Date of Order:
May 19, 2023
Bench:
Justice Surya Kant, Justice J.B. Pardiwala
Parties:
Appellant – Tata Motors Limited
Respondents - The Brihan Mumbai Electric Supply & Transport Undertaking (BEST) & Anr
SUBJECT
Judicial review is a process by which courts review the legality of actions taken by governmental agencies or other entities. In the context of contractual or commercial matters, judicial review is the process by which the courts may scrutinize the decisions of a tribunal or other decision-making body to ensure that it has acted within the scope of its authority and that its decision is rational and not arbitrary. In particular, the court may review the decision to ensure that it is not ultra vires (outside the powers of the tribunal or other decision-making body) or that it is not based on an error of law.
IMPORTANT PROVISIONS
The Constitution of India, 1950
- Article 226
OVERVIEW
- BEST issued a tender for the supply and maintenance of Single Decker AC Electric Buses with drivers, for public transport for 12 years.
- The tender document specified that the bidders should provide Single Decker Buses which 2 can run 200 km on a single charge without interruption in actual conditions for the relevant Gross Vehicle Weight (GVW) with air conditioning with not more than 80% battery consumption.
- Eight market players including TATA Motors took part in the tender process.
- The modifications requested by TATA Motors in the pre-bid meeting conducted were rejected by BEST and certain specific revisions were brought in.
- BEST issued a corrigendum, specifying the last date of bid submission as 02.05.2022 and the date of opening the technical bid as 04.05.2022.
- TATA Motors submitted its bid on 25.04.2022 but there were certain deviations from the bid specifications.
- EVEY submitted its bid on 02.05.2022 and claimed it didn’t deviate from the specified tender conditions.
- Clause 5.1.1 of Schedule II (Definitions and Instructions to Bidders) of the tender provides the mode and manner in which the bid is to be submitted.
- It was also stated that only the successful bidder had to submit Annexure Y to the Operational Equipment Manufacturer (OEM), and it was not to be submitted along with the bid.
- However, EVEY submitted Annexure Y and later submitted a revised Annexure based on certain clerical errors.
- After the bid opening, TATA Motors' bid was rejected as it was “technically non-responsive”. EVEY's bid was found to be “technically responsive”.
- Thereafter, EVEY was declared to be the L1 bidder.
- Aggrieved by this declaration, TATA Motors filed a writ petition at the High Court of Judicature, Bombay.
- While the proceedings of the petition were being carried through, BEST granted the tender in favor of EVEY and the latter even produced 8 buses between 04.07.2022 and 05.07.2022.
- The high court rejected TATA Motors' claims as an eligible bidder as they failed to meet the technical requirements of the tender.
- The high court also pointed out why EVEY's bid should also have been rejected and declared EVEY an unsuccessful bidder.
- All the parties to this case approached the Hon’ble Supreme Court through the present petition.
ISSUE RAISED
- After upholding TATA Motor's disqualification, was it justified for the High Court to examine whether EVEY also stood disqualified and whether BEST in its discretion may pursue a fresh tender process after upholding the disqualification of TATA Motor?
ARGUMENTS ADVANCED BY THE APPELLANT
- Dr. Abhishek Manu Singhvi represented Tata Motors in the present case.
- The counsel submitted that the acceptance of EVEY’s revised Annexure Y after the expiry of the bid submission end date and technical bid opening date is against the tender conditions and hence, the contract given by BEST to EVEY is illegal.
- The case of Poddar Steel Corporation v. Ganesh Engineering Works and Others, [(1991) 3 SCC 273] was cited to substantiate the above point.
- The counsel urged that the actions of BEST are unfair and their tender process is discriminatory.
- Reliance was placed on Jagannath Behera 15 & Ors. V. Raja Harihar Singh Mardaraj Bhramarbara Roy, [1958 SCR 1067] to state that once Annexure Y is submitted, it cannot be altered.
- The counsel finally submitted that the high court was justified in its decision and that a fresh tender is warranted owing to the delay in the delivery timeline and the arbitrary tender process.
ARGUMENTS ADVANCED BY THE RESPONDENT
- Mr. Tushar Mehta represented BEST in the present case.
- The counsel contended that none of the bidders successfully followed the mandatory bid conditions. Comparatively, of all the bidders found technically responsive, EVEY had quoted the lowest rates and accordingly, the contract was granted in its favor.
- Counsel also submitted that Annexure Y was neither a mandatory nor a prerequisite condition.
- It was further submitted that the issuance of another tender would be against the public interest and commercially imprudent.
JUDGEMENT ANALYSIS
- The Supreme Court of India dismissed TATA Motors' appeal.
- The court ruled that TATA Motors had deviated from the material conditions of the tender. Therefore, the High Court was right in disqualifying their bid from the tender process.
- It was also observed by the court that the act of BEST to allow the re-submission of Annexure Y by EVEY is not influenced by favoritism and this instance alone was not sufficient to declare the entire bid by EVEY as unlawful or illegal.
- To establish that initiating a fresh tender will burden and cause loss to the public exchequer, as well as consume unnecessary time, a view was made of the case, Association of Registration Plates v. Union of India and Others. [(2005) 1 SCC 679].
- The case of Jagdish Mandal v. State of Orissa and Others, [(2007) 14 SCC 517] was cited to pronounce that when the court invokes judicial review powers in matters of tenders or contracts, certain special features must be contemplated.
CONCLUSION
The Supreme Court in the present case provided many clarifications regarding the exercise of court discretionary powers under Article 226. The court first pointed out that it should exercise limited interference in commercial matters, especially where such interference will cause unnecessary loss to the public exchequer. The court should intervene only when overwhelming public interest requires it. The bench consisting of Justice Surya Kant, and Justice J.B. Pardiwala held that the court is only bound to review commercial cases where a clear-cut case of arbitrariness or mala fides or bias or irrationality is established.
