M/S Galaxy Transport … vs M/S New J.K. Roadways,Fleet … on 18 December, 2020


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Supreme Court of India

M/S Galaxy Transport … vs M/S New J.K. Roadways,Fleet … on 18 December, 2020

Author: Rohinton Fali Nariman

Bench: Rohinton Fali Nariman, Navin Sinha, K.M. Joseph

                                                                                REPORTABLE


                                        IN THE SUPREME COURT OF INDIA

                                         CIVIL APPELLATE JURISDICTION

                                CIVIL APPEAL NO._____________ OF 2020
                           (@ SPECIAL LEAVE PETITION (CIVIL) NO. 12766 OF 2020)


                         M/S GALAXY TRANSPORT AGENCIES, CONTRACTORS,
                         TRADERS, TRANSPORTS AND SUPPLIERS
                                                               …APPELLANT

                                                       VERSUS


                         M/S NEW J.K. ROADWAYS, FLEET OWNERS AND TRANSPORT
                         CONTRACTORS & ORS.
                                                             …RESPONDENTS




                                                 JUDGMENT

R.F. Nariman, J.

1. Leave granted.

2. In this appeal, the Inspector General of Police, Kashmir Zone, Zonal

Police HQR’s Kashmir, Srinagar [“ZPHS”], being Respondent No. 4
Signature Not Verified

Digitally signed by
before us, invited online tenders (e-tenders) vide e-N.I.T. No. 01 of
Jayant Kumar Arora
Date: 2020.12.18
16:51:24 IST
Reason:

2020 dated 18.02.2020 [“N.I.T.”] from reputed transporters,

1
registered firms/associations for the supply of various types of

commercial vehicles (without fuel) for the carriage of troops and

equipment for the Financial Year 2020-2021. Pursuant to the N.I.T.,

4 parties, namely, M/s Associated Contractors; M/s Quareshi

Transport Co.; M/s Galaxy Transport Agencies, Contractors,

Traders, Transports and Suppliers [“Appellant”]; and M/s New J.K.

Roadways, Fleet Owners and Transport Contractors [“JK

Roadways”] submitted their bids for consideration and the same

were uploaded through an e-tendering system. The tender process

consisted of a technical bid and a financial bid. The Tender Opening

Committee met on 11.03.2020 and found that JK Roadways,

Respondent No. 1 herein, and Associated Contractors did not meet

the qualifying requirements of the technical bid, leaving Quareshi

Transport Co. and the Appellant, who were considered technically

eligible for the allotment of the contract. The Appellant’s financial bid

being the lowest, vide an order dated 30.03.2020, the Appellant was

allotted the contract for the supply of commercial vehicles for the

Financial Year 2020-2021.

3. A writ petition was filed by JK Roadways seeking the quashing of the

allotment of the contract in favour of the Appellant. Before the

learned Single Judge of the High Court of Jammu and Kashmir at

2
Srinagar [“Single Judge”], three contentions qua the Appellant’s

technical eligibility were made by JK Roadways, which were decided

in the following manner, by a judgment dated 30.06.2020:

3a.Firstly, the learned Single Judge found that though the service

licence of the Appellant was only valid upto 31.03.2020, it had

sought an extension of its service licence prior to its expiry. Since

a lockdown was imposed on account of the outbreak of COVID-

19, a General Order dated 30.03.2020 [“General Order”] was

issued, through which the validity of all documents relating to

transportation services were deemed to be extended till

30.06.2020. This being the case, this contention was decided

against JK Roadways, and it was held that the Appellant fulfilled

the eligibility condition of holding a valid service licence.

3b. Secondly, it was found that the Appellant did in fact own 30

vehicles including heavy motor vehicles [“HMV”] and light motor

vehicles [“LMV”], as a list of 36 vehicles was furnished to ZPHS,

the tendering authority. Since a complaint in this regard had

been made by the unsuccessful bidders, the same was

forwarded to the Senior Superintendent of Police, Srinagar

[“SSP”] to ascertain the veracity of the documents furnished. The

SSP submitted a report finding that though 5 vehicles were found

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to be owned by individuals other than the Appellant, 31 vehicles

were still owned by the Appellant, as a result of which the

eligibility condition was satisfied. It was also found that insofar as

1 vehicle was concerned, it was indeed owned by the Appellant

as there existed a typographical error in the registration number

of the vehicle.

3c.Thirdly, as far as the eligibility criteria of having work experience

of at least 5 years, not being less than Rs. 2 crores was

concerned, the learned Single Judge found that work experience

certificates from 2014 to 2018 were submitted and since the

tendering authority was the best judge as to whether such

eligibility condition had in fact been satisfied, a judicial hands-off

was mandated.

3d. Finally, the learned Single Judge concluded:

“16. Considering the submissions of the parties and in
view of the law laid down by the Supreme Court and
also the fact that the contract is for the year 2020-21,
which has already commenced w.e.f. 1st April, 2020,
public interest would be severely jeopardized if the
respondents are not allowed to execute the contract
because the bid of respondent No. 5 was the lowest. It
is, therefore, in public interest not to interfere in the
allotment of contract in favour of respondent No. 5,
who satisfied the criteria as laid down in technical bid
as he had furnished list of HMV & LMV vehicles which
was the most essential condition of the tender. Thus,
the petitioner having been found ineligible cannot now

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question allotment of contract to respondent No. 5
because the petitioner is not similarly situated.”

4. JK Roadways filed a letters patent appeal before the Division Bench

of the High Court of Jammu and Kashmir at Srinagar [“Division

Bench”]. By the impugned judgment dated 16.10.2020, the Division

Bench recorded:

“14) Though the appellant has raised a number of
grounds in the appeal yet during the course of
arguments, the main thrust of arguments advanced by
the learned counsel for the appellant was on the
following grounds:

(I) That the official respondents were not justified in
rejecting bid of the appellant on the ground that it
had submitted only the list of heavy motor vehicles
and that the list did not contain the particulars of
light motor vehicles;

(II) That the respondent No.5 despite lacking the
requisite experience in supply of vehicles, was
awarded the contract, which action has amounted
to award of contract in favour of an ineligible bidder
to the exclusion of an eligible bidder.”

5. After setting out Condition No. 31 of the N.I.T., the Division Bench

concluded:

“16) From a perusal of the aforesaid condition, it is clear
that the official respondents while formulating the tender
notice have used the expression “HMV/LMV” meaning
thereby that a tenderer had the option of furnishing the
particulars of either HMVs or LMVs or both types of
vehicles. No other construction can be given to the
expression “HMV/LMV”. If the official respondents
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desired that a tenderer must own both types of vehicles
i.e. HMVs as well as LMVs, they could have easily used
the word “and” instead of “/” in between HMV and LMV in
the tender notice, use whereof refers to “or”. This is not
the case over here. Thus, if the appellant has furnished
the list of Heavy Motor Vehicles only, he has done what a
reasonable and prudent person would do upon going
through the tender condition quoted hereinabove. The
action of the official respondents of rejection of technical
bid of the appellant on the ground of non-furnishing of list
of both types of vehicle is, therefore, irrational, arbitrary
and perverse. Therefore, the contention of the appellant
in this regard is full of substance and deserves to be
accepted.

17) Mr. B. A. Dar, Sr. AAG, has submitted that the tender
notice condition stated “both HMV/LMV” which meant
that the tenderers had to provide details of both HMV
and LMV vehicles. Per contra learned Sr. counsel for the
appellant has contended that the very appellant was
found eligible in respect of the same condition and was
awarded the same work for the previous five years which
was satisfactorily completed.

18) We are unable to agree with the submission of Sr.
AAG. As already noted, if the respondents required
provision of details of both HMV and LMV vehicles, they
would have placed “and” between them. This has not
been done.”

6. As a result, the Division Bench found that JK Roadways, having

satisfied Condition No. 31 of the N.I.T., was wrongly disqualified by

the tendering authority. So far as the requirement under Condition

No. 27 of the N.I.T. of holding work experience of at least 5 years

was concerned, the Division Bench found that the Appellant had

experience of supplying vehicles only for a few months in the years

6
2014 and 2015 and therefore, the Appellant could, at best, be said

to hold work experience of supplying vehicles for 1 year only. Thus,

Condition No. 27 of the N.I.T., being an essential condition,

remained unfulfilled by the Appellant. Resultantly, the judgment of

the Single Judge dated 30.06.2020 was set aside and the contract

awarded in favour of the Appellant was quashed. The official

respondents were directed to invite fresh tenders and complete the

process within a period of 1 month from the date of the order of the

Division Bench.

7. On 04.11.2020, this Court issued the following order:

“Issue notice.

There shall be an ad-interim stay of operation of the
impugned judgment and order of the High Court.

Counter affidavit within one week by Respondent No.1.
Likewise, counter affidavit to be filed by the State within
two weeks. Rejoinder affidavit within one week
thereafter.”

8. As a result of this Court’s order, the Appellant has continued

executing the awarded work till date, with roughly 3 months left for

the completion of the contract period.

9. Shri Rana Mukherjee, learned senior advocate appearing on behalf

of the Appellant, argued that the Division Bench was wrong on both

7
counts. According to him, a plain reading of Condition No. 31 of the

N.I.T. showed that “both HMV/LMV” had to be supplied, and as JK

Roadways only supplied a list of HMVs, it was obviously ineligible.

Further, he placed reliance upon the judgments of this Court stating

that the authority that floats the tender is the best judge on how a

tender condition should be read. Accordingly, the Division Bench

overstepped its mark in construing the eligibility conditions of the

N.I.T. contrary to the tendering authority’s interpretation. Insofar as

the work experience condition was concerned, he adverted to the

work experience certificates from the Financial Years 2014-2015 to

2018-2019, which showed that the Appellant possessed the

necessary work experience, which had also been demonstrated to

the Tender Opening Committee, which had, in turn, reflected the

same in a tender scrutiny report, showing that it had applied its mind

in rendering the Appellant a technically qualified bidder. With respect

to the service licence, Shri Mukherjee relied upon the conclusions of

the Single Judge and stated that since this contention was given up

before the Division Bench, this Court ought not to allow this point to

be re-agitated.

10. Shri Altaf H. Naik, learned senior advocate appearing on behalf of

JK Roadways, reiterated the three submissions made before the

8
Single Judge and also sought to argue that the work experience

certificates supplied by the Appellant were in the name of “Galaxy

Agencies” and therefore, could not be counted to the credit of the

Appellant. He vehemently argued that the Appellant did not possess

a service licence for the relevant period, the licence having expired

on 31.03.2020 and not having been renewed by the General Order,

when properly read. Thus, the eligibility conditions were not satisfied

by the Appellant. Equally, the Division Bench was right in saying that

insofar as the work experience requirement was concerned, the

Appellant had only 1 year of experience, which would not meet the

essential requirement of the N.I.T. Finally, he also advanced

submissions on JK Roadways being qualified on a reading of

Condition No. 27 of the N.I.T.

11. Smt. Shashi Juneja, additional standing counsel appearing on behalf

of the Union Territory of Jammu & Kashmir, supported the grant of

the contract in favour of the Appellant and said that the Division

Bench was incorrect in its construction of Condition No. 27 of the

N.I.T. She also submitted that the Tender Opening Committee, being

an expert body and having scrutinised the documents supplied by

the Appellant, cannot now be second-guessed by the judgment of

the High Court.

9

12. Having heard the learned counsel for the parties, it is first necessary

to set out the N.I.T.’s “Terms and Conditions/Qualifying Criteria”.

Condition Nos. 27 and 31 of the N.I.T., which are material to this

case, state as follows:

“Terms and Conditions/Qualifying Criteria

xxx xxx xxx

27. The firm/association shall have working experience
of at least Five years with documentary proof and work
should not [be] less [than] 2 Crores.

xxx xxx xxx

31. The firm/tenderer should have owned at least 30 nos.
of vehicles both HMV/LMV and attached 200 vehicles
with the firm alongwith documentary proof.”

13. Even a cursory glance at Condition No. 31 of the N.I.T. would show

that the 30 vehicles referred to, are “both HMV/LMV”. The tendering

authority has construed this condition to mean that both types of

vehicles, i.e., HMV and LMV, need to be included in the list of the 30

vehicles submitted by each bidder.

14. In a series of judgments, this Court has held that the authority that

authors the tender document is the best person to understand and

appreciate its requirements, and thus, its interpretation should not

be second-guessed by a court in judicial review proceedings. In

10
Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation

Ltd., 2016 (16) SCC 818, this Court held:

“15. We may add that the owner or the employer of a
project, having authored the tender documents, is the
best person to understand and appreciate its
requirements and interpret its documents. The
constitutional courts must defer to this understanding
and appreciation of the tender documents, unless there
is mala fide or perversity in the understanding or
appreciation or in the application of the terms of the
tender conditions. It is possible that the owner or
employer of a project may give an interpretation to the
tender documents that is not acceptable to the
constitutional courts but that by itself is not a reason for
interfering with the interpretation given.”
(page 825)
(emphasis supplied)

15. In the judgment in Bharat Coking Coal Ltd. v. AMR Dev Prabha

2020 SCC OnLine SC 335, under the heading “Deference to

authority’s interpretation”, this Court stated:

“51. Lastly, we deem it necessary to deal with another
fundamental problem. It is obvious that Respondent No.
1 seeks to only enforce terms of the NIT. Inherent in
such exercise is interpretation of contractual terms.
However, it must be noted that judicial interpretation of
contracts in the sphere of commerce stands on a distinct
footing than while interpreting statutes.

52. In the present facts, it is clear that BCCL and India
have laid recourse to Clauses of the NIT, whether it be to
justify condonation of delay of Respondent No. 6 in
submitting performance bank guarantees or their
decision to resume auction on grounds of technical
11
failure. BCCL having authored these documents, is
better placed to appreciate their requirements and
interpret them. (Afcons Infrastructure Ltd v. Nagpur
Metro Rail Corporation Ltd
, (2016) 16 SCC 818 at para

15)

53. The High Court ought to have deferred to this
understanding, unless it was patently perverse or mala
fide. Given how BCCL’s interpretation of these clauses
was plausible and not absurd, solely differences in
opinion of contractual interpretation ought not to have
been grounds for the High Court to come to a finding that
the appellant committed illegality.”
(emphasis supplied)

16. Further, in the recent judgment in Silppi Constructions

Contractors v. Union of India, 2019 SCC OnLine SC 1133, this

Court held as follows:

“20. The essence of the law laid down in the judgments
referred to above is the exercise of restraint and caution;
the need for overwhelming public interest to justify
judicial intervention in matters of contract involving the
state instrumentalities; the courts should give way to the
opinion of the experts unless the decision is totally
arbitrary or unreasonable; the court does not sit like a
court of appeal over the appropriate authority; the court
must realise that the authority floating the tender is the
best judge of its requirements and, therefore, the court’s
interference should be minimal. The authority which
floats the contract or tender, and has authored the tender
documents is the best judge as to how the documents
have to be interpreted. If two interpretations are possible
then the interpretation of the author must be accepted.
The courts will only interfere to prevent arbitrariness,
irrationality, bias, mala fides or perversity. With this
approach in mind we shall deal with the present case.”
(emphasis supplied)

12

17. In accordance with these judgments and noting that the

interpretation of the tendering authority in this case cannot be said to

be a perverse one, the Division Bench ought not to have interfered

with it by giving its own interpretation and not giving proper credence

to the word “both” appearing in Condition No. 31 of the N.I.T. For this

reason, the Division Bench’s conclusion that JK Roadways was

wrongly declared to be ineligible, is set aside.

18. Insofar as Condition No. 27 of the N.I.T. prescribing work experience

of at least 5 years of not less than the value of Rs. 2 crores is

concerned, suffice it to say that the expert body, being the Tender

Opening Committee, consisting of four members, clearly found that

this eligibility condition had been satisfied by the Appellant before

us. Without therefore going into the assessment of the documents

that have been supplied to this Court, it is well settled that unless

arbitrariness or mala fide on the part of the tendering authority is

alleged, the expert evaluation of a particular tender, particularly

when it comes to technical evaluation, is not to be second-guessed

by a writ court. Thus, in Jagdish Mandal v. State of Orissa, (2007)

14 SCC 517, this Court noted:

13
“22. Judicial review of administrative action is intended to
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
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”;

14

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no
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.”
(pages 531-532)
(emphasis supplied)

19. Similarly, in Montecarlo Ltd. v. NTPC Ltd., 2016 (15) SCC 272, this

Court stated as follows:

“26. We respectfully concur with the aforesaid statement
of law. We have reasons to do so. In the present
scenario, tenders are floated and offers are invited for
highly complex technical subjects. It requires
understanding and appreciation of the nature of work
and the purpose it is going to serve. It is common
knowledge in the competitive commercial field that
technical bids pursuant to the notice inviting tenders are
scrutinised by the technical experts and sometimes third-
party assistance from those unconnected with the
owner’s organisation is taken. This ensures objectivity.
Bidder’s expertise and technical capability and capacity
must be assessed by the experts. In the matters of
financial assessment, consultants are appointed. It is
because to check and ascertain that technical ability and
the financial feasibility have sanguinity and are workable
and realistic. There is a multi-prong complex approach;
highly technical in nature. The tenders where public
largesse is put to auction stand on a different
compartment. Tender with which we are concerned, is
not comparable to any scheme for allotment. This arena
which we have referred requires technical expertise.

Parameters applied are different. Its aim is to achieve
15
high degree of perfection in execution and adherence to
the time schedule. But, that does not mean, these
tenders will escape scrutiny of judicial review. Exercise of
power of judicial review would be called for if the
approach is arbitrary or mala fide or procedure adopted
is meant to favour one. The decision-making process
should clearly show that the said maladies are kept at
bay. But where a decision is taken that is manifestly in
consonance with the language of the tender document or
subserves the purpose for which the tender is floated,
the court should follow the principle of restraint.
Technical evaluation or comparison by the court would
be impermissible. The principle that is applied to scan
and understand an ordinary instrument relatable to
contract in other spheres has to be treated differently
than interpreting and appreciating tender documents
relating to technical works and projects requiring special
skills. The owner should be allowed to carry out the
purpose and there has to be allowance of free play in the
joints.”
(page 288)

20. This being the case, we are unable to fathom how the Division

Bench, on its own appraisal, arrived at the conclusion that the

Appellant held work experience of only 1 year, substituting the

appraisal of the expert four-member Tender Opening Committee

with its own.

21. As was correctly pointed out by Shri Mukherjee, learned senior

counsel appearing on behalf of the Appellant, the contention as to

the invalidity of the Appellant’s service licence for the requisite

period does not appear to have been argued before the Division

Bench, though argued before and rejected by the learned Single

16
Judge. This being the case, we do not think that the scope of this

appeal be enlarged to include any such point which appears to have

been given up before the Division Bench.

22. Also, the argument that the Appellant has submitted work

experience certificates in the name of “Galaxy Agencies”, which is a

separate entity from “Galaxy Transport Agency”, has not been

argued either before the Single Judge or before the Division Bench.

In this circumstance, we reject this point also.

23. The Division Bench’s judgment dated 16.10.2020 is therefore set

aside and the learned Single Judge’s judgment dated 30.06.2020 is

restored. The appeal is disposed of in the aforesaid terms.

…………………………………….. J.

(ROHINTON FALI NARIMAN)

…………………………………….. J.

(NAVIN SINHA)

…………………………………….. J.

(K.M. JOSEPH)

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New Delhi;

December 18, 2020.

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