shown from theestablished surrounding factors whichpreceded the order. If bad faith wouldvitiate the order, the same can, in ouropinion, be deduced as a reasonable andinescapable inference from proved facts.(See S. Partap Singh v. State of Punjab) Itcannot be overlooked that burden ofestablishing mala fides is very heavy on theperson who alleges it. The allegations ofmala fides are often more easily made thanproved, and the very seriousness of suchallegations demands proof of a high order ofcredibility. (As noted by this Court inE.P. Royappa v. State of T.N. ii)In (Reliance Airport Developers (P) Ltd vs. AirportsAuthority of India and others) (2006) 10 SCC Page No.1 theHonourable Supreme Court, in Para No.62 held thus:- 62. Therefore, to arrive at a decisionon “reasonableness” the court has to findout if the administrator has left outrelevant factors or taken into account https://hcservices.ecourts.gov.in/hcservices/ irrelevant factors. The decision of theadministrator must have been within the fourcorners of the law, and not one which nosensible person could have reasonablyarrived at, having regard to the aboveprinciples, and must have been a bona fideone. The decision could be one of manychoices open to the authority but it was forthat authority to decide upon the choice andnot for the court to substitute its view. iii)In (Noble Resources Ltd., vs. State of Orissa andanother) (2006) 10 SCC 236, in Para 15, it was held by theHonourable Supreme Court as follows:-: 15. It is trite that if an action onthe part of the State is violative of theequality clause contained in Article 14 ofthe Constitution of India, a writ petitionwould be maintainable even in thecontractual field. A distinctionindisputably must be made between a matterwhich is at the threshold of a contract anda breach of contract; whereas in the formerthe court’s scrutiny would be moreintrusive, in the latter the court may notordinarily exercise its discretionaryjurisdiction of judicial review, unless itis found to be violative of Article 14 ofthe Constitution. While exercisingcontractual powers also, the governmentbodies may be subjected to judicial reviewin order to prevent arbitrariness orfavouritism on their part. Indisputably,inherent limitations exist, but it wouldnot be correct to opine that under nocircumstances a writ will lie only becauseit involves a contractual matter. iv)In (Directorate of Education and others vs. EducompDatamatics Ltd., and others) 2004 4 SCC 19, it was held by theHonourable Supreme Court in Para Nos. 9 and 12 as follows:- 9. It is well settled now that thecourts can scrutinise the award of thecontracts by the Government or its agenciesin exercise of their powers of judicialreview to prevent arbitrariness orfavouritism. However, there are inherentlimitations in the exercise of the power ofjudicial review in such matters. The pointas to the extent of judicial reviewpermissible in contractual matters whileinviting bids by issuing tenders has beenexamined in depth by this Court in TataCellular v. Union of India. After examining https://hcservices.ecourts.gov.in/hcservices/ the entire case-law the followingprinciples have been deduced: (SCC pp. 687-88, para 94)“94. The principles deducible from theabove are:(1) The modern trend points to judicialrestraint in administrative action.(2) The court does not sit as a court ofappeal but merely reviews the manner inwhich the decision was made.(3) The court does not have the expertiseto correct the administrative decision. Ifa review of the administrative decision ispermitted it will be substituting its owndecision, without the necessary expertisewhich itself may be fallible.(4) The terms of the invitation to tendercannot be open to judicial scrutiny becausethe invitation to tender is in the realm ofcontract. Normally speaking, the decisionto accept the tender or award the contractis reached by process of negotiationsthrough several tiers. More often than not,such decisions are made qualitatively byexperts.(5) The Government must have freedom ofcontract. In other words, a fair play inthe joints is a necessary concomitant foran administrative body functioning in anadministrative sphere or quasi -administrative sphere. However, thedecision must not only be tested by theapplication of Wednesbury principle ofreasonableness (including its other factspointed out above) but must be free fromarbitrariness not affected by bias oractuated by mala fides.(6) Quashing decisions may impose heavyadministrative burden on the administrationand lead to increased and unbudgetedexpenditure.”(emphasis supplied)12. It has clearly been held in thesedecisions that the terms of the invitationto tender are not open to judicial scrutiny,the same being in the realm of contract.That the Government must have a free hand insetting the terms of the tender. It musthave reasonable play in its joints as anecessary concomitant for an administrativebody in an administrative sphere. The courtswould interfere with the administrative https://hcservices.ecourts.gov.in/hcservices/ policy decision only if it is arbitrary,discriminatory, mala fide or actuated bybias. It is entitled to pragmaticadjustments which may be called for by theparticular circumstances. The courts cannotstrike down the terms of the tenderprescribed by the Government because itfeels that some other terms in the tenderwould have been fair, wiser or logical. Thecourts can interfere only if the policydecision is arbitrary, discriminatory ormala fide. v)In (Harminder Singh Arora vs. Union of India andothers) (1986) 3 scc 247, in para No.29, it was held by theHonourable Supreme Court as follows:-"29. In the instant case, theinstrumentalities of the State invitedtenders for the supply of fresh buffalo’sand cow’s milk and, therefore, this case hasto be decided on the basis of bid by thetenderers. There was no question of anypolicy in this case. It is open to the Stateto adopt a policy different from the one inquestion. But if the authority or the StateGovernment chooses to invite tenders then itmust abide by the result of the tender andcannot arbitrarily and capriciously acceptthe bid of Respondent 4 although it was muchhigher and to the detriment of the State.The High Court, in our opinion, was notjustified in dismissing the writ petition inlimine by saying that the question relatesto the contractual obligation and the policydecision cannot be termed as unfair orarbitrary. There was no question of anypolicy decision in the instant case. Thecontract of supply of milk was to be givento the lowest bidder under the terms of thetender notice and the appellant being thelowest bidder he should have been grantedthe contract to supply, especially, when hehas been doing so for the last so manyyears.3.Mr. Vijay Narayan, learned senior counsel appearingfor the appellant in W.A. No. 1126 of 2008 submitted asfollows:-The fifth respondent has sent a final recommendationletter dated 30.01.2008 wherein in Para No.2.0 it is statedthat all bidders furnished their documents/information forestablishing their eligibility requirement and based on thepreliminary review of documents received from the tenderers, https://hcservices.ecourts.gov.in/hcservices/ all the bidders appeared to be prima facie eligible.Additional clarifications and documents were sought from allthe bidders for meeting the eligibility requirements, onreceipt of which certain discrepancies were observed in theoffer of GMGGL, while rest of the three bidders namely fourthrespondent, the appellant and Praxair were found to beeligible. In Para-6.0, it is stated that the bidders wereasked to quote their revised prices based on theclarification/confirmation to draft agreement read with tenderdocument & minutes of meeting mentioned therein. In para-7.0 itis stated that in line with the saidclarifications/confirmations all the three techno-commerciallyacceptable parties were communicated to submit un-priced bidsand revised price bid (as per the format in the tenderdocument) in separate sealed envelopes to be opened on14.01.2008. All the bidders quoted the amount calculateduniformly based on hourly basis for supplying Oxygen andNitrogen and Argon on daily basis. Further, in Para No.10 ofthe said letter, it is stated that subsequent to the receipt ofconfirmation and declaration on the unpriced bid all theparties were called together and the declarations/ confirmationgiven by each party were read out and all the parties havenoted the above. Similarly, in para-11, it is mentioned thatthe prices are inclusive of the taxes etc., as quoted by thefourth respondent, appellant and Praxair as tabulated therein.In para-14, it is stated that based on the above results of NPVit is found that appellant was the lowest bidder and the pricesquoted by them were considered reasonable and recommended toconsider the appellant. It is however suggested that thesecond respondent may try and negotiate with the appellant forany possible reduction in supply price of Argon as it is theirbought-out item. The learned senior counsel further submittedthat the said letter dated 30.01.2008 of the fifth respondentwas suppressed by the respondents 1 to 3 in order to favour thefourth respondent. The letter dated 01.02.2008 was sent by thefifth respondent at the instance of the third respondent. Theappellant also, in their letter dated 22.02.2008 addressed tothe first respondent referred to the said letter dated30.01.2008 of the fifth respondent. There was no confusion inthe minds of the bidders in the evaluation criteria as allegedby the respondents 1 to 3. Pointing out the said reasons, thelearned senior counsel prayed for setting aside the commonorder passed by the learned single Judge in WP Nos. 6425 and6426 of 2008. 4.Mr. Jagdeep Dhankar, learned Senior Counsel appearingfor the first respondent submitted that the evaluation criteriafor contracted quantity of gases mentioned in annexure I of thesecond tender do not impart any certainty besides lackingclarity and taking advantage of the same, the appellant, fourthrespondent and M/s. Praxair India (P) Limited have claimedthemselves as 'L1'. The learned single Judge, in para Nos. 39and 40 of the order, has rightly rejected the contention of theappellant that there was clarity in the evaluation mechanism. https://hcservices.ecourts.gov.in/hcservices/ The evaluation criteria stated in tender documents and therequirements of gases stated in Annexure-II of the draftagreement are inconsistent; that if the average hourly flowrate NM3/hour is converted into days requirements, NM3/dayhourly flow rate in NM3/hour of gas multiplied by 24 hours, theresultant figures should tally with the days requirements, butit differs from the days requirement, which was also pointedout by the learned single Judge to say that there was noclarity in the second tender; that the fifth respondent hasrequested the respondents 1 to 3 to re-define once again theevaluation criteria and to call for fresh bids from thebidders, however, the respondents 1 to 3 considered that it isimproper to call for fresh bids after opening the price bids asit is contrary to PCP-06; that when the respondents 1 to 3 cameto know about the letter dated 30.01.2008, the fifth respondentwas called upon to state as to whether any such letter was senton 30.01.2008 by it. During the meeting, the fifth respondentclarified that it was one of the alternative evaluationcalculation worked out by them and further stated that they hadworked out other alternative calculations considering dailyflow rate of all gases etc., and these alternatives were workedout to check the various representations received. It wasfurther clarified by the fifth respondent that the said letterhad not been officially despatched to the respondents 1 and 2since it was felt that any evaluation method followed would notbe able to address the various representations received and thematter needed further review. Clause 14 of Section 1 of secondtender empowers the respondents 1 and 2 to withdraw from thetendering process or any part thereof, to accept any or alltenders in full scope or part scope at any stage of process andor to modify price or any part thereof at any time thereafterwithout assigning any reasons whatsoever and no financialobligation shall accrue to the respondents 1 and 2 in suchevent; that in annexure I of the second tender, the evaluationcriteria for contracted quantity of gases are mentioned, whichlacked clarity; that considering all those factors, the tendercommittee as well as other authorities of the respondents 1 and2 cancelled the second tender and called for third tender; thatSection VI of the third tender contains evaluation criteria forall contracted quantity of gases which obviate the differentinterpretation by the parties; that the evaluation criteriafurther clarifies that total variable cost, net of CENVAT &TNVAT of all the three gases (Oxygen, HP-Nitrogen & Argon) andfixed facility charges excluding taxes and duties shall becalculated for fifteen (15) years and brought down to NetPresent Value (NPV) of the gases and prayed for dismissal ofthe writ appeals. In support of his contention, the learnedsenior counsel for the first respondent relied on the belowmentioned decisions:- i)In Ramchandra Murarilal Bhattad and others v. State ofMaharashtra and others, (2007) 2 SCC 588, the HonourableSupreme Court held in Para Nos. 47, 55, 58 and 69 as follows:- 47. Reliance has also been placed on https://hcservices.ecourts.gov.in/hcservices/ State of U.P. v. Singhara Singh whereinthis Court quoted with approval thedecision in Taylor v. Taylor (Ch D atp.431) for the proposition that where apower is given to do a certain thing in acertain way, the thing must be done in thatway or not at all and that other methods ofperformance are necessarily forbidden.There is again no quarrel over theaforementioned proposition of law. Here theAuthority has not exercised any powerforbidden by law. The Authority has alsonot exercised its power in the manner whichis not in accordance with law. 55. The next question which arises forconsideration is as to whether any reasonwas required to be assigned. A power todeal with a contractual matter and a powerof a statutory authority to exercise itsstatutory power in determining the rightsand liabilities of the parties are distinctand different. Whereas reasons are requiredto be assigned in a case where civil orevil consequences may ensue, the same maynot be necessary where it is contractual innature, save and except in some cases e.g.Star Enterprises. 58. We have noticed hereinbefore thatpower has not been exercised by theExecutive Committee in rejecting thetender. The power has been exercised by theAuthority in cancelling the tenders so asto enable it to have a re-look of theentire project. 69. The appellant did not participatein the second bid. The tender process iscomplete. Before us only a higher bid hasbeen given. We do not intend to enter intothe intricacies of the question. Theappellant could have submitted its bidspursuant to the new tender and newconditions, even without prejudice to itsrights and contentions in this appeal. Thestipulations made in the 2002 tender couldhave been repeated by it so as todemonstrate before the experts comprisingmembers of the Executive Committee that itsbid was the highest. If, in view of thechange in the policy decision, theAuthority does not intend to become apartner in the profit-making and opt forhaving the entire bid amount at one goinstead of waiting for 20 years, we do not https://hcservices.ecourts.gov.in/hcservices/ find any fault therewith. ii)In (Centre for Public Interest Litigation v. Union ofIndia, (2000) 8 SCC 606, the Honourable Supreme Court, in ParaNos. 13 and 20 held thus:-13..... At any rate, it would behazardous for the Courts to venture on aguesswork as compared to the technicalassessment that is made, correctness ofwhich not disproved by cogent materials." 20. It is clear from the aboveobservations of this Court that it will bevery difficult for the courts to visualisethe various factors likecommercial/technical aspects of thecontract, prevailing market conditions,both national and international andimmediate needs of the country etc. whichwill have to be taken note of whileaccepting the bid offer. In such a case,unless the court is satisfied that theallegations levelled are unassailable andthere could be no doubt as to theunreasonableness, mala fide, collateralconsiderations alleged, it will not bepossible for the courts to come to theconclusion that such a contract can beprima facie or otherwise held to bevitiated so as to call for an independentinvestigation, as prayed for by theappellants. Therefore, the above contentionof the appellants also fails. iii)(G.D. Zalani and another vs. Union of India andothers) 1995 Suppl (2) SCC 512 wherein in Para No. 34, theHonourable Supreme Court held thus:- 34. We must reiterate that this wasnot a simple case of granting of lease of agovernment company, in which case the courtwould have been justified in insisting uponthe authorities following a fair methodconsistent with Article 14, i.e., bycalling for tenders. We agree that whileselling public property or granting itslease, the normal method is auction orcalling for tenders so that all intendingpurchasers/lessees should have an equalopportunity of submitting theirbids/tenders. Even there, there may beexceptional situations where adopting sucha course may not be insisted upon. Be thatas it may, the case here is altogetherdifferent. HAL was trying to improve not https://hcservices.ecourts.gov.in/hcservices/ only the quantum of production but also itsquality and for that purpose looking for anappropriate partner. They went in for thebest. It must be remembered that thistechnology is not there for the mere askingof it. All the leading drug companies keeptheir processes and technology a guardedsecret. Being businessmen, they like toderive maximum profit for themselves. It isultimately a matter of bargain. In suchcases, all that need be ensured is that theGovernment or the authority, as the casemay be, has acted fairly and has arrived atthe best available arrangement in thecircumstances.5.Mr. R. Krishnamoorthy, learned Senior counselappearing for the respondents 2 and 3 submitted as follows:-The first tender notice dated 13.03.2007 was cancelled on25.10.2007 on the recommendation of the plant level tendercommittee to go for re-tender of ASP since the other mainequipment packages of Steel Melting Shop (SMS) for which thegases from ASP are required, were re-tendered and consequentlythe contracted quantity of gases had to be re-ascertained onthe out come of the other re-tendered main equipment packagesand also to prevent the financial loss of Rs.5.75 crores to thefirst respondent as well as to synchronise the supply of thegases to match with the commissioning of main equipmentpackages of SMS. Since the plant level tender committeerecommended to go for re-tender, recommendations of theconsultant in favour of 'L1' bidder M/s. BOCIL against thefirst tender notice was not accepted by the respondents 1 to 3with the approval of Executive Director of the secondrespondent as well as the Executive Director (Operation) of thefirst respondent. As Plant level tender committee decided togo for re-tendering of ASP, which was also approved by thecompetent authority, second tender was floated on 12.07.2007.Neither the appellant nor the other bidders in the first tenderhad challenged the said cancellation. The allegation that inthe first tender the fourth respondent quoted 23 months asdelivery period is incorrect, in fact, it quoted 24 months asdelivery period. The extension of delivery period was grantednot as an isolated case of ASP alone but also for otherassociated main equipment packages in the interest ofsynchronising the commissioning of the entire expansion projectof the second respondent with due approval of competentauthority. After submission of tender, if any techno-commercial deviation taken by any tenderer is withdrawn duringthe clarification meeting, the tenderers are within their rightto request for submission of revised price bids, however, theycan do so before opening the price bids since the withdrawal oftechno commercial deviation may have some price implication andsuch revised price bid alone should be called for aspermissible under Clause-15 and 21 (5) of Section III of the https://hcservices.ecourts.gov.in/hcservices/ instructions to the tenderers under which the respondents 1 to3 are authorised to seek for revised price bid. Clause 7.17 ofPCP-06 empowers the respondents 1 to 3 to provide an equal andfair opportunity to all the tenderers to submit their revisedprice bid. Accordingly, revised price bids were called forfrom all the tenderers, which was in accordance with the tenderconditions as well as PCP-06. The supplementary price bid isnot permissible as per PCP-06. The appellant himself hasdeclared on his own as if he had qualified and emerged as 'L1'.After opening the price bid, there are certain procedures to befollowed during and after the process of evaluation and beforedeclaring 'L1' tenderer. After evaluation of the price bid,the fifth respondent has to forward it to the second respondentthe detailed evaluation, including the comparative position ofall the bidders, who in turn place the same before the plantlevel tender committee or the third respondent. The plantlevel tender committee has to consider the basis of evaluationand recommend it to the fifth respondent. Thereafter, therecommendation of the plant level tender committee would beplaced for approval before the Executive Directors of thesecond respondent as well as the first respondent andultimately, the said recommendations will be placed before theBoard of Directors of the first respondent for finalacceptance. After the approval by the Board only, 'L1' biddercan be declared as successful bidder. Therefore, the role ofthe fifth respondent is limited to the extent of submission ofevaluation and recommendation to the plant level tendercommittee, which has the sole prerogative either to accept orto reject the recommendations of the fifth respondent as perthe applicable guidelines. The fifth respondent cannot declareanybody as 'L1' bidder because it is beyond the delegatedpurview and authority. Immediately after the opening of theprice bids, all the tenderers started sending representationsand each one of them claimed themselves as 'L1' bidder on thebasis of their own interpretation about the evaluationcriteria. The evaluation criteria stipulated in the secondtender lacked clarity in respect of contracted quantity ofgases to be considered for price evaluation and the tendererscould not fully understand the evaluation criteria clearly.Therefore, with a view to resolve the ambiguity, the fifthrespondent suggested to the second respondent to ask for freshbid from all the three bidders by defining the evaluationcriteria vide his letters dated 01.02.2008 and 02.02.2008.Even in the letter dated 01.02.2008 of the fifth respondent,the letters dated 14.01.2008 and 15.01.2008 of M/s. Pragair;letter dated 16.01.2008 and 18.01.2008 of the appellant and theletter dated 16.01.2008 of the fourth respondent sent to therespondents 1 and 2 were taken into consideration by it. Theplant level tender committee, after examining the suggestionsmade by the fifth respondent, recommended to seek the advicefrom the Chief Vigilance Officer of the first respondentregarding seeking of fresh price bid. The Executive Directorof the second respondent, who was available in New Delhi atthat time, held discussions with the Executive Director https://hcservices.ecourts.gov.in/hcservices/ (Operations), Executive Director (Projects), Principal LawOfficer, Executive Director (Vigilance), Chief VigilanceOfficer and other senior officials of the first respondent andcame to the consensus that asking for fresh bid after openingthe original bid would be a clear violation of PCP-06 andtherefore they opined that such an option cannot be exercisedand instead recommended that the case can be re-tendered withnecessary clarification/modification as suggested by the fifthrespondent. The suggestion made by the fifth respondent wasplaced before the plant level tender committee and thecommittee had also recommended to go for re-tender by way ofthird tender notice. The fifth respondent did not send anyrecommendation dated 30.01.2008 to the respondents 1 to 3 asalleged by the appellant. After receiving of therepresentation from the appellant dated 22.02.2008, referringthe said letter dated 30.01.2008 of the fifth respondent, therespondents 1 to 3 have conducted detailed enquiry and calledthe senior officials of the respondents 2 and 5, enquired thematter on 15.03.2008 and in that meeting, it was replied by thefifth respondent that he has not despatched the said letterdated 30.01.2008. Thereafter, the fifth respondent also sentletter dated 20.03.2008 clarifying that the said letter has notbeen despatched either to the first respondent or to the secondrespondent which was the reason that even in the letters dated01.02.2008 and 02.02.2008, the said letter dated 30.01.2008 wasnot referred to by the fifth respondent. As per clause 6.17.2of the Purchase Contract Procedure 2006 (PCP-06) the plantlevel tender committee is the competent authority to monitorthe progress made by the consultant and examine therecommendation submitted by it, hence, the consultant namelythe fifth respondent has a right to make only inputs availableto the plant level tender committee for its consideration andsuch inputs are only in the form of recommendations orsuggestions. The consultant cannot issue any binding directionor guideline and it cannot be bestowed with the status of adecision maker and final decision has to be taken by theconcerned competent authority and even plant level tendercommittee does not enjoy competence to take final decision inthe matter. The reason for cancellation of the second tenderis because of ambiguity, lack of clarity and differentinterpretation given by the tenderers with regard to evaluationcriteria and the price bid, hence, the averment that the fifthrespondent/consultant changed its recommendations within 24hours at the instance of the respondents 1 to 3 is false. Theappellant has not chosen to participate in the third tender.The averment that the respondents 1 to 3 called the thirdtender with the intention to favour the fourth respondent isfalse. The respondents 1 to 3 gained financially by callingthird tender because of lower price and NPV quoted in the thirdtender by the fourth respondent as well as assured of gasessupplied to the extent required. The expansion project of thesecond respondent is estimated to cost about Rs.1900 crores.Unless the gas production commenced by commissioning ASP by thescheduled date, production would be affected and consequently https://hcservices.ecourts.gov.in/hcservices/ market demand of stainless steel cannot be met by therespondents 1 to 3. It is further submitted by the learnedsenior counsel for the respondents 1 to 3 that considering theabove said facts, the learned single Judge rightly dismissedthe writ petitions. Judicial review is not permissible incontractual matters. Even if some defect was found in theultimate decision resulting in cancellation of the tender, thecourts should exercise its discretionary power under Article226 of The Constitution of India with great care and cautionand should exercise it only in furtherance of the publicinterest. On the said grounds, the learned senior counselprayed for dismissal of the writ appeals. In support of hiscontention, the learned senior counsel for respondents 2 and 3relied on the below mentioned decisions:- i)(Haryana State Agricultural Marketing Board andothers vs. Sadhu Ram & etc., etc.,) AIR 2008 SC 2411 wherein inPara Nos. 12 and 15, it was held thus:-“12.....At the risk of repetition, wemay note that one of the conditions in thePublic notice was that the final authorityto approve or disapprove the best offer inthe auction was that of the ChiefAdministrator of the Board. It is truethat the Chief Administrator of the Boardrejected the offers without assigning anyreason but Section 18 of the Act clearlyprovides that such rejection could be madewithout assigning any reason. Let us nowconsider whether the action on the part ofthe Chief Administrator of the Boardcancelling the auction was unfair,arbitrary and invalid. In our view,considering the facts and circumstances ofthe case, the action of the ChiefAdministrator of the Board was fair and thecancellation was not arbitrary. The secondauctin as held in respect of the plots inquestion on 20th December, 2004 and from thesaid auction, although the reserve pricewas not mentioned, much higher offers werereceived by the appellants. Apart fromthat, we should not keep this fact out ofmind that the amounts deposited by therespondents with the appellants wererefunded to the respondents by accountpayee cheques, which were duly encashed bythem. Such being the position, we neitherfind any malafide, unfairness orarbitrariness on the part of the ChiefAdministrator of the Board in rejecting theoffers of the respondents nor do we find ita colourable exercise of power. 15.In view of the admitted fact thatthe money deposited by the respondents with https://hcservices.ecourts.gov.in/hcservices/ the appellants was refunded to therespondents by account payee cheques whichwere duly encashed by them and in view ofthe admitted fact that subsequently, asecond auction was held on 20th of December2004 in respect of the same plots whichwere put up for auction on 8th of July 2004and in the second auction, some otherparties have now acquired interest in thesaid plots, it was not open to the HighCourt to direct the appellants, in theexercise of its writ jurisdiction, to allotalternative plots to the respondents onlyon the ground that the auction dated 8thJuly 2004 could not be cancelled by theChief Administrator of the Board withoutassigning any reason and also on the groundthat the reserve price was not disclosed inthe public notice issued by theappellants.” iii)(Haridwar Singh vs. Bagun Sumbrui and others) AIR 1972SC 1242, Para No. 8 it was stated thus:-“8.....What the Minister did was notto confirm the acceptance made by theDivisional Forest Officer, but to acceptthe offer made by the appellant in hiscommunication dated October 26, 1970, thathe would take the coup for the reservedprice of Rs.95,000/-. There was,therefore, no confirmation of theacceptance of the bid to take the coup insettlement for the amount of Rs.92,001/-.If the offer that was accepted was theoffer contained in the communication of theappellant dated October 26, 1970, we do notthink that there was any communication ofthe acceptance of that offer to theappellant. The telegram sent by theConservator of Forest, Hazaribagh, by theGovernment on November 28, 1970, cannot beconsidered as a communication of theacceptance of that offer to the appellant.The acceptance of the offer was not evenput in the course of transmission to theappellant; and so even assuming that anacceptance need not come to the knowledgeof the offerer, the appellant cannotcontend that there was a concluded contracton the basis of his offer contained in hiscommunication dated October 26, 1970 as theacceptance of that offer was not put in thecourse of transmission. Quite apart fromthat, the appellant himself revoked theoffer made by him on October 26, 1970, by https://hcservices.ecourts.gov.in/hcservices/ his letter dated November 3, 1970, in whichhe stated that the coup may be settled uponhim at the highest bid made by him in theauction. We are, therefore, of the opinionthat there was no concluded contractbetween the appellant and the Government.”6.Mr. Harishankar, learned counsel appearing for thefourth respondent submitted that the fourth respondent is oneof the leading gas companies in India and is a joint venturecompany formed between the former Industrial Oxygen CompanyLtd., (INOX) and Air Products (AP) USA, which is a globalindustrial and medical gases and chemicals giant havingdiversified interests in both fields with a turnover of USDollar 9 billion; that the fourth respondent has been in theindustrial and medical gases business since its inception in1963 onwards having more than 30 manufacturing facilities allover the country; that the fourth respondent's products andservices are used by all segments of industry, health care andresearch and development work; that the appellant hasdeliberately chosen to add the fourth respondent as a party tothe above proceedings but failed to add M/s. Pragair despitethe fact that it also claimed as 'L1' in the second tender;that the respondents 1 and 2 sought clarification regarding theevaluation criteria post price bid opening; that the avermentsthat the fourth respondent influenced the respondents 1 to 3are false; that the fourth respondent signed letter ofacceptance after the dismissal of the writ petitions and allpreparations for commencement of work as per the contract havebegun and prayed for dismissal of the writ appeals.7.Mr. Habibullah Basha, learned senior counsel appearingfor the fifth respondent submitted that the letter dated30.01.2008 was not at all addressed by the fifth respondent tothe appellant; that the appellant is not a party to the letterdated 30.01.2008, hence, they cannot claim any right based onthe said letter, which is purely in the nature of internalcommunication; that any letter written by the fifth respondentto the second respondent would only be in the nature of a primafacie opinion/ suggesting alternatives, which needs to beplaced and discussed by the tender evaluation committee andthat is the reason why the letter was marked as 'confidential';that the appellant has not explained as to how they came intopossession of the said letter dated 30.01.2008 of the fifthrespondent; that the fifth respondent also sent a letter dated20.03.2008 when it was called to clarify as to whether any suchletter dated 30.01.2008 was sent by it to the appellant and inthe said letter dated 20.03.2008, it was stated by the fifthrespondent as follows:-"During the meeting SAIL has informedthat they have received a representationfrom M/s. MSPL enclosing letter Ref.MD-25046-288A dated 30th January 2008 andenquired about the status of this letter.Dasturco clarified that this was one of thealternative evaluation calculations worked https://hcservices.ecourts.gov.in/hcservices/ out by them. Daturco further stated thatthey had worked out other alternativecalculations considering daily flow rate ofall gases etc., These alternatives wereworked out to check the variousrepresentations received. Dasturco alsoclarified that the said letter has not beenofficially dispatched to SAIL-SSP since itwas felt that any evaluation method followedwill not be able to address the variousrepresentations received and the matterneeded further review."Pointing out the above said letter dated 20.03.2008 of thefifth respondent, the learned senior counsel submitted that itis evident from the above said letter written by the fifthrespondent that it is nothing but a prima facieopinion/suggesting alternatives which reply has to be placedand discussions has to take place by the tender evaluationcommittee and prayed for dismissal of the writ appeals. 8.This Court carefully considered the argument of thecounsel for both sides and perused the material records. Inorder to establish new Cryogenic Air Separation Plant in thepremises of the second respondent on Build Own Operate (BOO)basis, for supply of Oxygen, Nitrogen and Argon gases, firsttender notice dated 13.12.2007 was issued by the firstrespondent, which was subsequently cancelled. The secondtender notice dated 12.11.2007 was issued by the firstrespondent, which was also cancelled and third tender noticedated 23.02.2008 was issued by it. The subject matter of thesewrit petitions are relating to the said second and thirdtender. 9.The judicial review is permissible against thedecision making process not against the decision. (Harpal SinghChauhan vs. State of U.P.) AIR 1975 SC 2436. The principles ofjudicial review would apply to the exercise of contractualpower by government bodies in order to prevent arbitrariness orfavouritism, however, there are inherent limitations inexercise of that power of judicial review. The modern trendpoints to judicial restraint in the administrative action. TheCourt does not have the expertise to correct the administrativedecision. If a review of administrative decision is permitted,it would be substituting its own decision without necessaryexpertise, which itself may be fallible. The Court does notsit as a Court of appeal but merely reviews the manner in whichdecision was made. (Tata Cellular vs.Union of India) AIR 1996SC 11. Three heads, the grounds on which administrative actionis subject to control by judicial review; the first ground isillegality, the second irrationality and the third proceduralimproprietary. The Courts are slow to interfere in mattersrelating to administrative function unless the decision istainted by any vulnerability such as lack of fairness in https://hcservices.ecourts.gov.in/hcservices/ procedure, illegality and irrationality and whether such actionfalls within any of the categories has to be established. Mereassertion in that regard would not be sufficient. (DelhiDevelopment Authority vs. UEE Electricals Engineering) (2004)11 SCC 213.10.If malafide is alleged or it is alleged that thecontract has been entered into for collateral purposes and theCourt is satisfied that there is sufficient materials whichrequires further examination, it can interfere.11.In this case, the appellant, fourth respondent andothers participated in the first tender. The appellant hereinhas referred to the first tender in support of his contentionthat the respondents 1 to 3, particularly the third respondent,in order to favour the fourth respondent, initially extendedthe delivery period of the said tender from 18 months to 23months as required by the fourth respondent or to suit it,however, the said tender was cancelled since the fourthrespondent could not be qualified as 'L1'. The respondents 1to 3 contended that ASP specifications required to be modifiedin view of the fact that the re-tender was ordered in respectof allied EAF, LF and AOD packages of SMS, which was having abearing on establishing ASP, hence the first tender wascancelled. The cancellation of the first tender was notchallenged by any of the tenderers, including the appellant,hence, it is not necessary to go into the merits or demerits ofthe same. 12.The case of the appellant is that it participated inthe second tender along with the fourth respondent, M/s.PraxairIndia Pvt Ltd and others and the Techno-Evaluation Committeeand Commercial Evaluation Committee have recommended on10.01.2008 that the appellant, fourth respondent and the saidM/s. Praxair are commercially eligible and suggested to seekrevised price bids from all the said three bidders. On11.01.2008, the second respondent issued a letter requestingall the three tenderers to submit their revised price bids onor before 14.01.2008, which was protested by the appellant onthe ground that the revised price bid is unwarranted, if atall, submission of supplementary price bid is appropriate. Itis the further case of the appellant that all the tenderers,including the appellant, have properly understood theevaluation criteria, prepared their price bids calculated onthe hourly basis in respect of supply of Oxygen and Nitrogenand daily basis for Argon and submitted on or before14.01.2008. It is stated by the appellant herein that thefifth respondent found that the appellant was 'L1' and sent aletter dated 30.01.2008 to that effect to the respondents 1 to3 recommending to consider its bid, which was suppressed by therespondents 1 to 3 and they obtained letters dated 01.02.2008and 02.02.2008 from the said respondent wherein it is wronglystated that the said eligible tenderers have not understood thetender requirements and sent their representations and https://hcservices.ecourts.gov.in/hcservices/ suggested for obtaining fresh bids, thus, the tender process isactuated by malice. In support of this contention, theappellant relied on the decisions of the Honourable SupremeCourt reported in (i) Delhi Development Authority vs. UEEElectricals Engineering) (2004) 11 SCC 213 (ii) (RelianceAirport Developers (P) Ltd vs. Airports Authority of India andothers) (2006) 10 SCC Page No.1 (iii)(Noble Resources Ltd.,vs. State of Orissa and another) (2006) 10 SCC 236 (iv)(Directorate of Education and others vs. Educomp DatamaticsLtd., and others) 2004 4 SCC 19 (v) (Harminder Singh Arora vs.Union of India and others) (1986) 3 scc 247 and submitted thatit is trite that if an action of the State is violative ofequality clause contained in Article 14 of the Constitution ofIndia and also in violation of the tender conditions, judicialscrutiny is warranted. 13.The respondents 1 to 3 countered that they have not atall received the letter dated 30.01.2008 from the fifthrespondent, however, they received letters dated 01.02.2008 and02.02.2008 wherein it is stated that it received severalrepresentations from the eligible bidders from which “it isclear the parties not clearly understood the tenderrequirements"; that the respondents 1 and 2 have receivedrepresentations dated 16.01.2008, 18.01.2008, 19.01.2008,21.01.2008 and 22.01.2008 from the appellant stating that theyare the lowest bidder and requested to issue letter ofacceptance; that the fourth respondent also sent similarrepresentations dated 16.01.2008, 22.01.2008 and 30.01.2008claiming that they are 'L1' and M/s. Praxair India Pvt Ltdclaimed itself as 'L1' and sent representations dated14.01.2008, 15.01.2008 and 21.01.2008 and the saidrepresentations are outcome of lack of clarity in theevaluation criteria. 14.The said representations were also extracted by thelearned single Judge in Para Nos. 57 to 68 of the order in thewrit petitions. The learned single Judge, after perusal of thesaid representations as well as the the letters dated01.02.2008 and 02.02.2008 of the fifth respondent found thatthe same were placed before several authorities of therespondents 1 to 3 and were considered. 15.The letters dated 01.02.2008 of the fifth respondentis extracted below:-From the representations received from all the parties, itis clear that the parties have not clearly understood thetender requirements/stipulations and have interpreted thetender document differently to the extent of all of themclaiming to be the successful bidder.In view of the above and to give onemore equal opportunity to the bidders, weare proposing that SSP may consider https://hcservices.ecourts.gov.in/hcservices/ requesting all the eligible bidders tosubmit fresh prices once again definingonce again the evaluation criteria andother applicable contract terms. It wasalso understood from SAIL-ASP, Durgapurplant that supply of Argon by the BOO partyhas become a bottleneck because presentcontract stipulations. This suggestedcourse can also address this issue byenhancing the contract Argon requirement asdesired by SSP.Dasturco can issue a detailed draftwhich can be issued to the partiesregarding revised prices upon hearing fromyou. 16.Pursuant to the said letter dated 01.02.2008, anotherletter dated 02.02.2008 was sent by the fifth respondent to therespondents 1 to 3, which is as follows:-"Further to our letter No. MD-25046-292A dated 01.02.2008, we elaborate furtheron two points which may be communicated tothe participating bidders while seekingrevised price. 1.Contracted quantities/requirement of Gases shall be as follows:-a)Oxygen : 99.6 to 99.8% pure, 24kg/CM2 pressure with a flow rate of 3500NM3/hr (average hourly flow rate)b)HP Nitrogen : 2 ppm O2 max pure,22 kg/cm2 pressure with a flow rate of 1200NM3/hr (average hourly flow rate)c)LP Nitrogen : 2 ppm O 2 max pure7.9 kg/cm2 pressure for occasional purgingwith a daily requirement of 250 NM 2 (to besupplied free)d)Argon : 5 ppm max totalimpurities, 22 KG/CM2 pressure with a flowrate of 825 NM3/hr (average hourly flowrate)Thus, for evaluation of Price Bids andfor calculating the total variable cost ofGases, the contracted quantity/ requirementof Oxygen shall be taken as 84000 NM3/day(1200 TPD, Nitrogen as 28800 NM3/day (36TPD) and Argon as 19800 NM3/day (35 TPD).These figures are arrived at based on 24hour operation of 358 days (Allowable shutdown of 7 days in a year)2.We also suggest that the pricebid evaluation shall be done on Net off https://hcservices.ecourts.gov.in/hcservices/ CENVAT and Net off VAT basis instead of "ontotal cost" basis. This is in view of thefact that tenderers have quoted the tax andduty components of the Gas prices differentfrom each other and also due to the factthat the benefit of VAT payments willaccrue back to SSP. Therefore this changein evaluation method if acceptable to SSPmay also to be communicated.3.In case of lower demand, BUYERshall continue to pay monthly FixedFacility charge and the price for Gasessupplied on actual consumption basissubject to minimum off take of 50% duringoperation of the Feed Air Compressor, 75%during operation of two Fund Air Compressor(excluding Argon in both cases) as given inArticle 15.3 of Draft agreement in thetender document. However, since Argon isnot being produced from the plant, Argonwill always be paid only on actualconsumption basis.4.All other terms specified underevaluation criteria will remain as pertender document." 17.The learned single Judge pointed out that the said twoletters as well as the letters of the appellant, fourthrespondent and another mentioned supra made it clear that therewas no clarity in the evaluation criteria, which was made useby them and claimed each and every one of them are 'L1'. 18.In this context, when we look into requirement ofgases as found in annexure II of the draft agreement of secondtender (in page No.224 of typed set of papers of appellant), itcould be seen that requirement of oxygen per day is 51600 NM3and average flow rate is 3500 NM3/hr; that the requirement ofNitrogen per day is 22500 NM3 and average flow rate is 1200NM3/hr; that the requirement of Argon per day is 11500 NM3 andaverage flow rate is 825 NM3/hr. 19.The learned single Judge also compared the evaluationcriteria stated in the tender document and the requirements ofgases as found in annexure II of the draft agreement of thesecond tender and rightly found that they are inconsistent asdetailed below:- https://hcservices.ecourts.gov.in/hcservices/ Required quantity of gases as stipulated in Annexure-II of 2nd TenderGasHourly flow rateconverted into dayrequirement (NM3/hr X24)Day requirement asprovided in Annexure-IIOxygen3,500 X 24 = 84,000NM3/hr i.e., (120 TPD)51600 NM3/hr (73.71 TPD)HP Nitrogen1,200 X 24 = 28,800NM3/hr i.e., (36 TPD)22,500 NM3/hr (28,125TPD)Argon 825 X 24 = 19800NM3/hr i.e., (35.35TPD)11,500 NM3/hr (20.5 TPD)This Court, after careful perusal of the said comparisionconcur with the findings of the learned single Judge that theyare inconsistent, outcome of lack of clarity in evaluationcriteria. 20.It is necessary to mention that the respondents 1 to 3corrected the mistake in the evaluation criteria of the secondtender and formulated proper evaluation criteria with detailsin the third tender. The Evaluation Criteria for contractedquantity of gases both in second tender and third tender is asfollows:-. https://hcservices.ecourts.gov.in/hcservices/ 2nd Tender3rd Tender1. The total cost of all thethree gases including fixedcharges for fifteen (15) yearsshall be brought down to NetPresent Value of the gases2. An escalation @ 5% p.a. shallbe applicable for power ratesonly for contract period3. A discounting factor of 10%shall be the basis for computingthe Net Present Value4. For the purpose ofevaluation, one uniform powercost on base date shall beconsidered for all the threegases1. Price bid evaluation will bedone on Net of CENVAT & Net ofTNVAT basis2. For the purpose of evaluationof Price bids and forcalculating the total variablecost of gases, the contractedquantity of Oxygen shall betaken as 75600 NM3/day, HPNitrogen as 28800 NM3/day andArgon as 12000 NM3/day. Thenumber of days in a year shallbe taken as 358 (i.e., 365 daysless 7 days of annual schedulemaintenance)3. The total variable cost, netof CENVAT & TNVAT of all thethree gases (Oxygen, HP-Nitrogen& Argon) and fixed facilitycharges excluding taxes andduties shall be calculated forfifteen (15) years and broughtdown to Net Present Value (NPV)of the gases. The taxes andduties, if any applicable onfixed facility charges will notbe taken for the purpose ofevaluation.4. An escalation @ 5% p.a. shallbe applicable for power ratesfor all three gases (Oxygen, HPNitrogen and Argon) duringcontract period of 15 years onlyfor the purpose of evaluation.5. A discounting factor of 10%shall be the basis for computingthe Net Present Value6. For evaluation purpose, powercost on base date i.e., Rs.4.86per unit shall be considered forOxygen and Nitrogen gases.7. For evaluation purpose, thenotional power cost on base datei.e., Rs.4.86 per unit shall beconsidered also for Argon gasirrespective of the source/stateof supply. https://hcservices.ecourts.gov.in/hcservices/

8. Extent of lease landrequired or lease rent paid bySeller will have no impact onevaluation criteria21.On comparison of the evaluation criteria of both thesecond and third tender, it is evident that there is nodefinite evaluation mechanism provided in the second tenderwhereas in the third tender the defects are rectified. 22.In so far as the malafides alleged by the appellantare concerned, it is to be kept in mind that the burden ofestablishing malafide is very heavy on the person who allegesit. The allegations of malafides are often more easily madethan proved, and the very seriousness of such allegationsdemands proof of a high order of credibility. Of course, it isnot necessary that such malafide to be established only bydirect evidence. The Court has to find out as to whether thesaid authority left out relevant factors or taken into accountirrelevant factors. Even the decision could be one of manychoices open to the authority to decide upon the choice and notfor the Court to substitute its view. Followed (DelhiDevelopment Authority vs. UEE Electricals Engineering 2004 11SCC 213 and Reliance Airport Developers (P) Ltd vs. AirportsAuthority of India and others (2006) 10 SCC 1. 23.The appellant alleged malafide only against the thirdrespondent and complained that the fifth respondent's letterdated 30.01.2008 was suppressed and obtained letters dated01.02.2008 and 02.02.2008 from it to favour the fourthrespondent, which act resulted in cancelling the second tenderand obtaining of approval in a short period for the thirdtender from the higher authorities of respondents 1 and 2. Thelearned single Judge after elaborate discussion found thatthere is every possibility to assume that such a letter wouldhave been sent to the respondents 1 to 3 by the fifthrespondent, but relying on the letter dated 20.03.2008 of thefifth respondent came to the conclusion that the fifthrespondent did not despatch the said letter officially to therespondents 1 to 3. The learned single Judge also extractedthe letter dated 20.03.2008 of the fifth respondent in theorder impugned. It is to be noted that the said letter dated20.03.2008 relates to the period after cancellation of secondtender and notification of the third tender, hence muchsignificance cannot be attached to that letter. 24.The respondents 1 to 3 stoutly refuted the receipt of the https://hcservices.ecourts.gov.in/hcservices/ said letter dated 30.01.2008 of the fifth respondent and alsoall the allegations made against the third respondent in thecounter and stated that the fifth respondent is only aconsultant whose suggestion or recommendation, if any made inthe letter dated 30.01.2008 would not bind either the tendercommittee or the other authorities of respondents 1 to 3 andneither the third respondent nor the respondents 1 and 2 haveany power or authority to take a decision in their individualcapacity; that after evaluation of the price bid, the same hasto be placed before the tender committee, which is thecompetent authority to recommend and declare 'L1' tenderer,which has to be approved by the second respondent and the firstrespondent Board, then only, the acceptance letter would beissued by the second respndent to 'L1' bidder and the thirdrespondent can only forward the letter of acceptance tosuccessful bidder. 25.The appellant alleges malafide relying on thecontention of the letter dated 30.01.2008 of the fifthrespondent and presumed that the same was sent by it to therespondents 1 to 3, but receipt of it was deliberatelysuppressed by the third respondent and seeks to invalidate ornullify the act of the respondents 1 to 3 in cancelling secondtender and issuing third tender. The respondents 1 to 3 deniedthe receipt of the letter and stated that in individualcapacity none of them are vested with the power to take finaldecision. The evidentiary facts of the letter dated 30.01.2008is too remote and conjectural and either of the respondentsagainst whom malafide is attributed could exercise the power oftaking final decision individually or any of their action beequated with decision tainted by vulnerability such as lack offairness, illegal and irrational or falls within any one ofsuch category, hence, this Court hardly accept the plea ofmalafide alleged.26.The other averments that the respondents 1 to 3maneuvered fifth respondent and obtained the letter dated01.02.2008 and 02.02.2008 is hardly believable, that too, inthe absence of any allegations against the fifth respondent. 27.The averments that in a short period the second tenderwas cancelled and approval for third tender was obtained fromthe higher authority is concerned, the right to choose bestperson expeditiously by the respondents 1 to 3 cannot beconsidered to be arbitrary when the project is estimated to thecost of Rs.1,900 crores and it is being delayed, hence, thesaid averment of the appellant is rejected. 28.The other averments is that the fifth respondent inits letter dated 01.02.2008 and 02.02.2008 suggested only forobtaining of fresh prices but the respondents 1 to 3 chosen tocancel the second tender itself. As concluded above, any suchsuggestion of the fifth respondent not binding the tendercommittee or other authorities of the respondents 1 to 3. The https://hcservices.ecourts.gov.in/hcservices/ respondents 1 to 3 replied that letters dated 01.02.2008 and02.02.2008 of the fifth respondent and also the letters dated14.01.2008, 15.01.2008 of M/s. Praxair, letter dated 16.01.2008and 18.01.2008 and letter dated 16.01.2008 were sent torespondents 1 and 2 which were considered and came to aconsensus conclusion that seeking for fresh bid after openingthe price bid is clear violation of PCP-06 and opined that suchoption cannot be exercised and instead recommended for re-tender with necessary clarification/ modification as suggestedby the fifth respondent. Again the suggestion of the fifthrespondent was placed before the plant level tender committeeand the committee also recommended to go for re-tender, whichwere also informed by letter dated 23.02.2008 by the secondrespondent to all the three bidders, including the appellant.The said reasons assigned by the respondents 1 to 3 for issuingfresh tender are perfectly valid, hence, the averment relatingto the same also rejected.29.In the second tender, Section I clause 14.0, therespondents 1 and 2 reserved "their right to withdraw from thetendering process or any part thereof, to accept or reject anyor all tenders in full scope or part scope at any stage ofprocess and/or to modify the process or any part thereof at anystage thereof without assigning any reasons whatsoever. Nofinancial obligation shall accrue to SAIL, SSP in such anevent.". If respondents 1 to 3 felt that in view of thebackground of the cases it is impossible to accept the tenderof the appellant and exercise the said power of cancellation,the same is not open to judicial review in the absence of anyproved malafide or irrationality. 30.The appellant did not participate in the third tender.The tender process is complete in which the fourth respondentis 'L1'. The appellant could have submitted its bids pursuantto the third tender even without prejudice to its rights andcontention in the writ petition, but it failed. The appellantherein also received earnest money deposit when it wasreturned. Such being the position, it is not open to it toseek for Mandamus to accept their tender. Followed (HaryanaState Agricultural Marketing Board and others vs. Sadhu Ram &etc., etc.,) AIR 2008 SC 2411 Para Nos. 12 and 15.31.It is affirmed by the respondents 1 to 3 that theyhave gained financially because of lower price and NPV quotedin the third tender by the fourth respondent and also assuredof supply of required quantity of gases. https://hcservices.ecourts.gov.in/hcservices/

32.In view of the above discussions, the order passed bythe learned single Judge is confirmed and the writ appeals aredismissed as devoid of merits. No costs. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarrshTo1. The Executive Director (Operations)M/s. Steel Authority of India Limited ISPAT Bhavan, Lodi Road New Delhi – 110 0032. The Deputy General Manager I/CSalem Steel Plant (Materials Management) a Unit of Steel Authority of India Limited Salem – 636 013 Tamil Nadu3.The Deputy General Manager I/C (Materials Management) Salem Steel Plant Salem – 636 013 Tamil Nadu+1cc to Mr.C.Manishankar, Advocate Sr 67215+2ccs to Mr.Srinath Sridevan, Advocate Sr 67161+2ccs to Mr.A.Ilango, Advocate Sr 67100+2ccs to Mr.Uma Vijayakumar,Advocate Sr 66968NM (CO)km/10.12.WA Nos. 1125 & 1126 of 2008