Writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty.


[Case Brief] The Bharat Coking Coal Ltd. & Ors. V/S AMR Dev Prabha & Ors.


Case name: The Bharat Coking Coal Ltd. & Ors. V/S AMR Dev Prabha & Ors.

Case number: CIVIL APPEAL NO. 2197 OF 2020 [Arising out of Special Leave Petition(C)No. 11915 OF 2018] WITH Civil Appeal No. 2198 of 2020 (Arising out of SLP(C) No. 12139 of 2018 WITH Civil Appeal No. 2199 of 2020 (Arising out of SLP(C) No. 12867 of 2018 AND Civil Appeal No. 2200 of 2020 (Arising out of SLP(C) No. 13321 of 2018

Court: Supreme Court Of India

Bench: CJI. (S. A. BOBDE)

J. (B.R. GAVAI)

J. (SURYA KANT)

Decided on: 18th March, 2020

Relevant Act/Sections: Constitution of India

 

BRIEF FACTS AND PROCEDURAL HISTORY:

1. BCCL, a subsidiary of Coal India Ltd, operates coking coal mines in India and as part of its operations regularly outsources many mining and processing functions to external entities. Such allocation of tasks is done through competitive bidding processes, with Respondent No. 4 [M/s C1 India Pvt Ltd (hereinafter “C1 India”) – an online procurement facilitator] being appointed as the service provider for e¬tendering of its contracts.

2. A Notice Inviting Tender (“NIT”) was issued by the appellant on 09.03.2015 for purposes of ‘Hiring of HEMM for removal of OB, extraction and transportation of coal with fire fighting seams at Patch¬DE (Mega Project) of Dhansar¬Ena colliery of Kusunda Area along with crushing of coal by portable crusher’ (NIT No 312).

3. The bidding was slated to be conducted on the online e¬reversse auction platform of C1¬India on 04.05.2015 and 05.05.2015, with C1¬ India having near complete supervision and autonomy over the auction process. In turn, C1¬India had hosted its server with Tata Communications Ltd (“TCL”). In case of any technical faults at the service provider’s end, the auction period was to be paused and extended by the period of the fault; however, bidders were to be responsible for connectivity problems at their end.

4. The last bid of Rs 2345 Crores made by M/s AMR¬Dev Prabha (Respondent No. 1) at 12:33PM on first day went unresponded for thirty minutes, and the auction was automatically closed at 1:03PM. Taking conscious notice of the technical issues communicated by TCL and estimating that a lower price could be discovered had such fault not arisen, C1¬India (allegedly with the concurrence of BCCL officials) took a decision to restart the auction process at 2:30PM. Such resumption, with the possibility of extension of time, was communicated to all bidders telephonically, as well as through emails sent between 2:17PM and 2:36PM. The auction proceeded to the extended time of 1 hour and 27 minutes, and Respondent No. 6 was declared successful with a bid of Rs 2043 crores at 7:27PM. As per earlier agreed contractual terms, a Performance Bank Guarantee had to be submitted within 28 days of receipt of LOA. Respondent No. 6 was unable to do so, and it requested BCCL to provide an additional two months for compliance.

5. Three months after closure of the auction, Respondent No. 1 preferred a Writ Petition before the High Court of Jharkhand at Ranchi on 10.08.2015, praying for a declaration that it emerged as the successful L¬1 bidder at 1:03PM on 05.05.2015. During the pendency of the Writ Petition, Respondent No. 1 invoked Clause 20 of the NIT which provided for an integrity pact under which two Independent External Monitors (“IEM”) had been appointed. A report was received from one of these two IEMs on 23.09.2016 which held that there had been no technical problem. Simultaneously, the appellant approached the second IEM who observed that there was no possibility of collusion and noting that the interruption in bandwidth had been established and thus the subsequent resumption by C1¬India was in consonance with specified procedure.

6. In light of such conflict, BCCL first approached the Standardization, Testing & Quality Certification (STQC) Directorate seeking an audit, and later upon them expressing inability to do so owing to the technical nature of the dispute; the appellant approached the Director General of CERT¬In (an independent body under the Ministry of Communications & IT of the Government of India

7. On 16.08.2017, the learned Single Judge dismissed the first respondent’s writ, holding there indeed was a connectivity issue and the subsequent resumption of auction was as per terms of the NIT; award of contract to RK Transport was not arbitrary for not only was it L¬1 but also had offered a bid much better than that of AMR¬Dev Prabha.

8. This was challenged by Respondent No. 1, before a Division Bench of the High Court. On 18.09.2017, counsel for AMR¬Dev Prabha offered a lower bid of Rs 1950 Crores for the job, The Division Bench allowed the appeal vide impugned judgment dated 12.04.2018 and quashed the LOA issued by BCCL in favour of RK Transport and held that all consequent work was invalid.

9. Analysing the terms of the NIT, the High Court held that it was the bidder’s responsibility to comply with system requirements, with BCCL not being liable for any technical difficulties or connectivity failures. Tender could be paused only in case of technological/system failure at the service provider’s end and once concluded, could only be revoked in limited circumstances. Not only were the complaints nonactionable for C1¬India was continuously connected to TCL which meant there were no problems at the service provider’s end, but even otherwise C1-India failed to pause the auction process during the crucial period which it ought to have as per the terms of the NIT.

10. The Court held that BCCL and C1¬India failed to maintain the sanctity of the auction process and committed serious illegality which raised doubts on procedural propriety and indicated arbitrariness in the decision-making process.

11. Hence the present appeals have been preferred by Bharat Coking Coal Ltd. (hereinafter, “BCCL”) being aggrieved by the order dated 12.04.2018 passed by a Division Bench of the High Court of Jharkhand at Ranchi.

 

ISSUE BEFORE THE COURT:

Two clear issues ¬in ¬dispute arise-

1. The first pertains to the maintainability of the writ considering the nature of tender processes, and

2. The second concerns application of that standard to the facts of the present case to determine whether there were lapses on part of BCCL and C1¬India.

 

RATIO OF THE COURT

• Assailing the order of the High Court primarily on preliminary counts, counsel for BCCL vehemently contended that the present case was not one where judicial review was possible. They highlighted that the scope of writ jurisdiction in contractual dealings of the State or its instrumentalities was extremely limited.

• Respondent No. 4 (C1¬India) clearing their stand contended that the slight delay in the decision making process was because C1¬India as a responsible e-services provider was first attempting to determine whether the interruption was at the bidders’ end or its own.

• Counsel for the appellant,  claimed how AMR¬ Dev Prabha’s interest was, in fact, personal and not public, and only to win the tender one way or the other and not to maintain the sanctity of the auction process through stating that Court AMR¬ Dev Prabha sought adherence to terms of NIT and strict procedural compliance, but later they wished to settle the matter at a lower price.

• On the other side, Respondent No. 1 claimed that it had been declared as the lowest bidder (L¬1) by virtue of automatic conclusion of the auction process at 1:03PM, post which any resumption was impermissible and contrary to contractual terms.

• They further contended no adverse inference could be drawn against Respondent 1’s participation in the resumed bidding process as the resumption itself was illegal. The auction was closed and not paused, and hence no resumption of a closed bidding process was possible

• On maintainability, although Respondent No. 1 admitted to having alternate remedies, but it argued that there could be no hard and fast rule preventing it from approaching writ courts.

• The court while discussing maintainability of petition held that the allegations of illegality, irrationality and procedural impropriety would be enough grounds for courts to assume jurisdiction and remedy such ills. This is especially true given our unique domestic circumstances, which have demonstrated the need for judicial intervention numerous times. Hence, it would only be the decision-making process which would be the subject of judicial enquiry, and not the end result.

• In tender matters, such can be either when a party seeks to hold the State to its duty of treating all persons equally or prohibit it from acting arbitrarily; or when executive actions or legislative instruments are challenged for being in contravention to the freedom of carrying on trade and commerce. However, writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty. Hence, the persons seeking writ relief must also actively satisfy the Court that the right it is seeking is one in public law, and not merely contractual.

• The court observed that in the present case it was clear that the Division Bench of the High Court was cognizant of these principles surrounding scope of judicial review, however, it failed to effectively evaluate whether larger public interest was being affected. On the contrary, the interest of Respondent No. 1 was purely private and monetary in nature. Further, the first respondent has failed to demonstrate which public law right it was claiming.

The court relied on following cases-

1. Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 in which it was held that 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 in a civil court.

2. Raunaq International Ltd. v. IVR Construction Ltd., (1999) 1 SCC 492 in which the court observed that If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation.

3. Maa Binda Express Carrier v. North¬East Frontier Railway, (2014) 3 SCC 760 in which the court held that the bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government.

 

DECISION HELD BY COURT:

1. The court also settled that the impugned order is correct in its conclusion that there were substantial procedural lapses on part of BCCL and C1¬India which amount to arbitrariness, and ought to be remedied by way of judicial review.

2. The court didn’t need to venture into questions concerning quantum of extension of time. It is clear that the same message was communicated by CI–India to all, stating that the auction process would be extended by a period equivalent to the time between closure of auction at 1:03PM and resumption at 2:30PM.



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