JUDGMENT
Anil Dev Singh, J.
1. This is a writ petition where by the petitioner seeks the following reliefs:-
“(a) a writ in the nature of Mandamus issuing a direction or such
appropriate writ upon the Respondent No. 1 to 3 not to take any
steps contrary to or in contradiction of the Tender Specifications
contained in Tender Notice No. AGM(MM-III)/CRPS/99-2000/40
dated 17.7.2000.
(b) a writ in the nature of prohibition or such appropriate writ
restraining Respondent Nos. 1 to 3 and each one of them from
taking any steps in furtherance of the counter offer till the
disposal of the present petition.
(c) a writ and/or direction in the nature of certiorari or such
appropriate writ quashing the Purchase Order issued to
Respondent No. 4.
(d) a writ in the nature of Mandamus directing the Respondent No. 3
to award the Tender as per the specification and requirement
specified in the Tender Documents.
(e) Pass such other or orders, direction or directions as this
hon’ble court may deem fit in the facts and circumstances of the
case.”
2. The petitioner is a company incorporated under the Companies Act, 1956, and
deals in telecom equipments, etc. The first respondent is Mahanager Telephone Nigam
Limited (MTNL) which is providing telecom network at Delhi. The second respondent
is the Chief General Manager of the MTNL, and the third respondent is the General
Manager (MM), if its Delhi Unit. The fourth respondent is a company incorporated
under the Companies Act, 1956 and is also dealing in telecom equipments.
3. The third respondent issued a notice dated July 17,2000 inviting sealed tenders
in two parts comprising of technical-commercial and financial bids, for supply of five
units of Cable Record Purification System (CRPS) along with accessories. The
petitioner as well as the fourth respondent submitted their commercial and technical
bids on August 25,2000 in response to the aforesaid notice. The technical bids of the
petitioner and the fourth respondent were opened on August 25,2000 itself. Both the
bids were evaluated by the MTNL. The tenderers were asked to depute their respective
technical experts to explain how the systems offered by them were in conformity with
the equipment sought vide tender enquiry dated July 17,2000. They were also asked to
make their respective presentations.
4. On January 4, 2001, the financial birds of the petitioner and the fourth respondent
were opened. It is not disputed that the petitioner and the fourth respondent offered
their systems as per the following details:-
PETITIONER:
1. System capable of automatically scanning 1200 termination at a time at the
Main Distribution Frame (MDF).
2. System equipped with portable equipment capable of automatically scanning
100 pairs at the Secondary Distribution Frame (SDF) (at the pillar/cabinet).
3. Price per unit = Rs. 2,46,35,824.
FOURTH RESPONDENT:
1. System capable of automatically scanning and testing up to 800 termination
at a time at the MDF.
2. System capable of automatically scanning 2000 pairs at the SDF.
3.Price per unit = Rs. 2,15,14,320.
The petitioner by its letter dated February, 1,2001 to the respondent objected to the
bid of the fourth respondent on the ground that it did not meet the tender specifications.
on March 16,2001, the petitioner and the fourth respondent were also asked to make
certain clarifications. On March 19,2001, the petitioner addressed a letter to the second
respondent stating that the clarifications were being sought for favoring the fourth
respondent. It seems that in the meantime a technical committee evaluated the tenders
of the petitioner and the fourth respondent and preferred the equipment offered by the
latter. consequently, on July 2001, the MTNL placed a purchase order on the
fourth respondent for supply of one unit of the CRPS.
5. On August, 8, 2001, the Assistant General Manager, MTNL, wrote a letter to the
petitioner giving counter for supply of CRPS. The letter reads as under:-
” Please refer the above tender enquiry opened on 25-8-2000, wherein
you had quoted your rates etc. I am directed to counter offer you the rates
of Rs. 2,15,14,320/- net including comprehensive warranty of three years
with following configuration, terms & condition, instead of
Rs. 2,46,35,824/- each as quoted by you.
1. Software updates is to be supplied free of cost for seven years.
2. System must scan 800 pairs on MDF & 2000 pairs on pillars
side. (as per TEC specification No. G/CRP-01/01 dt. May ’97).
Also following configuration for shoes must be provided with
the system.
(A) MDF side/configuration of top shoes.
(i) Pouyet MDF shoes-400 P Kit 2 Nos.
(ii) Krone shoes-400 P Kit 2 Nos.
(iii) Fetex shoes-400 P Kit 2 Nos.
(B) SDF side/configuration of top shoes.
Krone shoes 400 P Kit 5 No
3. During warranty and post warranty period you will not charge
any thing extra towards service charges for installation of
additional hard ware or for upgradation of equipment. Also
you have to supply, at your own cost, all necessary spares,
which have not been included in the offer as part of the
requirement.
4. Post warranty AMC charges after three years warranty will be
paid in following manner:
(a) 4th year AMC charges= Rs. 14.0 lacs
(b) 5th—–do—–=Rs. 14.5 lacs
(c) 6th—–do—–=Rs. 15.5 lacs
(d) 7th—–do—–=Rs. 16.0 lacs
5. CRPS must be compatible with MTNL CSMS.
6. The system to be supplied must fulfilll all the requirements and
conditions as required in the tender.
If the above counter rates are acceptable to you, then please confirm
within 10 days of the receipt of this letter failing which it will be treated
that counter offer rates are not acceptable to your firm and the case will be
closed without further correspondence.”
In response, the petitioner vide its letter dated August 13,2001 stated that the counter
offer given by the MTNL was not as per the tender specifications and bill of material
asked for in the tender. It was also stated that the MTNL was changing its own
specifications to accommodate the fourth respondent. The letter reads as follows:-
“With reference to the above mentioned subject letter dated May 22nd
2001 singed on August 8th, 2001 handed over to us on August 9th, 2001 we
would like to bring to your notice the following:
1) That the Counter Offer given to us vide the above
mentioned subject letter is not as per the Specifications and
Bill of Material asked for in the tender as per Annexure-A
of Section XII. (Copy enclosed four your ready reference).
2) That the Bill of Material mentioned in the counter offer is
as per our competitors, which clearly shows that out
competitors M/s ARM are being favored and MTNL is
changing its own specifications to accommodate our
competitor. Also refer to our previous letter dated March
19th, 2001 while submitting our clarifications in this regard.
(Copy enclosed for your reference).
3) The Bill of Material asked for in the above mentioned
subject letter is also in contradiction to Clause 8 of
Annexure-A of Section XII which states that the system
should be portable. A 2000 pair system scanner at the SDF
is in no way portable to be taken out in the filed. Please
also refer to Query No. AGM(MM-III)/CRPS/2000-2001
dated March 16th, 2001 (copy enclosed for your ready
reference) wherein MTNL had asked for clarification from
both the companies if the system offered shall be able at
the SDF. This again proves that in spite of getting
clarifications MTNL has changed its own requirements to
accommodate our competitors and it also shows that the
reply given by our competitors M/s ARM is false and
misleading and that their system cannot perform as per the
queries asked.
4) To accommodate our competitor some officials of MTNL
are also not taking into account the inoperatability of the
system It is a well-known fact that from the Vertical at the
MDF a cable does not go to one SDF and is bifurcated and
terminated at more than one pillar/cabinet. Because of this
reason MTNL probably asked for a small portable 100 pair
scanner/tester at the SDF and a bigger 1200 pair
Scanner/tester at the MDF so it can move the portable
scanner from SDF to SDF to completely scan and test the
cable coming from the MDF. It is clear from this that some
officials form MTNL have completely ignored its own
technical requirements/specifications, practibility and
operatability of the system to accommodate our
competitors in spite of they themselves asking for these
very clarifications vide their letter dated March 16th, 2001.
This points to a definite bias and mal-intention on the part of some
officials of MTNL, which we have from the beginning being pointing out
to MTNL that our competitors are being favored. We hereby express our
extreme disappointment at the way this tender has and is being handled
and there is only one conclusion from this favoritism of M/s. ARM for
some unknown, unexplainable reasons.
In light of the above you are requested to kindly look into the matter and
get a revised offer letter issued as per the Bill of Material asked for in the
tender originally. Pending receipt of your letter we hereby reserved our
right to submit our acceptance of your above subject mentioned letter.”
On October, 4,2001, the petitioner wrote another letter to the Chief General Manager,
MTNL, stating that it had not received any reply to its letter dated August 13, 2001.
The petitioner expressed its apprehension that the MTNL was proceeding to procure the
system from the fourth respondent in spite of the fact that the same was not in
conformity with the configuration and technical specifications as laid down in the
tender documents as well as the TEC specifications. It is note worthy that the
petitioner did not signify its acceptance to the counter offer given to it by the second
respondent.
6. The petitioner on October 18, 2001 filed the instant writ petition alleging, inter
alia, that the bid of the fourth respondent was not in conformity with the specifications
laid down in the tender documents. The petitioner also claimed that the placing of the
purchase order for one equipment on the fourth respondent was result of malafide
action of the MTNL. The petitioner along with the writ petition also field an
application for interim relief.
7. By order dated October 19,2001, the learned Single Judge, before whom the
matter came up, directed that no further action pursuant to the purchase order placed on
the fourth respondent will be taken. However, on November, 23, 2001, on hearing the
learned counsel for the parties, the learned Single Judge vacated the interim order on the
ground that there had been laches on the part of the petitioner in moving the court under
Article 226 of the Constitution. The order dated November 23, 2001 passed by the
learned Single Judge was challenged by the petitioner before the Division Bench by
means of a Letters Patent Appeal. The order was set aside with a direction that the
matter of stay be reconsidered as the Division Bench was of the opinion that there was
no laches on the part of the petitioner in filing the writ petition. A Special Leave
Petition was filed by the fourth respondent from the order o the Division Bench. The
Supreme Court by its order dated May 8, 2002 modified the order of the Division Bench
and directed that the writ petition be taken up for hearing by the learned Single Judge
and disposed of on merits before the summer vacation. The Supreme Court while
disposing of the Special Leave Petition took note of the submission that the fourth
respondent had already placed an order for one unit with the manufacturing company
located in Israel and the same was shipped on April 22, 2002. The Supreme Court, in
view of the fact that the equipment had already been ordered and was on board, directed
that the equipment will be supplied by the fourth respondent to the MTNL in Delhi but
the supply will be subject to the final decision in the petition. The writ petition has
been placed before us in view of the amendment in Sub-rule (xviii)(a) of Part B of
Chapter 3 of the High Court Rules and Orders, Volume V, vide notification dated April
11, 2002.
8. The hearings in the case took place on May 22, 2002, MAY 24, 2002 and May
27, 2002, at which the learned counsel for the parties were heard at length. Mr. Prag P.
Tripathi, the learned Senior Advocate appearing for the petitioner, submitted that
according tot he tender Cable Record Purification System (CRPS), which is required to
be supplied to the MTNL, should be capable of automatically scanning up to 1200
termination at the MDF and 100 pairs at the SDF/Cabinet Pillar. The learned senior
counsel also pointed out that the tender postulates that the system shall be equipped
with portable equipment which can be taken out in the filed for scanning 100 pairs at
the SDF. According to him, the configuration of the system offered by the fourth
respondent is not consonance with the tender documents and, therefore, the tender of
the fourth respondent ought to have been rejected by the MTNL. The learned counsel
canvassed that the acceptance of the tender of the fourth respondent, which was not in
accordance with the specifications stipulated in the NIT, was illegal and needs to be
quashed.
9. The real issue which requires determination is whether or not the equipment
offered by the fourth respondent was in keeping with the tender specifications. In order
to resolve the issue it will be necessary to refer to the NIT and instructions to the
tenders for purchase and supply of CRPS withe accessories. In para 4.3.3 of the
Generic Requirements, G/CRP-01/01. May-97, which forms part of the NIT, it is
provided that the system shall be capable of automatically scanning 10 to 1000
termination at a time, at the MDF, cabinet, pillar and Distribution points. Correction
has been made in para 4.3.3 of the Generic Requirements, G/CRP-01/01. May-97, as per
the TEC specifications. The correction reads as follows:-
“Page No. 7: Para No. 4.3.3: Same as condition No. 7 and 8 of
Section-XII of NIT.”
Conditions No. 7 and 8 of Section-XII (Specification-Annexure-A) of the NIT also
needs to be noticed. These are mentioned at page 69 of the paper book and read as
under:-
“7. The system shall be capable of automatically scanning up to
1200 termination at a time, at the MDF.
8. The system shall be equipped with portable equipment which
can be taken out of filed and shall be able to automatically can
100 prs. at the cabinet/pillar.”
A reference may now be made to Annexure ‘E’ (Tender’s Quotation) which is part of
the Generic Requirements. Annexure ‘E’ is a form which a tenders is required to fill
up. Annexure ‘E’, being the focal point around which controversy has been built up,
needs to be set out:-
“MAHANAGAR TELEPHONE NIGAM LIMITED, DELHI.
(A Government of India Enterprise)
ANNEXURE ‘E’ (Tender’s Quotation)
(i) Tenderers telegraphic address…..
(if available)
(ii) Tenderer Telephone/Fax No……
From To,
Asstt. General Manager (MM-III)
9, CGO Complex, MTNL BLDG,
TELEPHONE EXCHANGE LODHI
ROAD, NEW DELHI-110003.
Dear Sir,
1. I/We submit the sealed tender for supply of Cable Record
Purification System (CRPS) with all accessories both hardware and
software capable of simultaneously scan & test 800 prs. (E-10B trype,
Krone type and Pouyet type MDF tag blocks) terminated on a 2000 prs.
Capacity pillar which has 800 Primary pairs & 1200 Distribution Cable
pairs terminated on it.
2. I/We have thoroughly read/understood the technical requirement
and General terms & conditions given in Annexure A & B and other
Annexure also (CX to F) and agree to abide by them.
3. The rates of each items used in Cable Record Purification System
(CRPS) and the total cost of the Equipment as a whole is given in the
following format.
Sl.No
Description of item
Unit Rate
Quantity
Cost
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Total Cost Read & Understood
Grand total of the system Sign. of Tenderer:
Date :
Seal of the Co."
10. As is evident from para 1, CRPS system should be capable of simultaneous
scanning and testing of 800 pairs (E-108 type, Krone type and Pouyet type MDF tag
blocks) terminated on a 2000 pairs Capacity pillar having 800 Primary pairs and 1200
Distribution Cable pairs terminated on it. In other words, of the configuration of the
equipment should be such which has the capacity to simultaneously test 800 lines on
the MDF side and 2000 lies on the SDF side. NIT also provides that technical
specification No. G/CCRP-01/01.May-97 will supersede the General Terms and
Conditions and prevail in the event of any contradiction between the relevant clauses.
The said condition at page 26 of the paper book reads as follows:-
“The “General Terms and Conditions” are applicable for this
tender however, the clauses mentioned in the conditions and technical
specification No. G/CCRP-01/01. May-97 will supersede the General
Terms and conditions and prevail in case of any contradiction in respect of
relevant clauses.”
The NIT also empowers the purchaser to modify/alter any terms or conditions as along
as they are uniformly applied to all the bidders. Keeping in view the aforesaid basic
and salient provisions of the NIT, it has to be seen whether or not the tender submitted
by the fourth respondent is in keeping with the requisite specifications.
11. It is true that in case Annexure ‘E’ was not part of the NIT, more particularly
Generic Requirements, G/CRP-01/01.MAY-97, it could be argued that the tender of the
fourth respondent ought to have been rejected out rightly as it falls short of the
requirements laid down in Conditions 7 and 8 of Section XII of the NIT which require
that the system should be capable of automatically scanning up to 1200 terminations at
the MDF, and the same time it should be able to automatically scan 100 pairs at the
Cabinet Pilar. The capability of the equipment offered by the fourth respondent on the
MDF side less as it can test 800 lines on that side. However, its capability on the
SDF side is ore as ti can test 2000 lines on that side. But if Annexure ‘E’ is part of
the Generic Requirements G/CRP-01/01.MAY-97 and consequently part of the NIT,
can it be said that the tender of the fourth respondent was not in conformity with the
NIT. The learned senior counsel for the petitioner submitted that the Annexure ‘E’ is
not a part and repository of technical specifications. He invited our attention to para 4
of Section-II of the NIT, ‘Instructions of Bidders’. He submitted that para 4, which
gives list of bid documents, does not speak of Annexure ‘E’. It may be mentioned that
para 4 refers to various Sections only and the annexure to the tender have not been
separately mentioned therein. The annexure are part of the sections. Therefore, no
significance can be attached to the non-inclusion of Annexure ‘E’ in para 4 para 4.1
divides the bid documents into Sections. Technical specification is comprised in
Section (XII) of the bid documents. This section has been described as follows:-
“xii) Technical Specification of generic requirements
No.G/CRP-01/01/.May-978 with latest amendment.”
Annexure ‘E’ is part of the aforesaid generic requirements which has several
annexure. None of he annexure has been separately mentioned in para 4.1 of the
NIT. Therefore, the contention of Mr. Tripathi that Annexure ‘E’ cannot be part of
technical specifications because of not being specifically mentioned and referred to in
para 4.1 of the NIT, is devoid of force.
12. The next question which arises for our consideration is whether specifications-Annexure-A, provided at page
69 of the paper book, will prevail. According to the clause at page 26 of the paper book
(NIT), the technical specifications provided in G/CCRP-01/01. May-97 will supersede
the General Terms and Conditions and prevail in case of any contradiction between the
relevant clauses. Therefore, in the light of the said clause, Annexure ‘E’ being part of
the Generic Requirements will prevail. Tender of the fourth respondent being i
conformity with the specifications provided in Annexure ‘E’ is to beyond the scope of
the NIT. The learned counsel for the petitioner, however, submitted that in case of
conflict between the earlier clause and the later clause, effect must be given to the
earlier clause. In support of his submission he relied upon the decision of the Supreme
Court in Radha Sunder Dutta v. Mohd. Jahadur Rahim, , in which it
was held as follows:-
“If, in fact, there is a conflict between the earlier clause and the later
clauses and it is not possible to give effect to all of them, then the rule of
construction is will-established that it is the earlier clause that must
override the later clauses and not ‘vice versa’. In Forbes v. Git, (1922) 1
Ac 256 at p. 259; (AIR 1921 PC 209 at p. 211) (J), Lord Wrenbury stated
the rule in the following terms:
“If in a deed an earlier clause is followed by a later clause
which destroys altogether the obligation created by the earlier cause, the later clause is to be rejected as repugnant and the earlier
clause prevails. In this case the two clauses cannot be reconciled
and the earlier provision in the deed prevails over the later.”
13. The rule of construction applied by the Supreme Court in the aforesaid case will
have no application to the instant case as the NIT specifically lays down that the
technical specifiations provided in G/CCRP-01/01.May-97 will supersede the General
Terms and Conditions.
14. We do not see how the petitioner can maintain that the bid submitted by the
fourth respondent was not in keeping with the specifications provided in the NIT.
Annexure ‘E’ was part and parcel of bid documents, the bid being in conformity
with Annexure ‘E’ cannot be said to be not in keeping with the specifications laid down
in the bid documents. Mr. Tripathi submitted that even the understanding of the
MTNL was that the technical specifications provided in para 4.3.3., as corrected by the
TEC which were reflected in Conditions No. 7 and 8 at page 69 of the paper book, were
the specifications which the tenderers were required to comply with. In this regard, he invited our attention to the letter of the fourth respondent dated October 21, 2000. In this letter, which was addressed to the Deputy General Manager, MTNL, a reference
was made to a discussion between the representatives of the fourth respondent and the
Deputy General Manager, MTNL. The relevant part of the letter, on which reliance has
been placed by the petitioner, reads as follows:-
“xx xx xx
During the discussion we have been given to understand that the above
system configuration was incorrect and it was a mistake of MTNL, as the
wrong configuration has been mentioned in the Annexure ‘E’ of MTNL
tender documents, calling for Tenderer’s quotation. The correct system
configuration is as below:-
The system shall be capable of automatically scanning up to 1200
pairs at a time at the MDF cabinet and 100 pairs at the street cabinet.
xx xx xx”
Apart from the aforesaid letter, the learned senior counsel for the petitioner also invited
our attention to the clarifications which were sought by the MTNL from the petitioner
by former’s letter dated March 16, 2001. The clarifications were required regarding the
following items:-
1. Please confirm whether the system offered shall be able to
simultaneously scan 1200 pairs at MDF and 100 pairs at SDF?
2. Please confirm whether the system offered is capable of
scanning/testing 1200 pairs at the MDF with no scanner present at
the SDF?
3. Please confirm whether during three years warranty and two years
comprehensive AMC, all the spares/components required for
proper working of the system will be supplied by you without
additional cost to the MTNL?
4. Please confirm whether the bill of material quoted by you is
complete and exhaustive and an additional equipment/spare parts
will be required for the configuration we have asked for?
5. Please confirm whether you will be supplying software up
gradation free of cost for the next seven years as required in the
tender?
On the basis of the aforesaid letter and the clarifications sought, it was vehemently
contended that the understanding of the MTNL was also to the effect that the MTNL
required system which could scan up to 1200 termination at the MDF and 100 at the
SDF. Mr. Tripathi submitted that the action of the MTNL cannot be judged in the
light of the explanation subsequently given by the MTNL for placing the purchase
order of the equipment on the fourth respondent. In support of his submission he
referred us to a decision of the Supreme Court in Mohinder Singh Gill and Anr. v. The Chief Election Commissioner, New Delhi and Ors. , wherein it was held as follows:-
“8. The second equally relevant matter is that when a statutory
functionary makes an order based on certain grounds, its validity must be
judged by the reasons so mentioned and cannot be supplemented by fresh
reasons in the shape of affidavit or otherwise. Otherwise, an order bad in
the beginning may, by the time it comes to Court on account of a
challenge, get validated by additional grounds later brought out. We may
here draw attention to the observations of Bose J. in Gordhandas Bhanji
:
Public orders, publicly made, in exercise of the a statutory
authority cannot be construed in the light of explanations
subsequently given by the officer making the order of what he
meant, or of what was in his mind, or what he intended to do.
Public orders made by public authorities are meant to have public
effect and are intended to affect the actions and conduct of those to
whom they are addressed and must be construed objectively with
reference to the language used in the order itself.”
15. We have considered the submission of the learned senior counsel for the
petitioner. His submission does not lead us to the conclusion that Annexure ‘E’ was
not to be given primacy in view of the alleged understanding of the aforesaid
respondent. The decision of the Supreme Court in Mohinder Singh Gill’s case (supra)
is hardly of any assistance to the petitioner. It is well settled that once an order of an
authority is issued it must be judged on the basis of the reasons specified therein and
those reasons cannot be improved upon by giving further reasons in the shape of
affidavits. Turning to the instant case, we have Annexure ‘E’ which was always part of
the NIT and was not introduced subsequently with a view to justify the award of the
contract to the fourth respondent. Annexure ‘E’ specifically lays down the
configuration of the CRPS required by the MTNL. The judgment of the Supreme Court
in Mohinder Singh Gill (supra) has no application to the facts of the instant case. In
case the parties were suffering from any misconception it cannot affect the
specifications contained in Annexure ‘E’ and their binding force. Therefore, the
aforesaid letter dated October 21, 2000 and the clarifications sought from the petitioner
are also hardly of any significance. It is, however, true that the parties may have
entertained doubts and misgivings about the interpretation of the tender documents.
The MTNL did not take care to issue an NIT which was clear enough and which would
have not left and party guessing about the specifications of the equipment which was
required to be supplied. There could be an element of doubt in the minds of the parties
as to whether Annexure ‘E’ would have supremacy or Conditions 7 and 8 at page 69 of
the paper book would prevail. We do not wish to fathom and reason why the MTNL
did not take care to draft the NIT in such a way so as not to leave any manner of doubt
about the specifications of the CRPS so that the tenders would know what was the
exact requirement of the MTNL and what they were bargaining for. In any event, the
petitioner has not been prejudiced inasmuch as a counter offer was given to the
petitioner vide letter dated August 8, 2001, as quoted above, for supply of CRPS which
could scan 800 pairs at the MDF and 2000 pairs on pillar side. The petitioner vide
letter dated August 13, 2001 stated that the counter offer was not as per the
specifications and bill of material required under the tender. It was also
stated that a
revised offer letter be issued as per the bill of material. Thus it appears that the
petitioner did not accept the counter-offer. It was submitted by the learned senior
counsel for the petitioner that the counter offer was given at a point of time when
already purchase order had been issued to the fourth respondent. According to him,
the counter offer made to the petitioner was not genuine.
16. In so far as the plea of the petitioner that the counter offer was given to the
petitioner after the purchase order was placed on the fourth respondent is concerned,
the same cannot be questioned as it is a fact that the purchase order was placed on the
fourth respondent by means of a communication dated May 22, 2001/July 31, 2001 and
the counter offer to the petitioner was made by means of a communication dated May
22, 2001/August 8, 2001. But this is hardly of any consequence. by means of the
purchase order dated May 22, 2001/July 31, 2001, the fourth respondent is required to
supply only one unit and we are told that the unit is subject to the approval of the
MTNL and the TEC before it is accepted by the MTNL. According to the learned
Additional Solicitor General appearing for the MTNL, further purchase order on the
fourth respondent will be placed only after trying the system for a period of six months.
Thus, it is clear that in case the unit supplied by the fourth respondent works efficiently
only then the further orders for two more units will be placed on it. In case the
petitioner would have accepted the counter offer, the MTNL would have placed the
order for two units on it subject to the petitioner’s willingness to supply the equipment
at the same rate as is being supplied by the fourth respondent. It appears to us that the
MTNL, despite the confusion created by it, has acted fairly. After the MTNL sought
clarifications from the bidders, a committee was formed to consider as to which of the
two systems would suit the MTNL. The financial bids of the tenders were considered
and evaluated and it was found that the bid of the fourth respondent was lower by Rs. 38
lakhs approximately. It was then the MTNL placed an order for one unit with the
fourth respondent and made a counter offer to the petitioner to supply the equipment at
the rate as offered by the fourth respondent. It may be noted that Annexure ‘E’ was
not only a part of the present tender but was also a part of an earlier tender as well and,
therefore, the argument of the learned counsel for the petitioner that the MTNL had
deviated from the tender specifications and that Annexure ‘E” was product of ‘hurry of
business’ is not well founded. Since the MTNL considered the system offered by the
fourth respondent to be more suitable than the system offered by the petitioner and the
configuration of the system match the specifications given in Annexure ‘E’, there was
nothing wrong in the action of the MTNL in accepting the tender of the fourth
respondent especially when the bid of the fourth respondent was lower by Rs. 38 lakhs
per unit than the bid of the petitioner. Even if Annexure ‘E’ was not part of the NIT,
the MTNL was empowered to modify, alter any terms and conditions of the tender as
long as they were uniformly applied to all the tenders. If the MTNL has the power to
modify the tender, we do not see any reason why the MTNL cannot insist on the the
compliance by the tenders with specifications which are provided in Annexure ‘E’.
More so when Annexure ‘E’ is a part and parcel of the tender documents.
17. Moreover, Annexure ‘E’, which according to the learned counsel for the
petitioner was not part of the tender documents, was nevertheless filled up and
submitted by the petitioner. It is not clear why this was done if Annexure ‘E’ was not
required to be filled up. Besides, at no point of time the petitioner represented against
the inclusion of Annexure ‘E’ as a part of all the documents required to be filled up, nor
was any protest made at any point of time.
18. The learned senior counsel for the petitioner submitted that the action of the
MTNL in placing the order on the fourth respondent is arbitrary and cannot be
countenanced in law. This argument in fact stems from the charge that the MTNL made
deviation from the tender specifications in accepting the tender of the fourth respondent
resulting in prejudice and injustice to the petitioner. In support of his submission he
relied upon the decision of the Supreme Court in G.J. Fernandez v. State of
Karnataka and Ors. , wherein it was observed as under:-
“…The second consequence, indicated by this Court in earlier
decisions, is not that the KPC cannot deviate from these guidelines at all in
any situation but that any deviation, if made, should not result in
arbitrariness or discrimination. It comes in for application where the non-conformity
with, or relaxation from, the prescribed standards results in
some substantial prejudice or injustice to any of the parties involved or to
public interest in general. For example, in this very case, the KPC made
some changes in the time frame originally prescribed. These changes
affected all intending applicants alike and were not objectionable. In the
same way, changes or relaxations in other directions would be
unobjectionable unless the benefit of those changes or relaxations were
extended to some but denied to others…”
19. While there cannot be any dispute with the principle enumerated by the
Supreme Court in the aforesaid decision, the premise on which the petitioner has
proceeded is based on misconception. We may again point out, even at the cost of
repetition, that the aforesaid Annexure ‘E’ lays down the specifications of the
equipment in question. While accepting the tender of the fourth respondent the MTNL
has not deviated from Annexure ‘E’ as Conditions 7 and 8 must give way to Annexure
‘E’. Besides, the action of the MTNL is not arbitrary or discriminatory. It also does
not cause any prejudice and injustice to the petitioner as the MTNL gave an opportunity
to the petitioner to supply the equipment by giving a counter offer to it, but the
petitioner did not accept the same. Even during the course of arguments, the petitioner
did not show any inclination to supply the system of the configuration mentioned in
Annexure ‘E’ at a price tendered by L-1 (lowest tenderer).
20. It is significant to note that there are only two manufacturers of the equipment
required by the MTNL and both of them have given their bids. There is no third
manufacturer and if any corners have been cut by the MTNL, it is after fully consulting
and discussing the matter with both the tenderers who were entitled to suitably modify
their offers, if necessary, in view of the requirements of the MTNL.
The learned counsel for the petitioner also cited the decisions of the Supreme
Court in Poddar Steel Corporation v. Ganesh Engineering Works and Ors, , and Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar
Municipal Corporation and Ors., . Both the decisions turn on their on
facts and have no bearing on the facts of the instant case as the terms of the tender have
not been deviated from by the MTNL or the fourth respondent.
21. In Raunaq International Limited v. I.V.R. Construction Ltd. and Ors., , on which reliance was placed by the learned Additional Solicitor General, it
was held that unless the Court is satisfied that there is a substantial amount of public
interest, or the transaction is entered with mala fide, intent, the court should not
intervene under Article 226 in disputes between two rival tenders. It was further
held that award of a contract, whether it is by a private party, or by a public body or the
State, is essentially a commercial transaction and in arriving at a commercial decision,
considerations which are of paramount importance are commercial in nature. The
Supreme Court enlisted the following considerations:-
“(1) Price at which the other side is willing to do the work.
(2) Whether the goods or services offered are of requisite
specifications.
(3) Whether the person tendering has ability to deliver the goods or
services as per the specifications.”
22. It appears to us that the MTNL while awarding the contract to the fourth
respondent kept in view the aforesaid considerations. The petitioner has not placed any
evidence on record to show that the contract has been awarded to the fourth respondent
mala fide or at the cost of public interest. We are told that the equipment offered by the
petitioner costs Rs. 38 lakhs more than the one offered by the fourth respondent. It is
not the allegation of the petitioner that the equipment offered by the fourth respondent
is in any manner inferior or of a substandard quality.
23. In Tata Cellular v. Union of India, , the Supreme Court
examined the scope of judicial review in case of award of contract by a public
authority. It was held that the principle of judicial review applied to the exercise of
contractual powers by the Government bodies in order to prevent arbitrariness or
favoritism. The Supreme Court, however, pointed out that there are inherent
limitations in the exercise of power of judicial review. The Supreme Court on review
of string of authorities held as follows:-
“(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.
(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 or quasiadministrative sphere. However, the decision can be tested by the
application of the “Wednesbury principle” of reasonableness and the
decision should 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 any unbudgeted expenditure.”
24. Applying the aforesaid parameters, we do not find that there is any scope for
interfering with the award of the purchase order in favor of the fourth respondent.
25. In Air India Ltd. v. Cochin International Airport Ltd., , it
was held that the State, its corporations, it s instrumentalities and agencies have a public
duty to be fair to all concerned, but when some defect is found in the decision making
process, the court must exercise discretionary power under Article 226 with great
caution and should exercise it only in furtherance of public interest and not merely on
the making out of a legal point. It was also observed that the court should always keep
the larger interest of the public in mind in order to decide whether its intervention is
called for or not, and only when it comes to a conclusion that overwhelming public
interest requires interference, the Court should intervene. Keeping in view the
aforesaid dictum of the Supreme Court, no interference is called for in view of the fact
that there is no overwhelming public interest requiring interference by us. We are not
convinced that any defect has crept into the decision making process while awarding
the contract to the fourth respondent.
26. During the course of arguments, the learned counsel for the fourth
respondent, on instructions of his client, has undertaken to provide units having capacity
to simultaneously test 1200 lines on the MDF side and 2000 lines on the SDF side
without any extra charge and at the tendered price. We are told that one unit has
already been handed over by the fourth respondent to the MTNL. As per the
undertaking, the learned counsel for the fourth respondent stated that the same shall be
upgraded.
27. Mr. Tripathi, learned senior counsel for the petitioner, urged that the
specifications given in Annexure ‘E’ have not been placed before the TEC for
approval. Nothing has been brought on record to show that the approval of the TEC
was necessary. MTNL being the purchaser is the best judge to assess its requirements.
28. The learned senior counsel for the petitioner claimed that the equipment
tendered by the petitioner is a portable one while the equipment tendered by the fourth
respondent is not portable. The learned counsel for the MTNL and the fourth
respondent dispute the fact that the equipment offered by the fourth respondent is not
portable. On the own showing of the petitioner, the equipment of the fourth respondent
can be carried to the site in vans. When the equipment can reach at site, it cannot be
said that the equipment is not portable.
29. All the pleas of the petitioner having failed and we having found that the action
of the MTNL is not contaminated by arbitrariness and mala fides, we decline to
intervene in the matter. Accordingly, the writ petition is dismissed.