M/S. MSG CONSTRUCTIONS v. UNION OF INDIA

Sri S.S.Yadrami learned Senior counsel appearing for Sri Girish Bhat, learned counsel for petitioner submits that, petitioner was a registered partnership firm, and was a Class-I Civil Contractor registered with Karnataka State Public Works Department.

#3. That, respondent no.1 had issued notification dated 26.05.2023, inviting bids for “Widening of two lane with paved shoulders from Km.235.00 – 254.800 Km. - 3 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023 of Sindigeri-Ballari section on NH-150A in State of Karnataka, on EPC mode (GOB no.NH-150A-KNT-2022- 23-983)” with estimated project cost of Rs.108.25 Crores through Engineering, Procurement and Construction (‘EPC’ for short) mode with construction period of 18 months and 5 years defect liability period.

#4. It was submitted, Notification prescribed bids in two separate covers namely technical bids and financial bids with last date for uploading of bids fixed as 3.00 p.m. on

10.07.2023. As per schedule, technical bids were to be opened at 4:00 p.m. on 11.07.2023.

#5. It was submitted, specified Threshold Technical Capacity of bidders as per Clause 2.2.2.2 (i) was during five financial years preceding bid due date, to have received payments for construction of eligible projects or undertaken construction work by itself in a PPP project, total sum adjusted as per clauses 2.2.2.5 (i) and (ii) of value exceeding Rs.108.25 Crores. - 4 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023

#6. Clause (ii) required bidder to have completed at least one similar work of 20% of estimated project cost i.e. Rs.21.65 Crores from amongst eligible projects in Category-1 and/or Category-3 specified in Clause 2.2.2.5. It was submitted eligible projects included widening/reconstruction up-gradation of major district roads with loan assistance from multi-lateral agencies on BOT basis.

#7. It was submitted, as per Clause 2.2.2.5, technical qualification was assessed based on adjusted value of works, which was discriminatory in classifying eligible works into two categories, those eligible for factor of 1 and others where factor applicable was 0.75%, even though works were virtually similar.

#8. It was submitted, during five preceding years, total value of eligible works executed by petitioner was Rs.117.54 Crores as per abstract at Annexure-D. But, by erroneously applying factor of 0.75, total evaluation score of petitioner was reduced to Rs.105.05 Crores, below threshold technical capacity and consequently classified his bid as technically non-responsive, in Annexure-E. - 5 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023

#9. It was submitted, same was not only arbitrary, but also cryptic. It was submitted, petitioner’s bid was admittedly lower than that of L1-bid and respondents would benefit financially by awarding tender to petitioner. It was submitted that discrimination and arbitrariness would be open for judicial review even in case of contracts with Governments, reliance was placed on decision of Hon'ble Supreme Court in Reliance Energy Ltd., & Anr. Vs. Maharastra State Road Development Corporation Ltd., & Ors. reported in (2007) 8 SCC 1, wherein it is held: “36. We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of “non- discrimination”. However, it is not a free-standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to “right to life”. It includes “opportunity”. In our view, as held in the latest judgment of the Constitution Bench of nine Judges in I.R. Coelho v. State of T.N. [(2007) 2 SCC 1] , Articles 21/14 are the heart of the chapter on fundamental rights. They cover various aspects of life. “Level playing field” is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the confers case. When Article 19(1)(g) present fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of “level playing field”. We may clarify that this doctrine is, however, subject to public interest. In the world of globalisation, competition is an important factor to be - 6 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023 kept in mind. The doctrine of “level playing field” is an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equally placed competitors are allowed to bid so as to subserve the larger public interest. “Globalisation”, in essence, is liberalisation of trade. Today India has dismantled licence raj. The economic reforms introduced after 1992 have brought in the concept of “globalisation”. Decisions or acts which result in unequal and discriminatory treatment, would violate the doctrine of “level playing field” embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of “equality” should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of “level playing field”. According to Lord Goldsmith, commitment to the “rule of law” is the heart of parliamentary democracy. One of the important elements of the “rule of law” is legal certainty. Article 14 applies to government policies and if the policy or act of the Government, even in contractual matters, fails to satisfy the test of “reasonableness”, then such an act or decision would be unconstitutional.”

#10. On above grounds, interference was sought.

#11. Sri Aravind Kamat, learned Senior Counsel appearing for Sri Avinash Angadi, advocate for respondent, at outset submitted that writ petition filed challenging rejection of petitioner’s bid as technically non-responsive by applying evaluation method stipulated in tender Notification, which were not even challenged would not be tenable. - 7 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023

#12. It was submitted, tender work notified was widening of two-way lane of Highway under Engineering, Procurement and Construction (EPC) mode. Threshold Technical Capacity was clearly stipulated in clause 2.2.2.2 at Rs.108.25 Crores, with method of evaluation of technical capacity stated in clear terms in Clauses 2.2.2.5 and 2.2.2.6, which were applied uniformly to all bids. It was submitted, writ petition was also liable to be dismissed on ground of acquiescence. It was submitted calculation sheet at Annexure-G, would indicate that petitioner had subscribed to ‘adjusted value method’ for calculating technical capacity while submitting objections against rejection of petitioner’s bid.

#13. On other hand, there was attempt to revise total value of eligible works from earlier stated value of Rs.117.54 Crores to Rs.121.6 Crores with intention to revise threshold value to Rs.109.107 Crores. But, as per clause 2.14.3.1, bidder was permitted to modify substitute or withdraw its e- bid any number of times before last date for submission of bid and prohibited any modification or substitution after said - 8 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023 date. Thereafter, only option available was to file objections against evaluation, as portal permitted viewing of documents of all bidders, for greater transparency. In view of above, assessment of adjusted value for purposes of threshold technical capacity of petitioner at Rs.105.38 Crores by Tender Evaluation Committee in meetings held on

31.07.2023 and 23.08.2023 would be justified. Hence, petitioner would not be entitled for any interference.

#14. It was submitted, petitioner’s technical bid was also liable for rejection on ground of being incomplete. It was submitted, unlike tender condition requiring receipts to be appended in support of technical capacity, petitioner had uploaded abstract along with Chartered Accountant Certificates.

#15. It was submitted, even ground urged that tender notification did not make provision for including experience earned in construction of Major District Roads (MDRs) among eligible works for evaluation of technical capacity, learned ASG submitted that clause 2.2.2.2 (ii) included construction / widening of MDRs amongst eligible works, although - 9 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023 attracting lower evaluation factor depending upon whether such work was funded by multilateral agencies or otherwise.

#16. It was submitted contention that petitioner’s objections did not receive proper consideration would also not subsist, as per interim order granted on 30.08.2023 was till consideration of objections filed by petitioner. Therefore, respondent considered petitioner’s objections at Annexures- F, F1 and G and issued detailed reply on 14.09.2023 as per Annexure-J.

#17. Insofar as ratio in Reliance Energy Ltd. case (supra), it was submitted, Hon'ble Supreme Court had shown indulgence on ground that condition for evaluation was vague, whereas no such case of vagueness in any tender condition was either pleaded or established. Thus, there was no merit in writ petition and sought for dismissal.

#18. Heard learned counsel and perused writ petition record.

#19. From above, it is seen that petitioner herein is challenging Annexure–E, which is result of evaluation of - 10 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023 petitioner’s technical bid as non-responsive uploaded on Tender Portal and Annexure-J giving out detailed reasons for such rejection.

#20. While, main grounds urged by petitioner are that, failure of tender authority to make provision for inclusion of MDR works amongst eligible works for technical qualification was vague and arbitrary, and even method of calculation of adjusted value by classifying eligible works into two classes attracting different adjustment factor was discriminatory, apart from order rejecting tender bid as non-responsive was cryptic.

#21. On other hand, respondent contends petitioner had subscribed to notified method of calculation of adjusted value, while submitting objections against uploading of result of technical bid, consequently writ petition was not tenable, especially, as petitioner had not questioned tender conditions. And further with issuance of Annexure-J, petitioner’s contention against rejection of bid as cryptic also would not subsist. - 11 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023

#22. Insofar as writ petitions filed seeking interference in tender matters, Hon'ble Supreme Court in case of Tata Cellular v. Union of India, (1994) 6 SCC 651: “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 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 the application of Wednesbury principle of reasonableness (including its other facts pointed out - 12 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023 above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative b` `urden on the administration and increased and unbudgeted expenditure. Based on these principles we will examine the facts of this case since they commend to us as the correct principles.” And in Jagdish Mandal v. State of Orissa, reported in (2007) 14 SCC 517 it held: “22. Judicial review of administrative action is intended prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made “lawfully” and not to check whether choice or decision is “sound”. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages - 13 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023 in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions: (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”; (ii) Whether public interest is affected. If the answers are in the negative, there should be interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.” - 14 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023

#23. Even in case of Reliance Energy Ltd. (supra), it is held that tender document should indicate norms and bench marks with legal certainty, while setting out contours of judicial review in tender matters on ground of vagueness, arbitrariness and unreasonableness. As Tender Notification at Annexure-C, clearly spelt out norms for calculation of adjusted value in Clauses 2.2.2.2 to 2.2.2.6.

#24. Petitioner’s main grievance appears to be against assignment of factor of 0.75 in respect of MDR works undertaken by petition. But, as rightly pointed out, petitioner has subscribed to said method of evaluation, while filing objections as per Annexures-F, F1 and G. Therefore, challenge against endorsement at Annexure–E and Annexure-J would not be tenable.

#25. Admittedly, is no challenge against evaluation of petitioner’s technical capacity, as being erroneous. Therefore, in absence of challenge of conditions, petitioner’s challenge of only result of application of said tender conditions while evaluating technical bids would not - 15 - NC: 2024:KHC-D:5451 WP No. 105316 of 2023 be tenable. In view of above, ratio in Reliance Energy Ltd., case (supra) would not aid petitioner.

#26. Even challenge on ground that impugned order at Annexure-E as cryptic would not subsist, as respondent has considered petitioner’s objection against Annexure-E, and issued Annexure-J, enumerating several reasons which disentitled consideration of petitioner’s technical bid. When petitioner’s technical evaluation score is admittedly below technical threshold limit, respondent was justified rejecting petitioner’s bid. Consequently, petitioner would not be entitled for any relief.

#27. For above reasons, writ petition lacks merit and is accordingly dismissed. Sd/- JUDGE VMB/ List No.: 1 Sl No.: 21